Does Good Economic News Undermine Political Messages By Trump, Clinton?
STEVE INSKEEP, HOST:
Let's ask just how much we need to update our view of the struggling middle class. The middle class is getting plenty of attention in the presidential campaign, as Donald Trump paints a grim picture.
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DONALD TRUMP: Household incomes are down more than 4,000 since the year 2000. That's 16 years ago.
INSKEEP: And Hillary Clinton has been promising to help.
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HILLARY CLINTON: I've made very clear I'm the only candidate who ran in either the Democratic or the Republican primary who said from the very beginning I will not raise taxes on the middle class. The middle class has to catch up to where they were before the Great Recession.
INSKEEP: Yet the latest news is that people in the middle have been getting a raise. The Census Bureau found people's economic positions have improved by more than 5 percent in 2015. That was the best one year jump in many, many years. So what's that mean? Well, we're going to ask that of Jared Bernstein, who is of the Center on Budget and Policy Priorities, a liberal economist, former adviser for President Obama. Welcome to the program, Jared.
JARED BERNSTEIN: Thanks very much.
INSKEEP: Also, conservative economist Peter Morici, who is a professor at the University of Maryland. Welcome back to you.
PETER MORICI: Nice to be with you.
INSKEEP: OK, so Jared, you go first. Is this a big deal? Five-percent raise sounds pretty good.
BERNSTEIN: It is a big deal. The median household income jumped, as you suggested, more than it ever has in the history of this series. It starts back in the 1960s. And yes, it made up a bunch of the losses that these families had experienced over the Great Recession. But as was suggested in some of those comments, they had a lot of losses to make up. So middle-class families are digging out of a deep hole. Now they're basically back to where they were in 2007, but 2007 is about where they were in 2000 as well. So the narrative of stagnant median incomes for households still has some bearing. However, we have to acknowledge this improvement and link it to the improving job market.
INSKEEP: Peter Morici, do you acknowledge an improvement here?
MORICI: Well, there's an improvement, although they haven't really caught up to where they were before the Recession or to, say, in 1999. One of the problems we've had is over successive cycles in this century, they have trended down. Now, if we get a few more good years like this, then they'll be more than caught up and actually making some progress. The real question is are we now transitioning into a job market where people start to really get better wages? And I don't mean for computer programmers that are - already make $150,000 a year or bankers...
INSKEEP: People near the top have been doing great, yeah.
BERNSTEIN: So that's exactly right. And in fact, what these results show is that that's what's happening. We were talking about the median household, the one right in the middle of the income scale...
INSKEEP: Fifty-some thousand, right.
BERNSTEIN: Right, about 57K. If you actually look at the income gains for the lower-income households, they did better, I think in the 20th percentile. So low-income households they grew between 6 and 8 percent. And that's what happens when the job market really tightens up. But we have to sustain that tightening if we want these folks to continue getting ahead.
INSKEEP: Peter, I figure that hand gesture means you want to get in. Go ahead.
MORICI: These are averages, and we have to remember that even...
BERNSTEIN: Medians actually, but OK.
MORICI: You know, in the large cities on the two coasts, people are doing very well. People in information technology, software, finance and so forth. People in the rural areas, old industrial areas, the resource economy, they're not. That's one of the reasons that Trump, you know, got the support that he did in the primaries. And the real question here is what do we do to create an economy where they can succeed. You know, that's a question that's important in this political campaign. It is only talked about on both sides by generalities, but there are real skills issues here. There are real problems of mobility and access that we have to address.
BERNSTEIN: So I think that's right. And it's an important point in terms of the geographical dispersion of these findings. But I will say this, if there was ever an economic report - and I'm going to get political for a second...
INSKEEP: Please, go right ahead.
BERNSTEIN: If there was ever - this is an election...
INSKEEP: It's an election year.
BERNSTEIN: If there was ever an economic report that said don't change horses and go with somebody who has a pretty radically different idea about how the economy ought to progress, this is that report because while Peter's - what Peter says is true about folks who've been left behind - and I'll give you a good example of that, the median guy who works full time full year, he got a boost of 1.5 percent. That's actually a significant increase. But the median male is earning about what he was in the 1970s. So that's been a long period...
BERNSTEIN: ...Of stagnation. So that's real, but things are moving in the right direction and at such a clip that they will reach down and lift those who've been left behind. But we've got to stay on the path that we're on in that regard.
MORICI: I don't know that I agree. The averages look good. Globalization has been very helpful to the people I described. But if we continue on the president's policies, for example, TPP, I don't know that that makes a lot of sense...
INSKEEP: The Trans-Pacific Partnership...
INSKEEP: ...The trade deal.
MORICI: If we look at what I call the trial run, the Korea-U.S. Free Trade agreement cost us 100,000 jobs. It hit those kinds of folks very hard. It seems to me that the prosperity we're having is bifurcated. It's great for 60, 70 percent of the population. It's terrible for 30.
BERNSTEIN: So no question about that over the longer term. But again, in these numbers that kind of disparity came down. In other words, gains were stronger at the bottom than they were at the top. And I should add both candidates are against this Trans-Pacific Partnership.
INSKEEP: But let's be real, let's be real here. Even with this raise for people at the middle or the raise for people at the bottom, people at the top have been doing spectacularly well...
MORICI: Oh, great.
BERNSTEIN: ...No question.
INSKEEP: ...So much better than everybody else...
MORICI: You don't know how rich Jared is.
INSKEEP: (Laughter) It's Jared - I didn't know that Jared was doing this. But you're not doing very well at the University of Maryland?
MORICI: He's got suitcases of money in his car trunk.
INSKEEP: And the University of Maryland is not doing so well, is that what you're saying?
MORICI: Absolutely, absolutely.
INSKEEP: OK, fine, no, no, yeah, go on, go on.
BERNSTEIN: You're unquestionably right. And that inequality is structurally embedded into our economy. No one-year results are going to turn that around. What will help is continuing this very tight job market because that gives low and middle-income workers the bargaining power they otherwise lack.
INSKEEP: Peter Morici.
MORICI: People know that we're really going to have had that come out the way we think. If we start having a tight job market, we're going to start getting more immigration. You know lately people have been leaving. They're going to start coming back.
There are an awful lot of native born Americans in rural areas that are not profiting from this prosperity, and they're not making the transition. We need to start addressing them, people in old industrial areas. We need to start addressing them.
INSKEEP: And they're suspicious about immigration, I guess we should mention.
MORICI: Well, it's linked to immigration but I don't want to sound like, you know, I'm clobbering immigration. What I'm saying is we tend to use immigrants to solve these problems in the labor force as opposed to solving the structural...
BERNSTEIN: OK, so all I'll say is...
INSKEEP: Fifteen seconds, Jared.
BERNSTEIN: All I'll say is that there is a lot of academic research, high-quality stuff, that suggests that in fact native born workers are not hurt by immigrant competition in large cases because they're not doing the same kinds of jobs.
MORICI: Because, well, they're not in the same places and we also have created a lot of disincentives for them to move into those jobs...
BERNSTEIN: So I think that...
INSKEEP: Peter, Peter you get the last word, go ahead.
MORICI: We've created a lot of disincentives for them then to move into those jobs. It's very difficult for them to move to cities. There's a lot of immobility and structural issues. And, frankly, the benefit structure is encouraging them to stay put.
INSKEEP: Gentlemen, it's always a pleasure. Thanks very much.
MORICI: Thank you.
INSKEEP: Peter Morici is with the University of Maryland, a conservative economist, and Jared Bernstein is with the Center on Budget and Policy Priorities, a former adviser to President Obama. And we've been listening to them both give a little debate here.
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