Though the economic picture at large is much improved since the end of the Great Recession several years ago, many Americans aren’t feeling the recovery. And there was good reason for that — as has been covered extensively, wage stagnation has taken a huge toll on the average American household, and though some families have managed to make the most of the recovery, a lot of people were simply getting left behind. Most of the country just wants a raise, to put it plainly.
The good news: That elusive raise may have finally arrived. A new report from the Census Bureau says we may have finally broken the cycle of stagnating wages, as median household income finally saw a sharp spike, rising 5.2% in 2015 over 2014. Not only that, but the report also says “the number of full-time, year-round workers increased by 2.4 million in 2015,” and “the number of people in poverty fell by 3.5 million between 2014 and 2015.”
All very good news, and something that has come in sharp contrast to the overarching economic trends we have been seeing in recent years.
“Median household income was $56,516 in 2015, an increase in real terms of 5.2 percent from the 2014 median of $53,718. This is the first annual increase in median household income since 2007, the year before the most recent recession,” the report said.
A raise, and wage growth?
Despite the fact that many employers are still unwilling to raise wages, the Census Bureau report shows that the market pressure to do so — which has been discussed at length, but until now, yet to manifest — must have finally broken through. Essentially, with the unemployment rate low and employers having trouble finding workers who are willing to work for low wages, they had to compete with one another to attract workers. That usually means a rise in average wages, but until recently, we haven’t seen it happen.
Even employer surveys show that most haven’t planned to pay more, though the Census Bureau numbers show otherwise.
This report is important, and not just because it shows a long-awaited turnaround for middle-class Americans. As The Washington Post reports, it’s actually the fastest increase on record, and the bottom 20% of workers were the ones who actually saw their incomes rise the most. “This exceeds the strong expectation that I already had,” Jason Furman, chairman of Obama’s Council of Economic Advisers, told The Washington Post. “The news here is the growth rates. I’ve read the last 21 reports, including this one. I have never seen one like this, in terms of, everything you look at is what you’d want to see or better.”
Again, all very good news. So, what’s the bad news?
This is good news, but…
The bad news, if you want to call it that, is that we’re still lagging behind where most economists and policymakers think we should be. Though median household income now sits at more than $56,000, it’s still below levels not seen since before 2000 when adjusted for inflation. Median household income figures actually peaked in the late 1990s, after several years of rapid economic expansion.
Incomes are “1.6 percent lower than the median in 2007, the year before the most recent recession, and 2.4 percent lower than the median household income peak that occurred in 1999,” the report said. A bit of a bummer, but it paints a much prettier economic picture than the one we have been staring at. It also gives the Democrats some room to brag, and may factor into the presidential election.
The question is, will we be able to keep it up? Economic frustrations have boiled over in many areas of American life, and there is still considerable frustration in many communities across the country. Just because we’re seeing improvement on paper doesn’t mean that everything is hunky-dory.