Income and Wages

Bartlett: Economy Nothing To Crow About

Last week, the Census Bureau released data for 1996 on the incomes and poverty status of Americans. Median household income was up 1.2 percent to $35,492 and the percentage of those living in poverty fell from 13.8 percent in 1995 to 13.7 percent. These extremely modest accomplishments nevertheless led Bill Clinton to claim that a new era of prosperity had dawned. "After years and years of stagnant family incomes, today's report proves that America's middle class, no longer forgotten, is rising fast," he trumpeted.

In truth, there is more to be disturbed about than elated by in the Census data. Although the economic expansion is in its 5th year, many Americans are worse off than they were at the end of the Reagan Administration. And what gains there have been have not been broadly distributed. Consider these facts:

  • Real median household income is still 2.7 percent below its 1989 level of $36,575 (in 1996 dollars).

  • Virtually all of the growth in income between 1995 and 1996 was in one region of the country: the South. Income levels essentially were unchanged in the Northeast and West and actually fell slightly in the Midwest.

  • Among racial groups, virtually all of the growth in income was confined to Hispanics, who saw a 5.8 percent rise in their median household incomes to $23,906. The average income for Hispanics is now above that of Blacks, who averaged $23,482 in 1996. Whites, Blacks and Asians saw practically no rise in income between 1995 and 1996.

  • Those with low incomes were worse off in 1996, with the lowest 20 percent of families seeing a 1.8 percent decline in their average income from $11,598 in 1995 to $11,388 in 1996. Meanwhile, the top 20 percent of families saw a 2.2 percent rise, increasing their share of total income to 49 percent--well above their 46.9 share in 1992.

  • Although the percentage of people living in poverty fell, the actual number of people in poverty rose by 100,000. The poverty rate fell significantly only in the South. It rose in the West and Northeast and was basically unchanged in the Midwest.

  • Women's earnings as a share of men's rose to an all-time high of 74 percent (see figure). However, this gain was achieved almost entirely by a decline from $32,426 in 1995 to $32,144 in 1996 in earnings for men working full-time, year-round. Men's earnings have fallen steadily since 1986 and are now 11 percent lower. Although women's earnings as a share of men's have risen 10 percent since 1986, their actual earnings are only 2 percent higher.

In short, there is really very little in the Census data for anyone to crow about. On balance, the bad news seems to outweigh the good.

Source: Bruce Bartlett (senior fellow, National Center for Policy Analysis), October 6, 1997.

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