Census Reports Broad U.S. Gains in Income

Americans of virtually all stripes--rich and poor, in the West and the East, Latino and white--enjoyed substantial income gains in 1998 as the nation’s long expansion lifted ordinary households to new heights of prosperity, the Census Bureau said Thursday.

The inflation-adjusted earnings of households at the center of the nation’s economic pile rose $1,304, or 3.5%, to $38,885 last year, the bureau said in its most comprehensive annual look at the well-being of Americans. That was its fourth consecutive yearly gain and its sharpest in more than a decade--enough to surpass the previous peak reached at the end of the 1980s boom.

More striking than the size of the income gain was its wide distribution. Virtually every type of household on which the government keeps tabs in every region of the country managed to hit new highs or maintain a previously achieved one, officials said.

In this, the new Census figures appear to belie the widely held perception that the nation’s economic pie is being divided in increasingly unequal shares, with a new generation of entrepreneurs claiming huge wedges while everyone else gets slivers.

The figures seemed to carry particularly good news for those traditionally excluded from the nation’s economic ascent. The median income of Latino households surged 4.8%--the most of any category defined by the Census Bureau--to $28,300. Although that still left them well behind their white, non-Latino counterparts, it was the highest income figure that the bureau has recorded for Latino households in the two decades it has kept separate records. Meanwhile, African American households maintained their record median income of $25,400.

Such wide sharing of the benefits of growth helped push the fraction of Americans in poverty down by half a percentage point to 12.7%, its lowest level since 1979. There were 1.1 million fewer people in poverty in 1998 than in 1997, according to the bureau. The poverty threshold for a family of four last year was $16,600.

“This is what growth in America is supposed to be all about, lifting all bottoms,” said Robert Solow, a Nobel Prize-winning economist at the Massachusetts Institute of Technology.

Both President Clinton and Republican leaders saw political advantage in the findings. Clinton, trumpeting the numbers as “another economic milestone” for administration policies, declared that “these gains finally are being shared with all groups in America, from the wealthiest to the poorest.”

House Majority Leader Dick Armey (R-Texas), by contrast, said: “The credit goes to the men and women who are out there creating the innovations and new technologies that make us all better off.”

Although the new figures are welcome news, there still are some signs of lurking trouble, hints that when the economy turns back down, much of the progress typical Americans have made could be lost.

For starters, it took a full decade for median household income to surpass the level reached during the last economic expansion of the 1980s, a substantially longer period than in most other booms of the post-World War II period.

Median income has grown an average of only 0.4% a year during the 1990s, according to Jared Bernstein, an economist with the labor-backed Economic Policy Institute. That is about the same as during the 1980s but slower than during the 1970s (1.0%), the 1960s (3.4%) and the 1950s (2.6%).

“These are good results,” Bernstein said of the latest figures, “but they’re coming pretty late in the game.”

Although rising wages and improving jobs are widely credited with driving incomes higher, some analysts also point to a more pedestrian and potentially transitory cause: that more Americans are working, and working longer hours.

In addition, there is the politically sensitive matter of income inequality.

Census officials said that for the fifth consecutive year, the spread between what households at the bottom and top made did not widen. Instead, the shares of the nation’s income going to various income groups remained essentially static.

But the officials acknowledged that their measurements, which cut off income in excess of $1 million in a single household, did not fully measure what is occurring at the very top of the economic pile, where growth in income and wealth is thought to be greatest. And some analysts said they are troubled by the fact that income inequality has not narrowed after such a long expansion.

“You would have thought that after such a long period of continuous prosperity we could have given the bottom a relative boost,” said Solow.

Bernstein added: “If this is the best it gets, you have to worry what happens when it is not as good again some day.”

Although the national numbers for household income and poverty were almost uniformly positive, much of the improvement was concentrated in just a few regions of the country, leaving others--especially California and the West--with a much more mixed picture.

For example, recent declines in poverty have been heavily concentrated in the South, long the region with the nation’s greatest poverty. The South’s poverty rate dropped from 14.6% in 1997 to a record low 13.7% in 1998. Fully 760,000 of the 1.1 million people to leave poverty during the year were in the South.

By contrast, the West’s poverty rate remained unchanged at 14%, the highest in the nation in 1998. California’s average rate for the last three years was 16.3%, among the 10 highest in the nation.

Analysts said that the West’s new status as a high-poverty region stemmed at least partly from recent immigration. Nearly one in four western households was headed by immigrants and the poverty rate among immigrant households nationally was about half again as great as among those headed by native-born Americans.

The new Census numbers offered little support for the most dire predictions that the 1996 welfare reform law would greatly aggravate poverty. But they did suggest that the welfare law’s strict work requirements have done little to boost the household incomes of those affected by the changes.

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GORE ON THE ATTACK: Vice President Al Gore used the decline in child poverty to assail his rival, Bill Bradley. A28