A Rare Trifecta For All American Workers

In a trifecta for American workers that has not occurred since the height of the (Bill) Clinton economic boom in 1999, median income rose by a hefty 5.2%, the uninsured rate dropped by 1.3%, and the poverty rate fell by that same 1.3% in 2015.

Median household income rose to $56,500, a gain of $2,800, which is the largest increase since the survey began in 1967. A stronger labor market was the primary driver for increased income as the unemployment rate in 2015 averaged 5.3%. Importantly, the income gains were strong across all income levels, not just at the top as they had been since the recovery began in 2009.

However, even with this substantial increase, median household income is still 1.6% below its 2007 levels before the Great Recession began and 2.4% below its all-time peak back in the good old days of 1999.

The 1.3% decline in poverty represents some 3.5 million people in households whose income finally moved above the poverty line. This was the largest decline in poverty since 1968, almost 50 years. Notably, the poverty rates for blacks and Hispanics is now back to its pre-recession levels. Again, this is the result of an improving and tighter labor market which always benefits minority workers. The Supplemental Poverty Measure, another survey that takes into account the cash value of nutritional programs, Earned Income Tax Credit, and other automatic stabilizers, fell by around 1% to just over 14%. Since the “War on Poverty” began in the 1960s, this measure has fallen by nearly half from its high of 26%.

Finally, another 4 million more people received health insurance in 2015, in increase of 1.3% that dropped the uninsured rate below 10%. Obamacare, or the ACA, is the primary reason for this drop, reducing uninsured by 7% from the 16% in place at its inception. That represents about 18 million additional people who now have health insurance. Of course, the number of uninsured could easily come down even further if those states that continue to refuse the federal money for Medicaid expansion finally turned around and accepted it. As Kevin Drum points out, those states refusing Medicaid expansion reflect a certain region of the country:

The combination of a stronger economy, low inflation, and public policies on health and poverty have made this trifecta possible. Middle and lower income Americans are seeing their paychecks go up. More people are moving out of poverty and fewer people do not have health care insurance. We are finally beginning to see people other than the top 1% crawling out of the hole created by the financial crisis and the resulting recession. Now is not the time to change course with a racist xenophobe like Donald Trump. And it is certainly not the time for the Fed to raise rates and slow the economy down just as middle and lower income Americans are starting to see some benefit.