By Dan Calabrese
This is consistent with what we told you last week about wage growth picking up with job growth. When labor is in high demand and short supply, as is the case right now, it’s only a matter of time before wages rise. And once that starts, you’ll see what Ronald Reagan said about a growing economy proven true: A rising tide lifts all boats.
But every time free-market policies are proposed, the left screams that it will “favor the rich” and screw the poor, which makes no sense if you understand anything about economics. People get wealthy via capital formation, not by taking money from people who don’t have any in the first place. But in order to understand that, you have to want to understand it rather than simply go around spewing political talking points. The left has no such interest, which is why they’ve continued to scream that the Trump tax cuts are somehow a stab in the back to the poor and the middle class.
And that means this news will complicate their lives considerably:
Remember those warnings of an economic implosion if Donald Trump was elected President? Well, instead, the economy has broken out of the 2% growth doldrums from 2009-2016, and Barack Obama is suddenly elbowing his way back into the public debate to claim credit. Yet the U.S. Census Bureau’s annual report on U.S. income released Wednesday underscores how the Obama policies of redistribution retarded growth for so many years.
Real median household incomes ticked up 1.8% to $61,372 between 2016 and 2017 while the poverty rate dropped 0.4 percentage points to 12.3%, according to the Census Bureau. Income gains were strongest among Hispanic households (3.7%). The poverty rates for blacks and Hispanics fell to 21.2% and 18.3%, respectively, the lowest since at least 1972.
Incomes increased across the distribution range with the share of people earning less than $15,000 declining 0.3 percentage points to 10.7%, the lowest level since 2007. The proportion of households earning more than $150,000 increased by 0.7 percentage points to 14.7%.
Surging investment earnings have driven up incomes at higher incomes. But at lower levels the income growth appears due to more people working more. While the number of people with employment earnings rose 1.7 million last year, the number working full-time and year-round grew 2.4 million. This lifted nearly one million people out of poverty in 2017.
But you want to hear the best news? The tax cuts didn’t pass until the final days of 2017, and didn’t fully take effect until February 2018. The wage growth we saw in August aren’t even counted in this good economic news for 2017, and that means the similar numbers for this year will likely show even more improvement for those in lower income levels.
Cutting individual tax rates put more money in the pockets of individuals, but liberals screamed that it was “crumbs.” Cutting the corporate tax rate gave businesses more money to reinvest in hiring, expansion, equipment purchases, product development or marketing, but Elizabeth Warren complains that they’re just using it for stock buybacks – not that there’s anything wrong with stock buybacks because the bought-out investors will turn around an invest in the growth of other companies.
Either way, this is how capital is formed and how opportunity is created for people to improve their lives. It is not done via government spending or wealth redistribution. It’s done by productivity, which is unleashed when capital once usurped by government is freed up to circulate in the productive private sector.
Chances are, if you read this site, you already know all this. Some of those lower-income folks who’ve traditionally trusted Democrats and their media friends are getting quite a pleasant surprise, though.
Dan writes Christian spiritual warfare novels and does all kinds of other weird things too. Follow all his activity by liking him on Facebook!