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Whatever Some Candidates Tell You, the Incomes of Most Americans Have Been Rising
After a decade when most Americans saw their incomes decline, the latest Census Bureau income data contain very good news: A majority of U.S. households racked up healthy income gains in 2013 and 2014. The facts may not fit the narratives of Donald Trump, Ted Cruz, or Bernie Sanders. But they do help explain why President Obama’s job approval and favorability ratings have passed 50 percent. They also show that Hispanic households made more income progress in 2013 and 2014 than any other group, which may be one reason for their growing support for Democrats. A third surprise: Households headed by Americans without high school diplomas racked up their first meaningful income gains since the 1990s, thanks to the large job gains in 2013 and 2014 and the Obamacare cash subsidies beginning in those years.
These findings all come from using the Census data on the median incomes of American households by the age, gender, race and education of their household heads, to track their income progress as they aged from 2009 to 2012. I focused first on millennial households headed by young women and men who were 20-to-29 years old in 2009, which makes them voters ages 27-to-36 today. For decades, younger households have been the group with the fastest-rising incomes, and the recent period is no exception. Despite colorful stories of millions of young people living in their parents’ basements, the data show that the household incomes of these millennials (adjusted for inflation) grew 3.6 percent per-year from 2009 to 2012, and those gains accelerated to 4.5 percent per-year in 2013 and 2014.
The data also show that the incomes of millennial Hispanic households grew 5.4 percent per-year in 2013 and 2014, outpacing the progress of white and African American millennial households of the same ages. To be sure, not all millennials did nearly so well: The household incomes of those without high-school diplomas, which had declined an average of 1.0 percent per-year from 2009 to 2012, rose 3.1 percent in 2013 and 2014 – while the incomes of households headed by millennials with high school diplomas or college degrees grew 5 percent per year. Two main factors are at work here, and in the big gains by Hispanic households. First, businesses created almost 2.5 million net new jobs in 2013 and 3 million more in 2014, and such strong job growth disproportionately helps those at the economy’s margin. Second, Obamacare’s cash subsidies for lower-income households kicked in the same years, and Census counts government cash subsidies as a form of income.
2013 and 2014 also were good years for most of Generation X. My analysis here focused on households headed by people ages 35-to-39 in 2009, which makes them 42-to-46 year old voters today. In those two years, the median income of those Gen X households rose 2.3 percent per-year – a major turnaround from 2009 to 2012, when their incomes had declined 0.4 percent per-year. As with the millennials, the Gen X households headed by Hispanics made more income progress in 2013 and 2014 than their white or African American counterparts. And thanks once again to the robust job growth and the Obamacare cash subsidies, Gen X households headed by people without high school diplomas made substantial income progress in 2013 and 2014 – in fact, more progress than Gen X households headed by high school or college graduates.
For many decades, the income gains of most Americans have slowed as they aged. Nevertheless, the new income data contain moderately good news for households headed by late baby boomers, those who were 45-to-49 years old in 2009 and today are voters ages 52 to 56. Their median household incomes rose in 2013 and 2014 by an average of 0.5 percent per year; but even that was a big improvement from 2009 to 2012, when their incomes fell 1.1 percent per year. As with the millennials and Gen Xers, the Hispanic boomer households again fared better than their white and African American counterparts in 2013 and 2014: The median incomes of these Hispanic households grew 2.8 percent per year in 2013 and 2014, compared to gains of 2.0 percent per-year by African American boomers and 0.1 percent per-year by white boomers. Also, once again, the data show that the incomes of households headed by boomers without high school diplomas grew faster in 2013 and 2014 than the incomes of boomer households headed by high school or college graduates.
The Census Bureau will release the 2015 incomes data in a few months. We already know that the economy created another 2.65 million new jobs in 2015. If, as expected, the broad income progress seen in 2013 and 2014 persists in 2015, it will rebut much of the economic message touted by Trump and badly weaken Sander’s critique of Hillary Clinton. These data may not penetrate those campaigns and the media that surround them, but American voters know when their own incomes have improved – and that will alter the landscape for next November in ways almost certain to favor Democrats and their nominee.
This post was originally published on Dr. Shapiro's blog.