Recent Census Bureau data tells us that the "economic boom" that just ended never happened for most American families!
In 2000 at the end of the previous economic expansion, the median American family made about $61,000, according to the Census Bureau’s inflation-adjusted numbers.
In 2007, in what appears to be the final year of the most recent expansion, the median family, amazingly, made less — about $60,500.
David Leonhardt, a New York Times economics columnist, reports:
This has never happened before, at least not for as long as the government has been keeping records. In every other expansion since World War II, the buying power of most American families grew while the economy did. You can think of this as the most basic test of an economy’s health: does it produce ever-rising living standards for its citizens?
In the second half of the 20th century, the United States passed the test in a way that arguably no other country ever has. It became, as the cliché goes, the richest country on earth. Now, though, most families aren’t getting any richer.
More than anything else — more than even the war in Iraq — the stagnation of the great American middle-class machine explains the glum national mood today. As part of a poll that will be released Wednesday, the Pew Research Center asked people how they had done over the last five years. During that time, remember, the overall economy grew every year, often at a good pace.
Yet most respondents said they had either been stuck in place or fallen backward. Pew says this is the most downbeat short-term assessment of personal progress in almost a half century of polling.
Leonhardt suggests that President Bush's economic policies are not responsible for the failure of family income to grow because these are long term trends.
Leonhardt is right that these are long term trends, dating back to the Reagan administration when real incomes began to fall. But he is wrong when he suggests that economic policy doesn't make a difference.
Bush's hyper supply side model of tax cuts for the wealthiest Americans, opposition to increasing the minimum wage, support for trade bills that promote capital's interest and ignore labor and environmental protections, and failure to support reforms facilitating union organization have all contributed to these trends.
While real wages and family income have declined in the United States they have increased in several European countries that have not embraced the hyper market model of deregulation, financial liberalization and privatization that has contributed to driving down the wages of hourly non supervisory workers in the U.S.
The Republican Presidential nominee, John McCain, has endorsed these failed policies including the upper income tax cuts which he originally opposed as fiscally irresponsible.
As the November election come into focus and Republican operatives raise wedge issues to divert the electorate's attention, the Democratic nominee will need to focus on the economy like a laser beam!
"It's the economy stupid!" And economic policy matters!