Yesterday, the Census Bureau reported that the national poverty rate declined slightly last year for the first time since 2006. However the drop in the overall poverty rate—from 15% in 2012 to 14.5% in 2013—was not enough to signal a statistically significant change in the number of poor people. There was also no notable change in the median household income. The numbers, although they suggest that the economy is improving incrementally, also highlight some realities that if uninterrupted will likely add up to a troubling new normal.
The 2.8 million net new full-time jobs created have helped families hit by the Great Recession, as evidenced by a heartening decline in the poverty rate for children below the age of eighteen—a statistically significant change from 21.8% in 2012 to 19.9% in 2013. But, we have by no means seen a full recovery. Median income is still 8% lower than it was in 2007. And, incomes at the bottom of the distribution have remained stagnant in the last 40 years—a fact that is a key contributor to income inequality which did not change significantly in the last year, but remains historically high.
8% Median income in 2014 is still 8% lower than it was in 2007.
Not surprisingly given these trends, much of the analysis of the data has focused on the need to meaningfully address inequality. It is clear that failing to do so will have devastating long-term effects on our economy, our place in the world, our democracy, and our way of life.
Here is some of what people are saying about the Census data and other related studies:
- “The economy is off kilter, with households at the top continuing to capture most of the gains from economic growth, while middle-class and struggling families are still waiting for the recovery to reach them.”—Center for American Progress’ Neera Tanden
- “Median household income hasn’t budged much, but at least it’s no longer falling.”—The Washington Post’s Emily Badger
- “We have a peculiar prosperity. The economy is escaping the confines of the Great Recession…But people don’t feel reassured. They’ve lost confidence in the future.”—The Washington Post’s Robert J. Samuelson
- “If I’m in the ballpark, Tuesday’s release will be another reminder why many Americans still feel pretty gloomy about the recovery: It hasn’t reached them.”– The Center on Budget and Policy Priorities’ Jared Bernstein *Note: He was very much ‘in the ballpark’.
- “Perhaps politicians are sensing that equality is no longer principally about poverty, but about wealth. A refashioning of political egalitarianism could be the result.”—The Brookings Institution’s Richard V. Reeves
Here at Living Cities, we share these concerns about how we are faring. The numbers are daunting. But, we believe that we can change course. It will not be easy and it will require unprecedented levels of collaboration, innovation and, perhaps most of all, optimism. Optimism has long been, like the idea of shared prosperity, a driver of the American Dream. We do not need the kind of optimism that renders us blind to current realities, but rather the kind that starts with the possibility that we can create something better. And, the kind that is not satisfied with managing decline, or with the status quo, or even with incremental change. That kind of optimism will lead to bigger, better and faster solutions. We look forward to working with other optimists to imagine, build and grow them.