Editorials

The American middle class gets a pay raise, at last

A woman passes a “we’re hiring” sign while entering a Boston clothing store in May. Census data released Tuesday showed middle class incomes rising for the first time since the recession ended in 2009.
A woman passes a “we’re hiring” sign while entering a Boston clothing store in May. Census data released Tuesday showed middle class incomes rising for the first time since the recession ended in 2009. The Associated Press

Americans have waited too long for economic news as good as Tuesday’s: Last year, for the first time since the Great Recession, incomes rose for the middle class.

The 5.2 percent surge in real median household income reported for 2015 by the U.S. Census Bureau was the fastest rise ever, lifting the nation’s income midpoint by $2,800, to $56,500. Income gains were nearly across the board in ages, ethnicity, household types and regions. The income gap between women and men was the lowest on record. The poverty rate was down by more than a point, as was the percentage of Americans lacking health insurance.

With the exception of rural Americans, whose stagnant income was an outlier, 2015 was a milestone, and we celebrate that.

The numbers raise a painful question: Why has it taken so long just to approach break-even?

Still, the numbers raise a painful question: Why has it taken so long just to approach break-even? The rich have been rebounding since the recession ended in 2009. Even with the gains, households at the median are still earning less in constant dollars than in 2007.

Yes, this last recession was particularly wrenching. But why, when we could have been ramping up government hiring and improving working-class wages, did austerity transfix so much of the country?

Behind last year’s numbers, for instance, was a rollout in 15 states of minimum-wage hikes, pushed through by progressives after years of strenuous effort – hikes embraced in cities, but not rural areas, where incomes lagged.

Also fueling middle-class income was a tightened labor market with some 2.74 million jobs added. A big chunk of that new employment was in the blue state of California, which, according to the Department of Finance, contributed about 17 percent of new employment, though it represents only about 11 percent of the U.S. population. California’s minimum wage rose by a dollar in 2014, to $9, and it rose again this year.

Then there was Obamacare, which Republicans in Congress are still trying to kill, but which surely contributed to the decline in poverty rates last year; in California, the Affordable Care Act’s most enthusiastic adopter, poverty fell even more sharply than it did nationally, though housing costs kept the rate too high. Other government assistance, from the earned-income tax credit to food stamps, appears to have helped, too, though the safety net was far from the only factor.

The bottom line is that focusing on the bottom rungs made a huge difference for the less-well-off – and without putting a dent in top-tier income, which soared last year. There’s a lesson in that, as we claw our way back to where we were nearly a decade ago now, and prepare for the next recession to strike.

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