Booming economy lifts all boats

New Census figures show median family income is highest on record, while poverty rate nears all-time low.

The US economy has now been so good for so long that its benefits are reaching virtually all levels of the American population.

It's not news that dotcom billionaires are minting money. But just-released Census figures show that the median US family is doing better than ever before - and that the poverty rate is nearing its lowest level in recorded history.

That means the US may be in a golden age of extraordinarily wide and deep economic gains. It also means that, in political terms, Vice President Al Gore has powerful evidence of continuing good times to boast about on the campaign trail - at just the time the presidential race turns the corner and heads for the homestretch.

"I would think Al Gore is dancing a jig," says Sheldon Danziger, a professor of social work and public policy at the University of Michigan.

Median household income has now broken the $40,000 barrier, according to Census Bureau figures released September 26. After adjusting for inflation, median household income increased 2.7 percent from 1998 to 1999, to $40,800.

This figure is the highest the Census has recorded since it first starting measuring middle family income in 1967. And that's not all, say Census officials.

"For the first time, households in the United States have sustained five consecutive annual statistically significant increases in their real median income," says Daniel Weinberg, chief of the Housing and Household Economic Statistics Division at the Census Bureau.

In addition, poverty fell for the third year running. Some 11.8 percent of the US population now lives below the poverty line - the smallest such percentage since 1979.

"This year's 0.9 percent drop is the largest we've seen in a long time," says Mr. Danziger. "If things continue the way they are, with year 2000 figures, the Clinton administration will deliver us back to the poverty low point of 1973."

Furthermore, the Census figures did not show an increase in income inequality between the top layer of earners and the bottom.

If anything, the numbers showed a slight narrowing of the gap, according to Census officials. "There may well be an increase in the bottom end more than the top," says Dr. Weinberg.

Why the decline in poverty? One reason may be something that is arguably the largest social policy change of the Clinton era: welfare reform.

The spur of losing benefits has forced many heads of household out into the workplace, where they get not just a salary but also a relatively generous Earned Income Tax Credit from the federal government.

"It's not surprising that those leaving welfare are better off," says Lisa Oliphant, entitlements policy director at the Cato Institute in Washington.

When welfare reform passed in 1996, many of its critics predicted that poverty rates would in fact rise, particularly among children. The Census figures hold the contrary - that child poverty, measured as 16.9 percent in 1999, is now the lowest it has been in 20 years.

"This is tremendously good news," says Isabelle Sawhill, a senior fellow at the Brookings Institution. "It shows a rising tide is finally lifting some of the boats at the bottom."

Changing demographics have been one factor behind the easing in child poverty, says Ms. Sawhill. In the 1980s, there was a large rise in single-parent families, which are more likely to be poor.

Now the number of children born out of wedlock has leveled off, and teen-pregnancy rates are declining.

"So it's not just the economy. It's also demographics going in the right direction," says Sawhill.

This does not mean that child poverty is no longer a concern. The Census figures reveal that children under 6 remain particularly vulnerable to living in poor households.

Young children living with single mothers had a poverty rate of 50.3 percent. By way of contrast, children under 6 who lived in married-couple families had a poverty rate of only nine percent.

While new Census figures may not show top earners pulling further away from the bottom layers of the US economy, they already have a pretty good lead.

Statistics about the US economy continue to reveal a wide disparity between rich and poor, says Larry Mishel, an economist at the Economic Policy Institute.

"We find a stubborn inequality that persists at the highest levels in our country," says Mr. Mishel. "One expects it to decline in recoveries."

Measured by region, median income was highest in the Midwest and the West, at $42,700.

It was $42,000 in the Northeast, and $37,400 in the South.

"This is all good news. It's what you would expect with a very tight labor market," says Frank Levy, a professor of urban economics at the Massachusetts Institute of Technology in Cambridge.

(c) Copyright 2000. The Christian Science Publishing Society

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