New York Times Editorial - Downward mobility

New York Times Editorial - Downward mobility
Copyright by The New York Times
Published: August 30, 2006


Americans who still harbor the notion that the U.S. economy is "good" should prepare to be disabused.

Even the best number from Tuesday'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 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 is 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.

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 George W. 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 could not be clearer.