Everyone Facing Financial Decline Since 2019 (Patreon)

The chart above is shocking. Bottom 10% Median Household income fell 6.3% down to 35K.

TLDR

1. According to the Census Bureau, the median household income, adjusted for inflation, dropped to $74,580 in 2022, a decrease of $3,670 since 2019, impacting middle-class households significantly.
2. Despite an increase in wages to attract and retain employees in a tight labor market, real median earnings for full-time workers fell by $3,620 for men and $2,880 for women due to inflation outpacing earnings growth, further exacerbating the gender wage gap.
3. Although income inequality showed a decline in 2022, the lower-income group suffered more due to inflation; Americans in the bottom 10% of earners were 6.3% poorer compared to 2019, whereas the top 5% saw a 4.1% decline in their incomes.
4. The Covid relief measures, amounting to $6 trillion, introduced or expanded by Congress, temporarily boosted incomes in 2020 and 2021 but fueled a historic surge in inflation that significantly reduced real incomes in 2022.
5. Despite the decline in child poverty rates owing to the expanded Child Tax Credit, the Biden administration faces criticism for advocating further expansive social-welfare spending, which critics argue has contributed to the highest inflation in 40 years and overall reduced wealth for Americans.

https://www.wsj.com/articles/census-data-income-inflation-joe-biden-economy-social-welfare-spending-3897dbed

Mr. Biden is trying to avoid the real story, which is that the Census Bureau says median household income adjusted for inflation fell last year by $1,750 to $74,580. It is down $3,670 from 2019.* Households in the fourth income quintile—those making $94,000 to $153,000—lost $4,600 in 2022 and $6,700 since 2019. Middle-class Americans who think they’re losing ground are right.

The reason is that inflation has outpaced the earnings growth from work. Real median earnings for full-time workers last year fell $3,620 for men and $2,880 for women despite a tight labor market that had companies paying more to attract and keep workers. The female-to-male earnings gap declined to 16% from 18% in 2019, but mainly because inflation has eroded men’s wages more than women’s. Wages in industries with more female workers such as healthcare and hospitality rose faster than those with more male workers such as manufacturing. But neither men nor women kept pace with the cost of living.

By most statistical measures, income inequality also declined last year. Even when excluding capital gains, higher earners saw a bigger drop in real incomes than Americans at the lower end. One reason is the latter group includes many seniors whose Social Security checks are adjusted for inflation. Real incomes at every decile were lower and income inequality was greater than in 2019. Americans in the bottom 10% of earners were 6.3% poorer last year than in 2019 while those in the top 5% saw their incomes decline 4.1%. Inflation invariably punishes lower-income Americans more than the affluent.

These numbers don’t take into account most transfer payments that Congress enacted or expanded as part of its $6 trillion in Covid relief. These include $3,200 a year in stimulus payments per adult and $2,500 per child; a $3,600 per child tax credit whether or not you paid any taxes; larger health insurance, earned income and child-care tax credits; and more generous food stamps.

These provided temporary income boosts in 2020 and 2021, but at the cost of fueling the historic inflation surge that gutted real incomes. Thus after-tax median real income last year fell $6,220 as some, but not all, Covid transfer payments lapsed. Americans with college degrees last year saw the biggest after-tax real income decline ($9,860), perhaps because they benefited most from the expanded tax credits.

Democrats passed their $1.9 trillion Covid bill in March 2021 with the goal of hooking the middle class on bigger government. But the big political surprise is that Americans weren’t thrilled with the handouts. A Hill-HarrisX poll in July 2021 found that 60% of voters, including nearly half of Democrats, thought the child tax credit expansion was too expensive and no longer needed.

Yet there Mr. Biden was on Tuesday lashing Republicans in Congress for not extending the expanded the child tax credit.

“We cut child poverty by nearly half to record lows for all children in this nation largely by expanding the Child Tax Credit,” he declared. “The rise reported today in child poverty is no accident—it is the result of a deliberate policy choice congressional Republicans made to block help for families with children while advancing massive tax cuts for the wealthiest and largest corporations.”

The child poverty rate did jump to 12.4% from 5.2% in 2021, but that is roughly the same as before the pandemic. The expiration of the expanded child credit accounted for about a quarter of the increase in the child poverty rate, though its impact was offset by an increase last year in food stamps, free school lunches and housing subsidies. Most of the increase in child poverty owed to the end of stimulus payments, inflation and higher taxes.

Mr. Biden has apparently forgotten that Republicans didn’t control either branch of Congress in 2021 or 2022. West Virginia Democrat Joe Manchin blocked an extension of the expanded child tax credit because it was estimated to cost $1.2 trillion over a decade.

And which tax cuts for the wealthy and corporations is he talking about? Maybe he’s confused and is referring to the Inflation Reduction Act’s green-energy corporate welfare and subsidies for electric vehicles and solar panels that largely benefit the affluent.

The annual census data tell the real story of Bidenomics: A gusher of unprecedented and unnecessary social-welfare spending helped to produce the highest inflation in 40 years that has made Americans poorer. The last thing Congress should do is heed Mr. Biden’s demand to do it all again.

Shout out to Sanjay for sharing the article with me.