Remember those warnings of an economic implosion if Donald Trump was elected President? Well, instead, the economy has broken out of the 2% growth doldrums from 2009-2016, and Barack Obama is suddenly elbowing his way back into the public debate to claim credit. Yet the U.S. Census Bureau’s annual report on U.S. income released Wednesday underscores how the Obama policies of redistribution retarded growth for so many years.
Real median household incomes ticked up 1.8% to $61,372 between 2016 and 2017 while the poverty rate dropped 0.4 percentage points to 12.3%, according to the Census Bureau. Income gains were strongest among Hispanic households (3.7%). The poverty rates for blacks and Hispanics fell to 21.2% and 18.3%, respectively, the lowest since at least 1972.
Surging investment earnings have driven up incomes at higher incomes. But at lower levels the income growth appears due to more people working more. While the number of people with employment earnings rose 1.7 million last year, the number working full-time and year-round grew 2.4 million. This lifted nearly one million people out of poverty in 2017.
Mr. Obama last weekend touted the employment growth during his Presidency, but the slower growth over eight years kept marginal workers on the sidelines. As economic growth has picked up over the last 18 months, lower-skilled Americans who were working part-time have moved to full-time employment, which appears to have slightly depressed the growth in median earnings for full-time workers.
The Labor Department’s monthly survey for August showed that 681,000 fewer Americans over the last year were working part-time because of slack business conditions and 266,000 fewer because they couldn’t find full-time jobs. Employers are scrounging for workers with job openings hitting a record high of 6.9 million in July.
Painful as it may be, recall the languid Obama years. Between 2009 and 2014, median household incomes stagnated and poverty increased as the expansion of welfare programs reduced the incentive to work. More than 1.5 million workers were added to the disability rolls. It wasn’t until the end of 2013, more than four years after the recession ended in June 2009, that 99 weeks of unemployment benefits were allowed to expire and the Social Security Administration began to tighten review of disability applications.
Meantime, regulatory policies aimed at punishing businesses loathed by liberals from fast-food franchises to coal mining hampered investment and hiring, particularly among less educated workers.
President Trump’s deregulation has unshackled business animal spirits while tax reform has boosted capital investment, which is starting to show up in greater worker productivity and higher wages. Minorities and less skilled workers left behind by the Obama economy are finally catching up.
The Obama years demonstrated how sensitive U.S. businesses and workers are to anti-growth policies while the Trump economy is demonstrating their pro-growth liberation.