The Economy Isn’t Broken
Middle-class wage stagnation is the biggest economic fact driving American politics. Over the past many years, so the common argument goes, capitalism has developed structural flaws. Economic gains are not being shared fairly with the middle class. Wages have become decoupled from productivity. Even when the economy grows, everything goes to the rich.
.. On both left and right, movements have arisen to fix capitalism’s supposed structural flaws, either by radically interfering in the marketplace (Bernie) or by clamping down on global competition (Trump).
.. In 2015, median household incomes rose by 5.2 percent. That was the fastest surge in percentage terms since the Census Bureau began keeping records in the 1960s. Women living alone saw their incomes rise by 8.7 percent. Median incomes for Hispanics rose by 6.1 percent. Immigrants’ incomes, excluding naturalized citizens, jumped by over 10 percent.
.. The numbers for 2016 have just been released by the Census Bureau, and the trends are pretty much the same. Median household income rose another 3.2 percent, after inflation, to its highest level ever.
.. The problem of the middle-class squeeze, in short, may not be with how the fruits of productivity are distributed, but the fact that there isn’t much productivity growth at all. It’s not that a rising tide doesn’t lift all boats; it’s that the tide is not rising fast enough.
.. There is still a yawning gap dividing
- the median Asian-American household, which makes $81,000 a year;
- the median white household, which makes $65,000; and
- the median African-American household, which makes $39,490.
.. Right now moderates are in retreat. The populist extremes are on the march. But the fact is they are basing their economic and political agendas on a story that is fundamentally untrue.