Rising Incomes Are a Key to Winning in 2016 — But Not Enough
Even if we accept that the 2016 campaign is a fact-free zone, what precisely are Donald Trump and Bernie Sanders talking about when they rant on about incomes cratering for most Americans? It’s true, as I’ve documented, that a majority of Americans saw their incomes stagnate or decline throughout the Bush expansion (2002–2007), and the financial crisis and ensuing recession aggravated those losses. But that dynamic ended more than three years ago. Since 2013, the household incomes of most Americans have risen steadily and substantially.
The only candidate who seems to get this is Hillary Clinton, judging by her pledge to preserve and extend the economic gains achieved under President Obama. But Trump and Sanders’s appeal should tell us that, politically, those gains are not enough; and that a wining economic platform for this year’s election has to address the entire picture of the last 15 years. Yes, voters want measures to ensure that their recent progress will continue, a challenge Clinton has met better than her Democratic rival or Republican opponent. They also want a credible pledge that they will never have to endure another housing collapse or muddle through an expansion that leaves them on the sidelines.
Nevertheless, there’s no doubt that most Americans are doing much better than they did four or eight years ago. Last month, the Federal Reserve’s “Report on the Economic Well-Being of U.S. Households in 2015” found that nearly 70 percent of Americans say they’re “doing okay” or “living comfortably,” versus 18.5 percent who say they’re “worse off.” Behind those positive views, the Bureau of Economic Analysis reports that Americans’ real personal income grew 1.9 percent from February to December 2013, followed by 3 percent gains in 2014 and another 4 percent gains in 2015.
To be sure, aggregate economic data does not always capture most people’s real experience. To track people’s actual experience, I sorted and collated the Census Bureau data on household incomes from 2009 to 2014. I focused on the incomes of American households headed by people who, in 2009, were 25-to-29 years old (millennials), 35-to-39 years old (Generation X), and 45-to-49 years old (late baby boomers). I tracked their incomes as they aged from 2009 to 2014, and analyzed the results by gender, race or ethnicity, and education.
The results show that most Americans saw their incomes continue to stagnate or decline from 2009 to 2012, with the exception of millennials. For economic and statistical reasons, young households always make greater progress than older households, and millennial households were the only age group whose income rose from 2009 to 2012. Moreover, household incomes have risen significantly since 2013 for Gen X and baby boomers, as well as millennials.
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Average Annual Household Income Gains |
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| 2009 – 2012 | 2013 – 2014 | |
| Millennials | 3.2% | 4.3% |
| Generation X | – 0.4% | 2.3% |
| Late Baby Boomers | -1.1% | 0.5% |
The results also show that gender and race matter. While the income dynamics of the last decade didn’t create today’s partisan divisions based on gender and race, they probably have reinforced them. For example, while households headed by men generally fared better than those headed by women in the lean years from 2009 to 2012, women turned the tables in 2013 and have made more progress than their male counterparts since the turnaround.
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Average Annual Household Income Gains by Gender |
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| 2009 – 2012 | 2013 – 2014 | |||
| Men | Women | Men | Women | |
| Millennials | 3.5% | 2.5% | 2.7% | 3.0% |
| Generation X | – 0.2% | – 0.6% | 0.9% | 2.8% |
| Late Boomers | – 0.5% | -1.1% | 0.2% | 0.2% |
The results based on race and ethnicity also may help explain Hillary Clinton’s strength among minorities, as compared to Trump and Sander’s connections to angry white voters. In particular, the incomes of Hispanic and African-American households across all three age groups have grown faster than their white counterparts since 2013, under Obama’s policies.
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Average Annual Household Income Gains by Race and Ethnicity |
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| 2009 – 2012 | 2013 – 2014 | |||||
| White | Black | Hispanic | White | Black | Hispanic | |
| Millennials | 3.7% | 0.0% | 1.8% | 2.9% | 3.0% | 3.2 |
| Gen X | 0.1% | 1.7% | – 1.5% | 1.6% | 2.0% | 5.0% |
| Late Boomers | – 0.9% | – 4.9% | 1.8% | – 0.1% | 2.0% | 2.8% |
Finally, the results also show that after the tough times from 2009 to 2012, when Gen X and baby boomer households at every educational level lost ground, every age and educational group but high-school educated baby-boomers have made significant income progress since 2013. These gains even include households headed by high-school dropouts, lifted by very strong job growth since 2013 and the new cash subsidies under Obamacare.
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Average Annual Household Income Gains by Education |
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| 2009 – 2012 | 2013 – 2014 | |||||
| No Diploma | HS | College | No Diploma | HS | College | |
| Millennials | -0.6% | 1.1% | 4.2% | 4.4% | 3.0% | 5.1% |
| Gen X | -2.2% | -1.3% | -0.1% | 6.2% | 4.0% | 1.5% |
| Late Boomers | -4.8% | -1.7% | -0.6% | 9.5% | 0.0% | 0.4% |
Incomes do not explain everything. The incomes of white millennials have risen rather strongly throughout this entire period. Yet, they’ve responded to Trump’s and Sanders’s cases that political and economic elites have denied them their hard-earned gains. Maybe they’re angry that their parents lost much of their home equity, or maybe they’re turned off rather than reassured by Clinton’s dispassionate demeanor. To win them over, she will have offer a credible path to both maintain everyone’s recent income progress and preclude another housing collapse and joyless expansion.