Census Report Shows Strength of Pre-COVID Economy
Based on a Census Bureau report released last Tuesday, the current debate over economic policy might come down to a question of numbers. Which would you prefer: A $1,200 “stimulus” check while not working during lockdowns, or a nearly $4,400 pay increase in a growing job?
The Census report, which chronicled changes in income and poverty in 2019, documented the state of the economy well before the coronavirus hit. But the amazing strength of the data in that report shows what the American economy, and American workers, can achieve—if given the right policy environment and opportunities.
The headline number from the Census report sounds so large as to be a misprint: Real median income for American households increased 6.8 percent in 2019—a jump of almost $4,400. Think about it for a moment: How many businesses offer 6.8 percent annual raises to all their workers?
The statistic becomes even more meaningful when considering the terminology. The phrase “real median income” means the figure 1) takes inflation into account and 2) represents the 50th percentile of American income—so a big increase in income for the top 1 percent of earners won’t move the median income number one bit. In other words, the benefits of this economic growth went to the vast majority of American households.
The poverty rate also declined in 2019—for the fifth consecutive year. Last year the poverty level fell to its lowest rate (10.5 percent) since the federal government started keeping records in 1959. As with the median income statistic, it shows that the economic boom benefited all classes of Americans, not just the wealthy.
Rising Tide Lifting All Boats
Beyond those two headline data points, other elements of the Census report show the benefits of widespread prosperity:
- Real (i.e., inflation-adjusted) earnings for full-time, year-round workers increased by 2.1 percent for men, and 3.0 percent for women.
- The number of individuals in work increased—the total number of workers with earnings increased by 2.2 million, and the number of full-time, year-round workers increased by 1.2 million. Real household earnings increased at such a phenomenal rate not just because people earned more money at their existing jobs, but also because more people joined the workforce.
The data also undermine the current leftist stereotypes about the United States’ supposed systemic racism, misogyny, and xenophobia:
- Median incomes for black (7.9 percent) and Hispanic (7.1 percent) households rose at a faster rate than incomes for households led by non-Hispanic whites (5.7 percent).
- Median incomes for foreign-born workers grew at a greater rate (8.5 percent) than those for native-born Americans (6.2 percent).
- Median incomes for women (7.8 percent) grew more than three times as fast as incomes for men (2.5 percent).
- The poverty rates for blacks and Hispanics also fell to all-time lows.
Again, these statistics, coupled with the fact that the poverty rate declined the largest for groups like single mothers and individuals with disabilities, show how the broad-based economic boom reduced inequality, bringing benefits to the vast majority of American families.
Presidents Don’t Create Jobs
All that said, a few caveats seem in order. While the Trump administration undoubtedly will attempt to take credit for these impressive statistics, presidents don’t create jobs—not jobs in the private sector, anyway.
One can easily argue that presidents, regardless of party, get too much credit when the economy succeeds on their watch, and too much blame when the economy falters. The most any president can do is create a positive, pro-growth environment, and allow private businesses to succeed.
Second, to the extent that President Trump will credit the 2017 tax bill for sparking the economic boom, that legislation represents a bill that will eventually come due for the American people. Because Congress has allowed government spending to continue to rise as tax revenues remained flat or declined, the nation faced a large and growing fiscal gap well before the coronavirus came from China’s shores and made things worse.
The Path Ahead
Third, and most obviously, the Census data show the state of the pre-COVID economy. What it will look like once the pandemic passes (and it will pass, eventually) remains to be seen.
But at present, Democrats like House Speaker Nancy Pelosi (D-Calif.) are spending all their energy fighting for another “stimulus” that would keep paying people more to stay on unemployment than to return to work. Given the way last year’s gangbusters economy gave the vast majority of households a whopping raise, perhaps Democrats should consider that the American people—to say nothing of the economy as a whole—would benefit from people working rather than on the government dole, and tailor their policies accordingly.
This post was originally published at The Federalist.