Americans’ incomes jumped in 2015 by the most since the last recession and the poverty rate fell, signs of U.S. economic health that could potentially boost Democratic candidates this year.
Fresh yearly data from the U.S. Census Bureau showed median, inflation-adjusted household income rose 5.2% to $56,516 in 2015, the highest level since $57,423 in 2007, when the recession began. Gains were spread across the income spectrum and by race, while women’s earnings inched closer to men’s.
The data suggest incomes are getting a boost from job gains to help break out of the stagnancy that’s been a blemish on the seven-year U.S. economic recovery. Republican presidential nominee Donald Trump and Bernie Sanders, who gave Hillary Clinton a strong challenge for the Democratic nomination, have tried to appeal to voters in part by capitalizing on weak wage gains.
“A combination of employment growth as well as some modest acceleration in wages seem to be showing through,” said Michael Gapen, chief U.S. economist at Barclays Plc in New York. “If you’re looking at a comparison from what I call the bubble years, we’re just getting back to those levels.”
The poverty rate was at 13.5%, representing 43.1 million Americans -- a drop of 1.2 percentage points from 2014, the agency said.
The rise in median income was due mainly to an increase in employment and in full-time, year-round workers, with 1.4 million men and 1 million women added, Trudi Renwick, an assistant Census division chief, said.
Even with a 7.3% gain from its post-recession low of $52,666 in 2012, median income was still 2.4% below its inflation-adjusted peak of $57,909 in 1999.
More recent data from the Labor Department showed hiring and wage gains cooling in August. The Federal Reserve has kept interest rates unchanged since a quarter-point increase in December, and most economists and investors expect the central bank to stand pat again this month as inflation remains below policy makers’ 2% goal.
“This is something that fits into their broader narrative that things have gotten better, but by no means suggests that things are getting overheated,” said Barclays’s Gapen, who previously worked at the Fed. “It justifies gradually higher interest rates over time, but not in a way that suggests we’re behind the curve.”
Clinton, now the Democratic nominee, is making a bid to extend her party’s tenure in the White House after eight years under President Barack Obama. Clinton has supported raising the minimum wage and has focused on raising taxes on the wealthiest Americans to help pay for proposals such as infrastructure projects and public-college tuition.
Trump has countered with a plan to reduce taxes, reduce regulatory burdens on businesses and revamp trade deals that he says are leaving too many Americans worse off. He also wants to boost spending on infrastructure and the military.
Democrats were gleeful over the Census report. The White House Council of Economic Advisers said the figures showed “remarkable progress” among American families as employment and wage growth strengthened. New York Senator Charles Schumer called it “excellent news.”
The report also showed that the number of people without health insurance coverage for the whole year was 29 million, or 9.1%, down 1.3 percentage points from 2014, according to the bureau.
By Michelle Jamrisko and Patricia Laya