Published August 22, 2013
The New York Times reports on a study issued yesterday by two former Census Bureau officials. The study shows that although median annual household income rose to $52,100 in June, from its recent low of $50,700 in August 2011, it remained $2,400 lower—a 4.4 percent decline—than in June 2009, when the recession ended.
According to the Times:
Since the end of the recession … household income has declined for all but a few population groups. Some of the largest percentage declines occurred for groups whose income was already well below the median, like African-Americans, Southerners, people who did not attend college, and households headed by people under age 25.
“Groups with low incomes tended to have steeper declines in income,” said Gordon W. Green Jr., who wrote the report with John F. Coder, a colleague at Sentier Research, which specializes in analyzing household economic data.
Households headed by people ages 65 to 74 were the only group in the study that experienced a statistically significant increase in post-recession income, helped perhaps by the decision of some older workers to remain in the work force or re-enter it.
There are several things to make of these findings, the first of which is that we’ve seen a decline in median income in the aftermath of a recession. During a recovery. That’s a fairly remarkable (and discouraging) development.
As for President Obama’s response to all this, a recent editorial by the Wall Street Journal gets it quite right: “For four and a half years, Mr. Obama has focused his policies on reducing inequality rather than increasing growth. The predictable result has been more inequality and less growth… The core problem has been Mr. Obama’s focus on spreading the wealth rather than creating it.”
Mr. Obama, then, is not only not up to confronting the problems of this era; he is exacerbating them. But even those of us who are critics of the president should admit that the problems afflicting the American economy–including (but not exclusive to) wage stagnation among the middle class, less social mobility among the lower class, and increased inequality–predate the Obama presidency. They are complex and defy simplistic partisan explanations.
Depending on which trend we’re talking about, they are rooted in deep cultural shifts (including a weakening marriage culture), globalization and advances in technology (which have moved us toward an economy that favors skilled over unskilled labor), a decline in workforce participation rates, rising health care costs, educational mediocrity (and downright awful education for the underclass), the structure of our entitlement programs (our transfer payments are increasingly regressive and benefit households headed by older adults, who tend to be wealthier than young adults), a byzantine tax code, and slow growth (the post-2008 recession growth rate has been roughly 2 percent).
In the face of America’s deep cultural and structural problems, assembling an agenda–including a comprehensive social-capital agenda that equips Americans, especially poor Americans, with the skills, values and habits that will allow them to succeed in a modern, free society–is a hugely complicated task. It will require a thoroughgoing reform agenda focused on entitlements, education, immigration, our financial system, and our tax code. A lot of good work is being done by policy experts and public intellectuals, by governors, and some members of Congress. (At a later date I’ll lay out what I think would constitute the broad outlines of an agenda, but for starters it might be worth reading this, this, and this.)
For the most part, however, Republicans and conservatives sound out of touch, their solutions stale, as if they fail to take into account new circumstances. And it is no wonder that Republican policies seem stale; they are very nearly identical to those offered up by the party more than 30 years ago. I’ve argued before that “For Republicans to design an agenda that applies to the conditions of 1980 is as if Ronald Reagan designed his agenda for conditions that existed in the Truman years.” It doesn’t help, of course, that prominent Republicans occupy their time pursuing tactics that are unworkable and qualify as primal screams (e.g., threatening to shut down the government unless the Affordable Care Act is defunded).
The public is in the process of concluding that President Obama and the Democratic Party, the embodiments of reactionary liberalism, are intellectually bankrupt. They are overmatched by events. This affords an opening for Republicans to put forward a positive governing vision. The elements of a conservative reform agenda certainly exist. But for the GOP to win over new hearts and minds will require the party to embrace that agenda more fully than it has; to overcome some old (bad) habits, to put a new frame on events, and to convince the public that they are the party of modernization, reform, and renewal.
It still has some distance to go.
Peter Wehner is a senior fellow at the Ethics and Public Policy Center.