Would the New York Times Have Written a Piece at the End of 2019 Telling Us Moderate Income Families are Struggling?

May 14, 2024

I ask because it ran that piece today and one of the major factoids cited was that wealth for the bottom half of the population is below its level before the Fed began raising interest rates. This is true, wealth for the bottom half of the population is below its level in the fourth quarter of 2022.

But wealth for the bottom half of the population grew substantially in 2020 and 2021, due to the pandemic payments from the government, and the fact that consumption spending on many items was limited by the pandemic. The drop highlighted in this piece, from $3.74 trillion in the fourth quarter of 2022 to $3.66 trillion (both adjusted for inflation) in the fourth quarter of last year is trivial compared to the rise from the last quarter before the pandemic.

In the fourth quarter of 2019, the Fed put wealth for the bottom half of the population at just $1.95 trillion. This means that the wealth of the bottom half of the population in the most recent data is nearly 90 percent higher, adjusted for inflation, than it was just before the pandemic.

This raises the question as to why the NYT would run a major piece, by two of its top economic reporters (both of whom are very good reporters), telling us that low- and moderate-income people are suffering now? After all, if they are suffering today, surely they were suffering much more just before the pandemic when their wealth was far lower.

This point also holds true if we look at homeownership, which the piece tells us is getting increasingly difficult for moderate-income families. The homeownership rate for families below the median income stood at 52.5 percent in the first quarter of 2024, up from 51.4 percent in the fourth quarter of 2019.

I have long argued that wealth is a less important measure than income, especially when it comes to the poor since they never have very much. To my view, it is far more important that we have good social welfare programs that ensure access to healthcare, decent housing, good schools, and retirement income.

On that score, things look reasonably good. The Biden administration’s expansion of subsidies in the Affordable Care Act has helped extend health insurance coverage. And Biden’s income-driven student debt repayment plan, coupled with tens of billions of dollars of debt forgiveness, have eased the burden on tens of millions of low-and moderate-income debtors.

If we look at income for low-and moderate-income families, it is likely a pretty good picture right now. We have just tied the 27-month streak of below 4.0 percent unemployment that we saw in the 1960s boom. As the NYT piece notes, low unemployment is especially important for low-income households, since these are the people who disproportionately lose their jobs when the unemployment rate rises.

Also, we have seen an extraordinary rise in the real wages of workers at the bottom of the wage distribution. The tight labor market in the recovery has given these workers far more bargaining power. They have taken advantage of this situation to demand higher pay or to move to jobs that will give them higher pay.

There are two points to be made here. First, in the United States we always have tens of millions of families who are struggling to be get by, or in many cases not getting by. This is a horrible situation which should be a major focus of national policy. The current situation is not different in that respect.

The second is that by most measures, the bottom half of the population looks to be doing better now than at most points in the last half-century. This raises the question of why the NYT felt the need to tell us that they are doing poorly today?

There is no doubt that high interest rates hurt many of these families who need to borrow, but that does not change the overall picture that things look relatively good for this group. So why are we constantly hearing about the negative and not about the tens of millions of people who have moved into higher paying jobs, or previously unemployed people who were able to find jobs in a strong labor market? Surely the NYT could assign some reporters to that beat.


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