DMI Blog

Amy Traub

New 2006 Income Data: Don’t Spend It All in One Place

Ah, 2006. It was a simpler time. Our income was up, poverty was down, and with no family health coverage, we could finally stop taking those pesky kids to the doctor.

At least, that's one interpretation of the new data on income, poverty, and health insurance released by the Census Bureau yesterday. Of course, the statistics compare 2006 to 2005, not the present, and the story they tell is a lot more complex than the one above.

First. consider the income numbers: the median household in 2006 made less than one percent more than in 2005. After inflation, that works out to an extra $6.85 a week (yes that decimal point is in the right place) that the typical American household took home last year. What's more, the Economic Policy Institute points out that households had to work longer hours with more household members in the workforce to realize these decidedly modest income gains.

Overall, the income numbers indicate that ordinary Americans are still not sharing the benefits of economic growth, or even recovering the ground lost in the last recession. This is fundamentally the result of working people's weak ability to bargain for better pay, even when economic growth enables employers to afford it. Remember how the number of Americans belonging to unions continued to slip in 2006? This might have something to do with that. If we wanted to really see an increase in the income of ordinary Americans, passing the Employee Free Choice Act might help.

Of course, income isn't all there is to the economic picture for most households. Many Americans live beyond their income, going into debt to make ends meet. This brings us to the housing bubble, still in full swing throughout most of 2006. Now, of course, the bubble is bursting, and falling housing prices mean that homeowners can no longer borrow against the value of their homes to get by. But cheer up, if last year's positive income trends continue, the typical American household will make another $6.90 a week more in 2007 than in 2006 which is sure to outweigh any loss from the bursting housing bubble -- right?

I haven't even addressed the health insurance data yet, which show 2.2 million more Americans -- including 700,000 children -- without coverage in 2006. The Center on Budget and Policy Priorities explains how the drop off for children is due to stalled progress in expanding Medicaid and SCHIP, which could be remedied through the Congressional proposals to expand SCHIP which President Bush has threatened to veto. Note also that 1 out of every six full-time workers also lacked health coverage in 2006.

One of the more interesting analyses of the new health insurance data comes from the American Enterprise Institute, not an organization that usually impresses me with its insight. In an effort to explain the drop in health insurance coverage, AEI's Douglas Besharov tells the New York Times that "employers are really feeling the bite" from increased health care costs, which means they push more costs (such as increased premiums) onto employees, leaving employees unable to afford coverage at all. This, in fact, is a great reason for American business to support a universal health plan, taking the responsibility of providing health coverage off individual employers entirely.

That leaves us with the poverty data. 33 million Americans under the age of 65 lived below the poverty line in 2006, statistically unchanged from the year before. But the poverty rate for seniors declined from 10.1 percent in 2005 to 9.4 percent in 2006. The nation has about 200,000 fewer poor people over age 65, and that is good news.

Amy Traub: Author Bio | Other Posts
Posted at 8:15 AM, Aug 30, 2007 in Economy | Health Care | Housing | Labor | Middle-class squeeze
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