Regular readers of R World know that I've been arguing that first half of 2010s would bring unemployment to healthy levels and this second half will bring wage growth to healthy levels. It's hard for wages to rise when business can hire from the ranks of the unemployed and those ranks have finally thinned. Today the Census Bureau reported this:
SEPT. 13, 2016 — The U.S. Census Bureau announced today that real median household income increased by 5.2 percent between 2014 and 2015 while the official poverty rate decreased 1.2 percentage points. At the same time, the percentage of people without health insurance coverage decreased.
Median household income in the United States in 2015 was $56,516, an increase in real terms of 5.2 percent from the 2014 median income of $53,718. This is the first annual increase in median household income since 2007, the year before the most recent recession.
To put that in perspective, last century wages grew 2.1% a year, which made incomes 8X higher by century's end. How big of a deal is 5.2% wage growth? (This is an increase in real terms, so it's inflation adjusted.)
First of all, 5.2% is the "
biggest wage increase since the Census started recording this data nearly 50 years ago."
Secondly, if wages kept growing at 5.2% a year through the end of this century, median wage would be $4.2 million. That's pretty cool. (And unlikely. Still, I don't think that $1 or $2 million inflation adjusted is unlikely though. Not that I'll be around to confirm my suspicions.)
Some people worry about the level of debt we're leaving future generations. That's nonsense. The only worry is whether we're leaving them with healthy or sickly wage growth.
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