Here’s Why Donald Trump Is in the White House
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Here’s Why Donald Trump Is in the White House

New Data Show Falling Incomes Through the Obama Years

David Cay Johnston

American incomes fell in 2016, which helps explain why 60 million voters chose Donald Trump in the presidential election. Things have grown worse since then for workers at the bottom of the wage ladder.

The average income on 2016 tax returns shows that people effectively lost one week of income compared to 2015. The average was $67,755, down almost $1,300 from the year before when adjusted for inflation, my analysis of new IRS Table 1 preliminary data shows.

Wages slipped, too. The number of households with one or more workers was flat at a little more than 125 million. But the average wage slipped by $336 to $59,036, the equivalent of working two days for free.

Workers’ incomes fell even as the stock market recovered from the 2008 crash and incomes at the top of the income ladder soared. The regained prosperity of the Obama era didn’t trickle down to workers.

That’s due in part to the long-standing impasse between the former president and the Republican-controlled Congress. The Republicans refused to invest in making our economy more efficient today and more prosperous in the future. More jobs would have been created had Congress started to repair and improve our roads, bridges, and dams and those good paying jobs would have increased demand for goods and services that create employment for others.

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Even now, the Trump infrastructure notions being discussed, but not so far acted upon, would only stop our decline toward Third World infrastructure while handing out huge new tax benefits to the richest among us.

The new income data lend support to the theory that Americans tend to vote their pocketbooks, as the eminent political scientist V. O. Key proposed a half-century ago.

Conditions at the bottom of the job market are deteriorating, an innovative new measure from the Center for American Progress shows. The Center declared March 1 “Minimum Wage Workers’ Equal Pay Day”—which marks how many extra days into a new year a minimum-wage worker must work just to earn the same amount she did in 2009.

Inflation has eroded the value of the minimum wage since it was last increased in 2009 to $7.25 an hour. Inflation means that that this year a full-time minimum wage worker will be paid only 10 months for a full year of work when compared to 2009.

Fulltime work at the minimum wage comes to a bit more than $15,000. “A full-time minimum-wage earner will lose nearly $2,370 in purchasing power this year,” compared to 2009, the center observed.

That reduction in purchasing power is 47 times the amount of the offsetting Trump tax cut, the center’s Rachel West noted in her report.

Use 1968 for comparison and the plight of minimum wage workers is much worse. Fully adjusted for inflation the 1968 minimum wage worker would earn close to $24,000 this year and Minimum Wage Day would fall about May 10.

That loss of purchasing power for minimum age workers is even more shocking when you consider how much wealthier America is today than in 1968, when Lyndon Johnson was president, newspapers referred to Red China and the Beatles formed Apple, their record label. Today the American economy generates more than twice as much per person compared to 1968.

March 2, 2018