A press release issued yesterday by the Census Bureau indicates some positive economic trends. As an overview:
– Median incomes increased from 2014 to 2015 by 5.3% and 5.4% respectively for family and non-family households.
– All racial demographics except “Asian” saw significant increases (6.1% for “Hispanics,” 4.4% for “non-Hispanic white,” and 4.1% for “black” households). While “Asian” households did not see a significant change they did have the highest overall median household incomes overall in both 2014 and 2015.
– All regions experienced an increase in median income, with the “South” receiving the lowest increase at 2.9% and the “West” the largest at 6.4%.
– Poverty rates fell from by 1.2 percentage points to 13.5% in 2015.
– Total percentage of the population with health insurance rose from 89.6% in 2014 to 90.9% in 2015.
– There was no significant change in income inequality.
There are other details worth looking into available in yesterday’s release, which contains links to more detailed data regarding methodology and interpretation. Overall, this is good news. What the Census data does not provide in its basic release is attempt to explain why we saw this marked improvement. Is this the beginning of a steady, positive trend? Is there another factor propping up these apparently positive indicators that may allow for a significant negative change in the future?
Part of the good news for people just getting out of poverty is government assistance. As indicated in the Census Bureau’s Supplemental Poverty Measure, the poverty rate becomes 14.3% when adjusting for certain benefits (such as Social Security, Supplemental Nutrition Assistance Program, and tax credits). The good news is that these programs are helping people get access to the goods their families need that they otherwise could not afford. If other economic trends remain positive these families may see enough improvement in the future to no longer need such assistance. On the other hand, if these families move out of poverty solely because of government assistance then that does not indicate a fundamental positive change regarding their income.
The Patient Protection and Affordable Care Act (PPACA) no doubt contributed to the increase in people with health insurance. These effects are impacted by state and local participation in certain aspects of the program, which impacts cost and availability regionally. Also, the decision by certain firms to extricate themselves from the PPACA market may impact the program’s efficacy in coming years.
Speculatively, some of the regional variations in median income improvement may be due to individual state and local government decisions to significantly increase their minimum wage. For example, the “West” had the highest increase in median income and also has the highest collective minimum wages (with some individual cities going as high as $15/hr). Conversely, the “South” on average relies on the federal minimum wage for its employees. While they did see an increase in income as well, their rate of increase was significantly lower. This correlation is not definitive proof of anything, but may be worth investigation.
Sound off: What other factors did impact or may have impacted this positive change?