After years of post-recession recovery and slow economic gains, middle class incomes peaked in 2016 according to a recent census. That’s not all good news, however. For one, that middle income zenith doesn’t account for rising income inequality. For another, the slightest tweak to the policies that affect middle class finances could tip millions of Americans out of their comfortable income tax bracket into the vast gulf on the other side. As the Trump administration tries to sort out its plans for tax infrastructure, job growth, and health care, there’s a distinct possibility that the peak might not become a plateau.
“There’s a danger that this is as good as it gets,” explained Peter Atwater of Financial Insyghts. “We are already at a 16-year low in unemployment. The likelihood of significant job growth from here is limited.”
2016 saw a 3.2% increase in median income, which reached $59,039. Poverty fell to the 12.7%, the same levels from before the recession. At first blush, that sounds like a positive, until you start to look at the other numbers. That middle class median has a lot to do with race, for one. The median income for black families is just $39,490, while whites cash in at $65,000 and Asians households make $81,000. That’s one aspect of income inequality. Another is that the wealthiest people in the country are making more than ever before. The top fifth earners in the country make the same amount as half the country’s incomes at all levels combined.
Another reason to worry is that the factors behinds those middle class income gains might not survive the Trump administration. If millions of Americans lose their health insurance, for example, or are forced to pay more for their plans, that will have a negative impact on just how far $59,039 can go. If unemployment dips again, that could also spell disaster for the middle class, not to mention the vulnerable income tax brackets below the median. In other words, the post-recession economic gains the middle class made under President Obama currently look more likely to stall or reverse than continue or increase.
“Today’s census report is unambiguously good news: on income, on poverty and on health insurance,” said Bob Green, president of the Center on Budget and Policy Priorities. “The goal should be to continue this progress.” However, with the Trump administration’s trend of undoing Obama’s policies, the White House might be trying to fix something that wasn’t exactly broken. That could not only dip incomes, but it could spell disaster for a middle class that was starting to feel comfortable after a decade of struggle.
(Via Washington Post)