There is so little good economic news these days that we were cheered August 26 after the Census Bureau reported that in 2007 the income of the typical American household rose for the third year in a row. We weren’t cheered for long.
A closer look confirms what Americans already know: most families reaped none of the benefits of the previous six years of solid economic growth. Median household income last year was still 0.6 percent less than it was in 2000, when the last economic expansion peaked. Households led by someone 65 or under made an average of $56,545 last year - 3.4 percent less than in 2000.
The census offers the same mirage when it comes to health insurance. While the overall number of uninsured dropped - from 47 million in 2006 to 45.7 million last year - that still left the number of uninsured Americans 7.2 million higher than in 2000. The improvements were entirely attributable to an increase in the number of people enrolled in Medicaid and other public programs.
What makes the news particularly bleak is that last year was probably the best year of the economic expansion that started at the end of 2001. Surveying the wreckage since then, it appears all but certain that this year’s census data will be worse.
The report has other grim news. The number of people living under the poverty line rose by 5.7 million since 2000, to 12.5 percent of the population. And the number of impoverished children increased to 18 percent.
There are multiple reasons why Americans are working harder and not getting ahead, including a weak labor movement, globalization, technological change and a slowdown in educational attainment. Except for a few years in the late 1990s, wages and benefits have grown more slowly than the nation’s income for nearly 30 years. Under the Bush administration, workers’ share of national income has fallen with a vengeance, to its lowest point since the 1960s. The Bush expansion may be the first in recorded history in which poverty rose and typical American families never regained the level of income they had attained at the end of the prior one.
What is clear is that economic growth alone will not be enough for most American families. The benefits must be shared more broadly. This means more progressive taxation, increasing access to affordable health care, investing more in public education.
President Bush was too busy cutting taxes on top earners to think about any of these priorities. The next president must do much better.