In early September, the U. S. Census Bureau finally confirmed what I've suspected for some time now: The average consumer was starting to benefit from wage increases for the first time since the onset of the Great Recession that was triggered by the financial crisis in fall 2008. Specifically, an increase in U.S. incomes last year delivered the first significant raise for the typical family after nine years of stagnant and declining earnings, the result of sustained job growth finally lifting a broad swath of American households.
As was widely reported, the median household income rose 5.2%, or $2,798, to $56,516, from a year earlier after adjusting for inflation. The increase was the largest annual gain recorded since the yearly survey of incomes began in 1967, though it didn’t fully close the gap left by last decade’s recession. Median household incomes stood 1.6% shy of the 2007 level, before the last recession took its toll, and 2.4% below the all-time high reached in 1999.
This confirms my suspicions, because of several reports of strong consumer spending, particularly in automobile sales in the past two years, and in the increasing levels of consumer confidence that I've written about before. A confident consumer will buy a new car and eventually a new home, and as a group, they fuel 70% of our entire gross domestic product. Simply put, they are the biggest economic engine of all, and are a huge factor in the overall strength of the construction materials industry.
The Census Bureau report is drawn from an annual survey asking detailed questions about annual incomes, including wages, dividends, child support, and government benefits. The survey, collected in March with results released in September, is sent to about 95,000 households that are representative of the U.S. population.
Poorest see largest gains
The figures show how several years of robust employment growth, including 2.4 million people who gained full-time work last year, helped regain ground lost after an especially wrenching downturn, particularly for lower-income households. The largest increases in incomes last year were for the bottom one-fifth of all earners, which reflect rising state and local minimum wages. Among all full-time, year-round workers, women saw substantially larger earnings gains than men, posting an annual increase of 2.7%, compared with 1.5% for men. The increases narrowed the pay gap between women and men to the lowest level on record.
Longer hours, higher wages and lower inflation also have contributed to the improvement. Income gains were spread across nearly all age groups, household types, regions, and racial or ethnic groups. The only exception was households living outside metropolitan areas, which saw flat incomes with little or no growth. But even with these reported gains, the typical full-time male worker earned about $150 less last year than in 1998, after adjusting for inflation.
At the current pace, median household incomes could surpass their 2007 level next year, bringing a painful, lost decade to an end for wage earners. Also the official poverty rate in 2015 was 13.5%, down from 14.8% in 2014. That was still slightly higher than in 2008 and up from 11.3% in 2000. The poverty level was $24,257 for a family of four;more than 43.1 million Americans were living at or below this level last year.
Incomes have been much slower to recover from the recession than stocks, home values, and other measures of wealth or value; these measures reached a new record during the second quarter, according to another report from the Federal Reserve, but income growth is now also closing the gap created by the Great Recession. These gains can only bode well for continued growth in the construction industry in general, and in the concrete industry, in particular.