The U.S. Census Bureau recently reported an increase in the median household income of families across the country. After years of decreasing earnings following the Great Recession and stagnant recovery, income data shows a 5.2% increase in median household income during 2015. According to Census Bureau figures, 50% of all U.S. households made less than $56,516, while 50% earned more. This represents the first significant increase in median income since 2007. Although not yet reaching the 1999 high of $57,909, the numbers do suggest that American families are finally experiencing a rebound of their financial stability.
This is good news for Nebraskans. However, many Nebraska families in District 38 may not feel the same impact as the national statistics suggest. The recent Mid-America Business Conditions Index remains below the neutral mark for the second month in a row. Among the factors reflected in the index, confidence among businesses in the Midwest region decreased during August. This reflects depressed prices for ag commodities and weakness in ag business and ag manufacturing.
Additionally, Census Bureau data reveals rural families are not experiencing the same increase in income as their urban counterparts. Average income has increased. However, if you separate the figures by residence, the median income for rural residents was only $44,657, compared to $59,258 for metropolitan residents. A 30% gap between rural and urban incomes is a significant finding for Nebraska policy makers to consider.
Regional economists from the Federal Reserve and local business owners in communities throughout District 38 report higher debt and lower incomes among farmers, ranchers, and associated ag businesses. Accustomed to the boom and bust cycles of production agriculture, most producers and businesses are cautious about economic conditions in our rural communities in the near future.
As the 2017 legislative session approaches, Nebraska lawmakers and special interest groups are beginning to publicize their plans and agendas. Significant changes to tax policy and restructuring of business incentives are likely to be addressed. Both are in need significant reform. As various proposals emerge, caution must be exercised to avoid unintended consequences.
As the latest income data illustrates, fundamental differences exist between the economies of rural and urban Nebraska. Incentives that support job growth and business expansion in metropolitan Nebraska cannot come at the expense of rural communities. Tax policy must not exacerbate the already growing income disparity between rural and urban Nebraskans.
Applying a “one size fits all” economic model to project the effects of proposed policy changes does not accurately reflect the financial reality of most Nebraskans. The fiscal diversity of our state must be represented. The focus should remain on improving the status and advancing the interest of all Nebraskans, not those with the greatest political influence and the loudest voice.