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Why the typical worker is struggling to share U.S. prosperity

The latest data from the U.S. Census Bureau shows a pattern of uneven progress. While the poverty and unemployment rates have fallen, prosperity is no longer widely shared as the economy grows. Sheldon Danziger of the Russell Sage Foundation talks with Judy Woodruff about why financial progress for the typical American family has stalled for 15 years.

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    The U.S. Census Bureau has been releasing a lot of new data this week on income, poverty and economic growth. Much of it, unfortunately, confirms again what many Americans already know and deal with on a day-to-day basis. That is that real incomes are not moving up appreciably.

    The country's median household income in 2013 was $51,939, up $180 from the year before, but still below where it was prior to the great recession. There was some good news. The official poverty rate fell slightly to 14.5 percent. And it was the largest drop in child poverty in a single year since the 1960s. The growth in family household incomes was also better than for households with singles or roommates.

    Sheldon Danziger is the president of the Russell Sage Foundation, which closely studies these issues.

    And, Sheldon Danziger, welcome to the NewsHour.

    Let me start by asking you, as we said, some good news along with the bad news. Why don't you explain the good news first?

  • SHELDON DANZIGER, Russell Sage Foundation:

    Well, the good news is that the economy is recovering slowly.

    As you mentioned, poverty has declined somewhat. There is an increase in the number of people working full-time full-year. And, clearly, those are good signs the unemployment rate has been falling.

    But, again, the bad news is, prosperity is no longer widely shared when the economy grows. And so the typical family, whether we're talking about earnings of full-time workers or the household incomes of families are no better than they were before the recession, and it's been almost 15 years with not much progress for the middle- and lower-income groups.


    And how do you explain that, looking at this data?


    Well, the economy for many years has been one in which globalization, technological changes, changes in employer practices, changes in finance have meant that some people in the economy, particularly elites and professionals, and particularly finance, have done very well, but the typical worker struggles to get a wage increase that matches inflation.


    And so when we see that wages are just keeping up with inflation, that there's not earnings growth, what does that mean? And one of the things you said to us was that you said people from the middle on down are those who are doing worse.


    That's right.

    And so even if — in the census data, if one looks at men working full-time full-year and adjusted for inflation, incomes in 2013 are not much better off than they were 15 or even 25 years ago. The — many workers took wage cuts and furloughs during the recession. And the good news is that some of those wage cuts have been restored.

    And most people — and there are not many people on furloughs anymore, but wage increases just are not very common. And the growth is often captured at the very top of the income distribution. And that's where most of the gains since the recession have gone.


    When you look at how uneven this economic recovery is, is there an explanation for that?


    Well, inequality has been growing in the United States since the late 1970s. The great recession exacerbated the situation.

    If you sort of think of the typical family, the typical family holds most of its wealth in terms of its housing equity, and we know that housing prices, while they are up from the lows of the recession, are still below the pre-recession level. Higher-income families, particularly the economic elite, have housing wealth, but they also have a lot of financial wealth.

    And the stock market is reaching all-time highs. And so if you have wage constancy for the middle on down, and you have stock gains and high-income gains and bonuses at the top, you get rising inequality in a period of economic growth.


    Another thing I was struck by is that you told us, you said, we're living in an economy where a rising tide no longer lifts all boats.


    That's correct.

    And in the great American boom, which lasted from the end of World War II to the early '70s, everyone, whether it was the factory worker, the factory manager or the corporation owner, did very well. And real income, that is incomes adjusted for inflation, across the distribution rose rapidly and pretty much in unison.

    That was a period of rapidly declining poverty and slightly falling inequality. And, unfortunately, we now live in a world in which the global economy and the U.S. economy are very different.


    Sheldon Danziger, president of the Russell Sage Foundation, we thank you for joining us.


    Thank you.

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