A Boom — for Whom?
The Census Bureau reported yesterday that median household income rose 0.7 percent last year – it’s second annual increase in a row- to $48,201. The share of households living in poverty fell to 12.3 percent from 12.6 percent in 2005. This seems like welcome news, but a deeper look at the belated improvement in these numbers – more than five years after the end of the last recession – underscores how the gains from economic growth have failed to benefit most of the population.
The median household income last year was still about $1,000 less than in 2000, before the onset of the last recession. In 2006, 36.5 million Americans were living in poverty – 5 million more than six years before, when the poverty rate fell to 11.3 percent.
And what is perhaps most disturbing is that it appears this is as good as it’s going to get.
The fortunes of middle-class, working Americans also appear less upbeat on closer consideration of the data. Indeed, earnings of men and women working full time actually fell more than 1 percent last year.
This suggests that when household incomes rose, it was because more members of the household went to work, not because anybody got a bigger paycheck. The median income of working-age households, those headed by somebody younger than 65, remained more than 2 percent lower than in 2001, the year of the recession.
Standard measures of inequality did not increase last year, according to the new census data. But over a longer period, the trend becomes crystal clear: the only group for which earnings in 2006 exceeded those of 2000 were the households in the top five percent of the earnings distribution. For everybody else, they were lower.
Please shove this in the faces of anyone who keeps whining about “the death tax” (aka the estate tax, the one that only affects rich people).