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NewsFlash: August 21, 2008
What the upcoming Census report will (probably) tell us
A preview of the August 26 Income Picture
On August 26th, the Census Bureau will release its annual report on poverty, household income, and health insurance coverage for calendar year 2007. Based on economic conditions last year, EPI expects the national poverty rate to fall slightly and median household income (adjusted for inflation) to rise slightly. Health coverage will surely decline, as it has every year in the recent past, largely due to continued declines in employer-based coverage.
While comparisons to the previous year (2006) may show some improvement, in order to understand the difficulties currently facing middle- and low-income families, it is important to consider these results in the context of the entire 2000s economic expansion. That expansion almost certainly peaked in 2007, and deteriorating conditions in 2008 are surely driving poverty higher and real middle-incomes lower. In that regard, it is notable that:
– The Census release will surely find poverty to have been higher last year than in 2000, the prior economic peak.
– For the first time on record, it is likely that real household income will be lower at the end of an economic expansion than it was when the cycle began. This fact in particular provides a stark reminder of how the benefits of growth failed to reach middle-class families.
– Job losses, higher unemployment, and deepening real wage decline mean that poverty will rise this year (2008) and median income will fall.
The Census results provide the first look at how some key living standards indicators evolved over the 2000 business cycle. Productivity was strong over these years, rising faster than in the 1990s, and unemployment was low. But weak job growth, stagnant earnings, and the fact that most of the growth accrued to those at the top of the income scale led to a historically unique gap between the performance of the economy and the fate of many of the people in it.
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