Americans gets a raise!
WFUV's Frank Chaparro spoke with Fordham Professor of Economics Sophie Mitra and Subha Mani last week about the meaning of a recent report from the Census Bureau. The noteworthy report shows that household’s income in 2015 shot up 5.2 percent from the previous year to about $56,500 dollars. This is America's first raise in 7 years. See excerpts from interview with Professor Mitra below.
FC: First and foremost is this report from the Census Bureau good news for the US economy? Does it indicate future economic growth?
SM: This is good news for the US economy and for Americans. It indicates that the median household income (the middle of the income distribution) has increased compared to the year before by more than 5%. This report says nothing about future economic growth and forecasts are difficult to make. The rising median income shows that the economic growth of the past few years seems to finally be trickling down and some boats at the middle or lower end of the distribution are rising with the tide.
FC: Is this increase in median household income shared among all income groups or are the very rich the only ones pushing the needle?
SM: Income inequality (measured by Gini) overall remained the same in 2015. However, people at the 60th or lowest percentiles experienced some of the highest year-to-year increase in income compared to previous years (see graph in NYT page B4 of yesterday).
FC: The median income is still below what it was in 2007. Do you expect it to reach/surpass that level?
SM: It is still below the 2007 but it is not far. If the labor market remains robust, it is likely to get back to the 2007 level soon.
FC: Is this increase rooted in anything President Obama has done? Or is it rooted in external economic factors? Such as an increase in consumer spending?
SM: It is rooted in the robust recovery of the labor market since the crisis.
FC: Aside from the increase in median income is there anything else you thought was noteworthy from the report.
SM:This is good news, and so is the reduction in 2015 of the poverty rate and the rate of persons without health insurance (see other report release by the Census bureau on Tuesday). However, there is much more work to do for middle and lower income families. Full time male workers real earnings are still lower than in the 1970s and women’s real earnings are at about the same level as in the early 2000s. (figure 2 of Census bureau report on Income and Poverty). This needs to change for income increases at the median and lower end of the income distribution to be sustained.
