Downward Mobility

If you’re still harboring the notion that the economy is “good,”
prepare to be disabused.

Even the best number from yesterday’s Census Bureau report for 2005
is bad news for most Americans. It shows that median income rose 1.1
percent last year, to $46,326, the first increase since it peaked in
1999. But the entire increase is attributable to the 23 million
households headed by someone over age 65. So the gain is likely from
investment income and Social Security, not wages and salaries.

For the other 91 million households, the median dropped, by half a
percent, or $275. Incomes for the under-65 crowd were hurt by a
decline in wages and salaries among full-time working men for the
second year in a row, and among full-time working women for the third
straight year. In all, median income for the under-65 group was
$2,000 lower in 2005 than in 2001, when the last recession bottomed out.

Despite the Bush-era expansion, the number of Americans living in
poverty in 2005 — 37 million — was the same as in 2004. This is the
first time the number has not risen since 2000. But the share of the
population now in poverty — 12.6 percent — is still higher than at
the trough of the last recession, when it was 11.7 percent. And among
the poor, 43 percent were living below half the poverty line in 2005
— $7,800 for a family of three. That’s the highest percentage of
people in “deep poverty” since the government started keeping track
of those numbers in 1975.

As for the uninsured, their ranks grew in 2005 by 1.3 million people,
to a record 46.6 million, or 15.9 percent. That’s also worse than the
recession year 2001, reflecting the rising costs of health coverage
and a dearth of initiatives to help families and companies cope with
the burden. For the first time since 1998, the percentage of
uninsured children increased in 2005.

The Census findings are yet another indication that growth alone is
not the answer to the economic and social ills of poverty, income
inequality and lack of insurance. Economic growth was strong in 2005,
and productivity growth was impressive. What have been missing are
government policies that help to ensure that the benefits of growth
are broadly shared — like strong support for public education, a
progressive income tax, affordable health care, a higher minimum wage
and other labor protections.

President Bush is unlikely to push for those changes, wed as he is to
tax cuts that mainly benefit the wealthy. But the economic agenda for
the next president couldn’t be clearer.