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Independent Student Newspaper Since 1969

The Badger Herald

Independent Student Newspaper Since 1969

The Badger Herald

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The median household income is rising. Here’s why it matters to students

Income of $56,516 is highest since 2007, represents a 5.2 percent increase from 2014
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Courtesy of Flickr user auntneecey

Sen. Bernie Sanders’, D-Vt., chime that the only people recovering from the 2008 recession are the millionaires and billionaires lost some of its ring today.

A Census Bureau report, Income and Poverty in the United States: 2015, found the median household income rose by 5.2 percent from $53,718 in 2014 to $56,516 in 2015. This is the highest the median household income been since 2007.

Now, these numbers might not mean anything to you at this very second, but at the end of this article, you will understand their significance to you.

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Depending on the cause of the rise in median household income, it can either indicate that the economy is recovering well or not so well.

Rising income generally is evidence there is more competition in the labor market, so employers must pay a higher wage to get better workers or any workers at all. This is a good thing, especially for recent job-seeking college graduates. Graduates will get paid more and have less competition for positions.

This may not be the case, though.

Maybe, Americans are logging more hours per week at work, accounting for the increase in wages. But according to the Bureau of Labor statistics, employed Americans have worked roughly 34.5 hours a week for the past decade.

So something else must have caused this change: wages. Wage growth per month in 2015 was over 4.5 percent for almost the entire year except for one month.

These two factors, steady hours and increasing wages, seem indicate a healthy economy — an economy that will provide plenty of opportunities for college graduates. But there is the issue of labor force participation.

The labor force participation rate looks at the labor force (those employed and unemployed) per the total adult population capable of participating in the labor force. The labor force participation rate was 62.8 percent in August 2016. To put that in context, the rate in August 2006 was 66.2 percent.

My opinion is a lower rate represents a new normal in America. The days of 66 percent or more of the adult population participating in the workforce is over, and only greener pastures are ahead.

Aaron Reilly ([email protected]) is a sophomore majoring in social work and economics.

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