Financial Inclusion

Good News, Wages Are Up For The Second Consecutive Year

Since the Great Recession, the ongoing concern has been that the recovery has not been evenly distributed in the aftermath as wages have not kept up with the post-Recession economic growth.

New data out of the Census Bureau may go some distance to quiet those fears, as it seems the wages of workers are catching up with the growth trend.

The recovery, according to the census, may have shifted some in the last 18-24 months — and that shift may be putting more money in the average American working family’s coffers.

According to the Census Bureau, median household income jumped for the second straight year, reaching $59,039 — a 3.2 percent increase after inflation. In other favorable metrics, the percentage of Americans living in poverty fell and the number of citizens with health insurance coverage grew.

The changes come as President Donald Trump has spent the better part of the last year pledging to repair the economic condition of the system, particularly for its workers. He has, as part of that plan, pushed for tax cuts, regulation reductions and caps on foreign trade.

“Our painful tax system has become a massive barrier to America’s economic comeback,” Mr. Trump said last week in North Dakota.

Trump’s antagonists may well use this data to argue that such an overhaul now — when the policies of the last eight years are gaining traction — is poorly timed and ill-conceived.

“We need to be building on the success of the past eight years, not abandoning the progress we have made as a country and the American people who worked so hard to get us there,” said Representative John Yarmuth, a Kentucky Democrat who is the ranking member of the House Budget Committee.

Giving life to the old adage that “a job is the best antipoverty program,” the economy has added 2.2 million jobs in the first eight months of 2017.

If the year stays strong, this will be the second consecutive year of notable income growth. In 2016, a year ago, census figures indicated that the median income in 2015 had risen by 5.2 percent, the largest jump since record keeping began in 1967.

The 2016 gains described on Tuesday pushed the median to the highest level on record, topping the previous peak in 1999.

But before you break out the party hats, it is worth noting that a methodology change in 2013 has tended to increase the measure of incomes.  Minus the accounting change, median household income in 2016 was still 2.4 percent lower than in 1999 — and 1.6 percent below the level reached in 2007, before the recession began, according to the liberal Economic Policy Institute.

And there are other areas for concern.

The poorest fifth of households actually saw their income fall $571 over the decade that ended last year, adjusting for inflation. Over the same period, the average income for the wealthiest fifth of households rose by $13,479, adjusting for inflation. African American households have also been locked out of the uptick — median income for black families fell 1.6 percent since 1999. The adjusted numbers provided by the Economic Policy Institute pegged the drop at 7.5 percent.

“Just as in 2015, 2016 is going on record as another year of massive income inequality,” said Mary Coleman, senior vice president at Economic Mobility Pathways, a Boston nonprofit group that focuses on female and family poverty. “There was no meaningful reduction in income inequality.”



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