The Economist: Rising Tide
The more than ten years of sustained economic expansion that preceded the pandemic, the longest period of growth in US history, brought notable progress across a broad spectrum. The latest income and poverty data from the US Census Bureau (through 2019) illustrate this point, indicating how the sustained strength benefitted individuals and families across the nation. Real (inflation-adjusted) median household income increased an impressive 6.8% between 2018 and 2019 to reach $68,703. It was the highest level since the series began (1967). It’s an impressive increase from just five years prior in 2014, when median household income was $58,001, which was lower than five years prior to that in 2009 ($59,458). Keep in mind that the median is the level at which half are above and half are below; it’s not just some huge gains at the top end driving the increases (although there has been some widening of the gap).
In fact, 2019 real median incomes were up for all racial/ethnic groups with increases of 5.7% for Whites, 7.9% for Blacks, 10.6% for Asians, and 7.1% for Hispanics. Families, single people, and single parents were all better off. The 2019 real median earnings of women increased a little faster than men. Many more people were working, with the total number of individuals with earnings up 2.2 million.
Not surprisingly, the number of families in poverty declined notably. The official poverty rate in 2019 was 10.5%, decreasing for the fifth consecutive year and down 1.3 percentage points from 2018. Since 2014, the poverty rate has fallen 4.3 percentage points. In 2019, there were 34.0 million people in poverty, approximately 4.2 million fewer than in 2018. The Black and Hispanic poverty rates were the lowest since the data has been published (1959 and 1972, respectively).
Historically significant low unemployment was also observed in 2019 across racial, ethnic, gender, and age groups. More than a decade of expansion brought prosperity at rates not seen in many years. It is apparent that a rising tide can indeed lift multiple boats, with growth and job opportunities in the private sector driving widespread progress.
Obviously, the pandemic has changed the situation dramatically, and the contrast between the historically high incomes and declining poverty last year (and steady progress for years before) with the current challenges facing millions of Americans is striking. Recent data tells us, for example, that the number of food insecure households has doubled. The ongoing gains have been reversed and will take a while to return. If, however, we can keep the structure together and help businesses survive and families avoid financial disaster, we can both restore past gains and achieve new heights in the future. Stay safe.
Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of over 2,500 clients over the past four decades.
