An Economy Like It’s 1999
Remembering the artist Prince and one of his greatest hits, “1999,” got us thinking: 1999 was actually a pretty good year for the U.S. economy.
Time spent browsing through the Economic Policy Institute’s “State of Working America” website is sobering, though, once you compare how working people were faring in 1999 to where they are now. In some cases, it’s stunning how far we’ve fallen.
Let’s take a look back. During 1999, the economy was growing at a rate in excess of 5 percent. Unemployment by the end of the year had fallen below 4 percent – it was down to 3.5 percent among white people and 7.8 percent for African Americans. Median family income was $48,831, or $69,405 in 2014 dollars. Wages then were not rising as fast as productivity, but the gap was not huge – worker productivity was up 8.7 percent over 1995; median wages in that period had increased almost 6 percent.
There were problems, to be sure, but that was an economy in which wages were rising, people who wanted work could find it, and the nation had the opportunity to begin eating away at the inequities that had plagued the nation’s economy for generations, such as the wide divisions in economic opportunity based on race and gender.
But, as a line in the song “1999” says, “two-thousand-zero-zero, party over, oops, out of time.”
It was actually 2001 when the economy dipped into recession and a conservative president and Congress accelerated the policies that moved the nation away from its course toward shared prosperity.
We know the consequences. Economic growth languishes on average around 2 percent. Unemployment stays stubbornly stuck around 5 percent. Median incomes fell: In 1999 dollars, a worker making the median income of $66,632 in 2014 was actually earning $1,939 less.
Notably, worker productivity has increased almost 37 percent since 1995, but workers have only seen a median increase of less than 10 percent on their wages. Who is gaining from the fruits of worker productivity? People at the top of the income scale.
Also striking is the backwards movement on the percentage of the population in deep poverty, defined as being below 50 percent of the poverty line. That percentage was a shameful 39.3 percent in 1999; in 2013, that percentage was almost 44 percent.
It is true that some of what looked like economic growth in 1999 turned out to be bubbles that would burst to what would be wealth-devastating effect for some. That bubble masked another problem, which is that too much of the tax revenue generated by economic growth was devoted to erasing the federal deficit and too little was devoted to needed investments in infrastructure and other assets that we now wish we had.
With all of the economic policy flaws in 1999, though, there is this reality: We succeeded in creating a near-full-employment economy, wages were rising in a way that was not dramatically out of line with their productivity, and we did it without giving huge tax breaks to corporations and the wealthy. Can’t we at least emulate what we got right and have an economy like it’s 1999? It’s not too much to ask of our presidential candidates.
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This has been reposted from the Campaign for America's Future.
