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September 16 2016

If Income Is Up, Why Do Americans Still Feel Squeezed?

Patrice L. Onwuka

The Census found that American household incomes are up and poverty has declined (a little), but those headlines hide the financial frustrations of Americans households who don’t feel any better off.

According to the U.S. Census Bureau, median household income climbed 5.2 percent in 2015 to $56,500 – its highest level since 2007 (before the recent recession). Lower-income households experienced the largest boost to their incomes rising 7.9 percent for households in the 10th percentile and 6.3 percent for those in 20th percentile. The government points to job gains as the driver of these income increases.

Not surprisingly, President Obama was quick to pat himself on the back:

"The Republicans don't like to hear good news right now. But it's important just to understand this is a big deal," …

"For every family who hasn't yet felt progress these past eight years, we've got more work to do - we know that.”

More work to do is right. His imagined legacy of economic revival is not concrete. The economic recovery still has a way to go. The median household income was still 1.5 percent lower than 2007 and 2.4 percent lower than the peak reached in the 1990s. And while the number of Americans living in poverty fell by 3.5 million people (8 percent), it still remains high.

National averages are one thing, regional and state-by-state analysis by the Wall Street Journal reveals that for Americans in suburban and rural areas, their incomes have been left behind. While urban median incomes fell 1.7 percent from 2008 to 2015, rural incomes fell almost six time as much. 2015 may brought better news for rural households that may not a one-time difference rather than a reversal. We’ll have to wait and see.

In addition, American households in electoral battleground states are still waiting for the incomes to stop falling. Pennsylvania, Virginia, Wisconsin, Ohio, Michigan, Florida, North Carolina, Arizona, Georgia, and Nevada all experienced negative percent changes in median household incomes ranging from less than one percent in Pennsylvania to a whopping 15.5 percent in Nevada.

While jobs have been added to many states, entire sectors have been wiped out leaving those residents to scramble for work:

In Nevada, the median household income plunged 15.5% between 2008 and 2015 to $52,431 when adjusted for inflation, census figures show. The higher-paying construction jobs that were wiped out during the recession have been replaced by lower-paying service jobs, and the state has yet to recover from the broad hit of its housing collapse.

In North Carolina, one of the most closely divided swing states this year, the inflation-adjusted median household income has fallen 6.7% since 2008 to $47,830 for 2015. Massive job losses in banking in Charlotte and at furniture makers in rural parts of the state haven’t been fully offset by a crop of new technology and financial-services jobs concentrated in metropolitan areas. Its income growth was the sixth-lowest of any state and the District of Columbia since 2008.

Regional differences matter in explaining the experiences of American households. One set of researchers in a new paper suggest that the impacts on household income explain why this election cycle has expanded and magnified the polarization of the electorate.

Gallup’s polling of Americans’ confidence in current economic condition finds that just 26% of Americans think current economic conditions are "excellent" or "good," while nearly a third (30 percent) say they are "poor." In addition, only 37 percent of Americans say the economy is "getting better" while more than half (57 percent) say it’s "getting worse."

The headlines paint a picture that too many Americans have yet to realize real opportunity and prosperity.

IIndependent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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