Wealth

Census Bureau: The Middle Class and Poor Have Not Gained Ground


An earlier version of this story ran online.

The most striking number in the U.S. Census Bureau’s Sept. 17 report on income and poverty isn’t about poverty. It’s about middle-class, working America. According to the Census, American men who work full time year-round earned less in real terms in 2012 than they did in 1973.

So much for a rising tide lifting all boats. Gross domestic product has nearly tripled since 1973, when President Richard Nixon was still flashing his V sign, but the gains have gone mostly to the people at the top.

Last year, the Census report shows, men who worked full time year-round had median earnings of $49,398. That’s a decline of 4 percent from 1973, adjusted for inflation. “We’ve had 40 years of stagnation,” says Sheldon Danziger, the new president of the Russell Sage Foundation, which funds research on improving living conditions in the U.S. “Things just don’t trickle down,” he says. “If the full-time, full-year male workers aren’t benefiting from economic growth, why should we expect the poor to be?”

Women saw a gain of 29 percent over the period, but that growth didn’t come recently: They earned less last year than they did in 2001. Real median household income was lower in 2012 than in 1989.

The only period in which the poverty rate declined substantially was the late 1990s, when unemployment dropped below 5 percent. Employers hired applicants whom they otherwise would have ignored. Productivity remained high, indicating that the new workers pulled their weight.

Today’s sluggish economy, with unemployment at 7.3 percent in August, isn’t relieving pressure on the middle class, much less the poor. According to the Census Bureau, the official poverty rate in 2012 was 15 percent. That’s not statistically different from the rate in 2011, but it’s up from 12.5 percent in 2007.

Poverty is youthful: About 22 percent of children live in it, vs. 15 percent of all Americans, the Census report shows. A family of four at the national-average poverty line in 2012 had an income of $23,492. That frighteningly low figure excludes the earned-income tax credit and noncash benefits such as food stamps and housing assistance. Then again, those benefits are vulnerable to cuts: Monthly food-stamp usage has risen 18 percent over the past four fiscal years, according to data compiled by Bloomberg News, and House Republicans were preparing to vote on a proposal to cut projected spending on nutrition programs by $40 billion over the coming decade to curb waste and abuse.

The bottom line: Full-time male employees who work year-round earned more in 1973 than they did last year, adjusted for inflation.

Coy_190
Coy is Bloomberg Businessweek's economics editor. His Twitter handle is @petercoy.

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