Middle Class Income Rises, Sort Of

The Census Bureau reports a modest income rise for the middle class, but the big picture tells a different story.

The fortunes of middle-class, working Americans also appear less upbeat on closer consideration of the data. Indeed, earnings of men and women working full time actually fell more than 1 percent last year.

This suggests that when household incomes rose, it was because more members of the household went to work, not because anybody got a bigger paycheck. The median income of working-age households, those headed by somebody younger than 65, remained more than 2 percent lower than in 2001, the year of the recession.

Over all, the new data on incomes and poverty mesh consistently with the pattern of the last five years, in which the spoils of the nation’s economic growth have flowed almost exclusively to the wealthy and the extremely wealthy, leaving little for everybody else.

Standard measures of inequality did not increase last year, according to the new census data. But over a longer period, the trend becomes crystal clear: the only group for which earnings in 2006 exceeded those of 2000 were the households in the top five percent of the earnings distribution. For everybody else, they were lower.

This stilted distribution of rewards underscores how economic growth alone has been insufficient to provide better living standards for most American families. What are needed are policies to help spread benefits broadly — be it more progressive taxation, or policies to strengthen public education and increase access to affordable health care.

Unfortunately, these policies are unlikely to come from the current White House. This administration prefers tax cuts for the lucky ones in the top five percent.