The headline is eye-opening, both for its declaration and for its context: “Americans got a raise last year for the first time since 2007.”
That was the news this week in the wake of a report from the U.S. Census Bureau. The median household income rose 5.2 percent last year to $56,516. Because “median” reflects the midpoint, with half of households ranking higher and half ranking lower — a more informative measurement than average — this is good news for the middle class. It is a well-documented fact that the American middle class has been taking a beating in recent years due to stagnant wages, and that a vast majority of income growth has been enjoyed by the wealthiest households rather than those in the middle.
All of that reflects the declarative portion of the headline, but the contextual part is equally noteworthy. The fact that the median household had not seen an income increase since 2007 demonstrates the depths to which this nation’s economy was dragged by the Great Recession. The median household income is now higher than when President Obama took office in 2009, but it still languishes below the peak of $57,909 in 1999, during the Clinton administration.
The recession officially ended in 2009, yet middle-class income has seen no improvement during the recovery. Until now. The latest study indicates that median income has increased in all regions of the United States, across all age groups, and for most ethnic and racial groups. In addition, the percentage of Americans living below the poverty line fell to 13.5 percent from 14.8 percent the previous year.
In short, the economy is far from the dystopia that Donald Trump is trying to portray it as. While the early years of the recovery saw job increases primarily in the low-wage restaurant and retail sectors, the Federal Reserve Bank of New York reports that in 2014 and 2015, the growth of middle-income jobs outpaced that in low-income sectors. The Census report also indicated that income for the poorest 10 percent of households jumped more last year than it did for the wealthiest 10 percent of households.
The numbers clearly represent progress for a nation that has been struggling for a decade. The United States is only as strong as its middle class — a middle class that provided the foundation for building the nation into the world’s pre-eminent economic power during the 20th century.
But the good news does little to suggest that the recession is over for all Americans. Far too many families still are struggling with unemployment or wage stagnation, and extending the recovery to an increased number of people remains essential. Presidential administrations often receive too much credit or too much blame for the economy, but federal policy does have an impact upon how many jobs are available and how much those jobs pay.
One concern in the wake of the income report is that it might be a harbinger of inflation that can stop the recovery in its tracks. More money chasing more goods can lead to price increases, and inflation in the world’s oil market could be devastating to the U.S. economy. The Federal Reserve thus far has eschewed calls to raise interest rates to stave off inflation, but shrewd management will continue to be necessary.
For now, however, the news from the Census Bureau is a strong indication that the economy is moving in the right direction. And that is good news in any context.
