On September 13 — just in time for election season — the Census Bureau announced that the U.S. median household income had its biggest jump since 1967 (and the first since 2007) to $556,516 for 2015, gaining 5.2 percent over the previous year’s amount.
On the surface that sounds like great news, and the Obama administration leaped to trumpet it. In the words of The New York Times and others, the economy was “breaking a pattern of stagnation.”
Except that left out of the Obama administration’s triumphant press releases was the fact that household incomes are still more than 1.5 percent below 2007 levels. Moreover, they’re 2.4 percent less than what they were in 1999.
Obama was also proud of the fact that “the pay gap between men and women shrank to the lowest level on record,” going on to give thanks to no one other than himself. But this is more a reflection of greater numbers of women entering the workforce and higher numbers of men leaving it than anything else.
Also left out of Obama’s speeches was the fact that numbers for 2016 are likely to be worse, according to number-crunching firm Sentier Research, which is run by former Census processors. As Sentier partner Gordon Green tells it, both the 2015 and 2016 numbers were affected greatly by drops in gas prices.
“Oil prices play into this in a very, very big way,” he remarked. Lower oil prices have kept inflation at bay and have temporarily led to marginally higher incomes.
Also factoring into the numbers jump was a change in the way the Census calculates its figures and the questions it asks its respondents. For instance, if a respondent answered questions about income with “I don’t know,” they were given a range of income choices instead of just leaving their answer as-is. In essence, that means the government is now accepting people’s guesses as opposed to hard numbers when it asks its questions.
Also, if people had assets that generated income — say in retirement savings accounts — but weren’t sure what the income was, the Census Bureau now records a value for the assets; this is a change from how the agency has operated in the past.
Some experts say that these two differences alone could account for most (if not all) of the income jump for 2015. The Census Bureau footnoted these changes, but most people are unlikely to notice them amongst the results’ fine print.
Economists also noted that most of the growth was from households earning $75,000 per year or more, and the gains were more weighted toward older earners than younger ones.
Of course, the Obama administration and the Clinton campaign would rather you not know about such caveats and would like to pretend that their heroic political efforts are responsible for the spike.
Social welfare professor Mark Rank at St. Louis’ Washington University said that the data is slightly “good news” but that income inequality and poverty in the U.S. remain more extreme than in many developed countries in the world. “It would take a lot to move that needle,” he asserted.
As some observers have noted, recent employment figures, which also have shown rises, are equally suspect. Most of the new jobs added have been in the service sector, in categories detractors refer to as “bartenders and waiters,” as opposed to those considered manufacturing jobs.
Even The New York Times noted that “more people are working, but many of them are still struggling to maintain their standard of living… The distribution of income in the United States remains tilted toward the affluent.”
Jeff Labruzzo, a construction worker in southwest Louisiana who treats building foundation sites for termites, says that his income is less than before the recession of 2008. He says his business is soft and that he faced stiff competition from firms employing illegal immigrants.
Until recently, he had five employees, but within the last year, he was forced to lay off two of them. “Things are to the point where I’m thinking about just closing up the business and letting my income drop,” he said. As a veteran, Labruzzo would qualify for government benefits.
The Republican chairman of the House Ways and Means Committee, Rep. Kevin Brady, stated, “Today’s report is another disappointing confirmation that too many Americans are still struggling to provide for their families and reach their full potential. The federal government invests billions of dollars each year in programs to help low-income Americans, but more than 43 million people continue to live in poverty.”
GOP presidential nominee Donald Trump agrees. “Poverty is beyond belief,” he asserted. “It’s time to break up the failed Democratic control over our inner cities, and provide real hope and opportunity to every single community in this nation.”
Regards,
Ethan Warrick
Editor
Wealth Authority
