Despite the growth of the overall economy, the typical American household saw its income decline in 1993, and more than a million Americans fell into poverty, according to figures made public today by the Census Bureau.
The numbers show the persistence, and perhaps even the quickening, of one of the most worrisome trends in the American economy, the long-term growth in inequality.
The numbers may help explain the voter discontent that threatens to turn next month's elections into a nationwide rebellion, despite an expanding economy and relative international peace. While voters have voiced concern about everything from declining moral values to rising immigration, at least some of their anger may have its origins in a familiar place: the pinched pocket.
"Even though the economy looks good on the surface, most Americans are not yet seeing a substantial change in their fortunes," said Robert B. Reich, the Labor Secretary. "There's a lot of resentfulness out there, a lot of frustration, and a great deal of anxiety."
Mr. Reich stressed that the trend toward inequality had been apparent for the better part of two decades and defended the Administration's long-term strategy for fighting it. But he made no effort to hide his alarm. "America is in danger of splitting into a two-tiered society," he said. "This is not anyone's idea of progress."Continue reading the main story
From 1992 to 1993, median household income declined by about $300, when adjusted for inflation, to $31,241. While this 1 percent decline was small, most economists had expected an increase, because the economy bounced back from the recession that ended in 1991.
The decline in household income looks much larger when measured against 1989, the peak of economic expansion in the 1980's. From 1989 to 1993, the typical American household lost $2,344 in annual income, a fall of 7 percent.
There is a similar pattern in the percentage of Americans who fell below the poverty line. The 1993 figure of 15.1 percent was not significantly different from the previous year's, but was sharply higher than the 1989 figure of 13.1 percent. A family of four was considered poor in 1993 if it had an income of less than $14,763.
The stagnation that bedeviled the broad middle class came despite what seemed to be encouraging numbers on the overall economy. The economy grew by 3 percent in 1993, and the unemployment rate fell, to 6.8 percent from 7.4 percent the previous year.
The numbers even surprised economists who make a career of studying such trends. "It's quite rare to have median income fall in a year where there's aggregate growth overall," said Rebecca Blank, an economist at Northwestern University. "It's not a good sign."
While average per capita income was up, by 1.8 percent, most of the benefits flowed to the wealthiest Americans. The Census report showed record levels of inequality, with the top fifth of American households earning 48.2 percent of the nation's income, while the bottom fifth earned just 3.6 percent.
The trend toward greater inequality has a number of causes, many of them working to depress wages. Economists disagree over which factors are most responsible for wage stagnation or erosion, but the list of suspects includes increased international competition; the shift from a manufacturing to a service economy; the decline of unionization; and the erosion of the minimum wage.
While the decline of wages has been most pronounced for those with the least education, the wages of college-educated workers has also stagnated since 1987, said Isaac Shapiro, acting director of the Center on Budget and Policy Priorities, a Washington advocacy group.
President Clinton made promises to meliorate these trends a major part of his 1992 campaign, and the voter anger may reflect disappointment that change has been slow to arrive. Mr. Clinton promised, for instance, a middle-class tax cut, but dropped it after taking office to fight budget deficits that he said were even worse than previously reported.
Gene Sperling, a White House economics adviser, said the President had put in place other strategies for helping average Americans, but that it was too soon to feel their effect. He cited, for instance, an expansion of tax credits for low-wage workers that will amount to more than $20 billion over the next five years.
He also cited a variety of programs aimed at raising the skills of average Americans to boost their wages. These include new training opportunities for dislocated workers and a change in student loan programs that allow borrowers up to 25 years to repay the Government.
"We are moving in the right direction, but we'd be the first to say there's still a long way to go," he said.
Mr. Reich made similar points, but with a tone of greater alarm, saying the nation's broad economic anxiety set the stage of demagogy on both the political right and left. "America has the most unequal distribution of income of any industrialized nation in the world," he said. "We cannot have a prosperous or stable society if these trends continue."
In issuing this year's poverty numbers, the Census Bureau adopted a system of statistical weighting that is different from previous years. While last year's official poverty rate was 14.5 percent, for instance, under the new system it would have been 14.8 percent. The increase to this year's figure of 15.1 percent does not meet tests of statistical significance.Continue reading the main story