WSJ Editorial: The Higher Wages of Growth

Before the pandemic, income growth soared and poverty fell to the lowest rate since 1959.
September 17, 2020 — Blog    — In Case You Missed It...   

Wall Street Journal

The Higher Wages of Growth

By Editorial Board

September 16, 2020

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In case you missed it, and most of the media did, the Census Bureau reported Tuesday that the median household income in 2019 grew a whopping 6.8%—the largest annual increase on record. While this year’s government-ordered lockdowns will erase these gains in the short term at least, it’s still worth highlighting how lower-income workers and minorities benefited from faster growth and a tighter labor market before the pandemic.

Real median U.S. household income last year rose by $4,379 to $68,709. In dollar amounts, this is nearly 50% more than during the eight years of Barack Obama’s Presidency. The wealthy last year benefited from a roaring stock market, as they did during most of the Obama years.

But lower and middle-income folks were also finally sharing more in the country’s growing wealth. Notably, median household incomes increased more among Hispanics (7.1%), blacks (7.9%), Asians (10.6%) and foreign-born workers (8.5%) versus whites (5.7%) and native-born Americans (6.2%). One reason is more Americans with lower education levels were working.

As family household incomes increased, the child poverty rate also declined to 14.4% from 16.2% in 2018 and 18% in 2016. The decline in childhood poverty last year was nearly twice as much as during the entire Obama Presidency. The most pro-family policies are those that increase jobs and wages.

These income gains weren’t magical. Policy changes mattered. …

Business investment and hiring increased amid the Trump Administration’s deregulation and the GOP’s 2017 tax reform that unleashed animal spirits. New business applications increased twice as much during the first two years of the Trump Presidency versus the last two Obama years, other Census data show.

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