Income Gains Spread to Lower Rungs of Wage Ladder
Recent economic reports show that median household incomes are beginning to increase at a meaningful pace, a trend with both obvious and subtle benefits for workers in Oregon and nationwide.
Most of the increase appears to be coming from increased earnings, not investment income. Some of that is because of increased employment, but workers also are getting raises. Obviously, bigger paychecks put more money in workers’ hands and ripple through the economy by increasing purchasing power.
Of particular significance in Oregon, household incomes here are increasing faster than the national average. Different reports offer slightly different numbers, but according to the American Community Survey, the Oregon median increased 6% in 2015 compared with 2014. Nationally, the increase was 3.8%. Oregon also had one of the biggest increases in per capita income in 2015, as we reported in August. You may view the article here.
The subtle, but equally important, positive benefits from the income gains can be seen when you look at wage data from different income strata. Concern about income inequality has played a major role in political discussions in recent years. The market is beginning to work out some of the inequities. Since 2012, the strongest wage gains – in Oregon and nationally – have been at the bottom of the income ladder. Some might be tempted to attribute the gains to minimum-wage increases, but very few cities or states made significant changes in minimum wages before the 2015 income data was collected. Mandated changes are at most only a minor contributor to the rise in incomes.
As economist Josh Lehner explained on the Oregon Office of Economic Analysis blog, higher-income households have more sources of income, including stocks and real estate. Since those assets recovered from the recession more rapidly than wages, those closer to the top of the income ladder saw their incomes increase sooner than those toward the bottom did. But after a steady climb from its bottom in 2009 until early 2015, stock indices have been relatively flat for the past year and a half while wages have been increasing. Click here to view the report.
Sometimes it doesn’t take big government initiatives to spread the wealth. It just requires patience.