It seems like more than a year has passed since 2020 began. COVID has presented an unexpected challenge to us all. Businesses are struggling in unprecedented numbers and many employees’ jobs hang in the balance.
The COVID pandemic health crisis has unquestionably confronted the country with a dramatic emergency. In the coming year, one of the President and Congress’s primary responsibilities will be helping bring back the economy to where it once was before the disease struck.
The 2019 results set a high bar. Over four million people were lifted from poverty. [i] The poverty rate had decreased to 10.5% that year. Since 2014 it had fallen from 14.8%, a drop of 29%. All racial groups and Hispanics saw improvements, with the poverty rate reaching the lowest rate since the Federal government first calculated estimates sixty years ago.
An increase in the total number of workers, especially among women, drove income improvements. Over 2.2 million more people worked at some point in 2019 compared with the year before. Of these, 1.2 million more people worked full-time year-round.
Median household income in 2019 increased by 6.8% from 2018, according to the Census Bureau. The median household income was $68,703, reflecting one of the most robust annual increases ever after adjusting for inflation.
Americans shared broadly in these income gains. Real median incomes of White, Black, Asian, and Hispanic households all increased from 2018, with the variation in changes for each population group not statistically significant. The 2019 real median earnings of men and women who worked full-time, year-round, increased by 2.1% and 3.0%, respectively.
The poverty reductions came without any increase in those government redistribution programs generally advocated by progressives. Inconveniently for their redistribution prescriptions, as incomes grew, income inequality fell for the second consecutive year. Between 2017 and 2019, the Gini index of income inequality fell from 0.489 to 0.484. Over the same two-year period, the share of income held by the top 20 percent fell by 0.4 percentage points.
This income distribution progress also occurred while leftist advocacy groups lamented that the federal minimum wage had stayed constant for a decade.[ii] Individual states divide on whether to increase the minimum wage over the Federal rate. Twenty-one states remain at the Federal rate, while 29 have chosen to increase it. While it is not possible to break out the data between the “Federal” states and those with higher minimum wage rates, the differences in median household income changes among all regions were not statistically significant. Arguably, the creation of more jobs produces broad benefits.
The Trump years’ strong economic performance came with little media fanfare. The data was also unquestionably overshadowed by the COVID pandemic’s severe consequences. But the news also did not fit into the media’s preferred narrative regarding the Trump Administration.
Nevertheless, the successes of conservative economic policies deserve to be the future yardstick by which the Biden economy and its COVID recovery should be judged.