Median Household Income Rose Again in 2017 - Pacific Standard

Median Household Income Rose Again in 2017

But progress on some measures has slowed.
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A family watching television at home, circa 1955.

A family watching television at home, circa 1955.

This morning, the United States Census Bureau released its annual reports on income and poverty in America. Median household income in America increased—for the third year in a row in 2017—by 1.8 percent. Median household income in 2017 was $61,372, which is approximately equivalent to pre-Recession levels. The 1.8 percent increase is, however, smaller than the increases observed in 2015 and 2016.

Substantial racial income gaps persist in household income. For white and Hispanic households, median income increased in 2017 by 2.5 percent and 3.7 percent, respectively. But income was essentially flat for black and Asian households. According to calculations by the Economic Policy Institute, a liberal think tank, median household incomes in 2017 were about 1.5 percent higher for white households and 6.7 percent higher for Hispanic households than they were in 2007; the median income for black households was still almost 3 percent lower than it was in 2007.

The chart below, from the report, illustrates income trends by race over the last 50 years:

chart1

In line with longstanding trends in the U.S., income growth was fastest for the wealthiest Americans. Those at the 95th percentile of the income distribution saw their median real income increase by 3.0 percent. In a conference call with reporters, economist Jared Bernstein of the Center on Budget and Policy Priorities, a progressive think tank, noted that this fact highlights persistent structural issues in the U.S. economy.

The report also finds that the increase in household income between 2016 and 2017 was driven largely by increased labor force participation and hours worked—the number of men and women working full-time increased, as did the number of workers reporting any earnings—not higher wages.

In fact, consistent with the Department of Labor's findings that real wages declined between July of 2017 and July of 2018 (due to faster inflation), the real median earnings of men and women working full-time actually declined by 1.1 percent between 2016 and 2017. (Bernstein noted in his call that this trend is likely driven at least in part by an increase in low-wage, full-time workers participating in the labor force.) The chart below illustrates trends in full-time earnings over time:

chart2

Real median earnings for women working full-time in 2017 were only 0.9 percent higher than they were in 2007, the year before the Great Recession hit. Median earnings for men working full-time, meanwhile, were actually 2.5 percent lower in 2017 than in 2007.

Poverty rates declined slightly in 2017 (again, for the third consecutive year)—to 12.3 percent (from 12.7 percent in 2016). Almost every demographic group experienced a decline or no change in their poverty rate in 2017, with the exception of Americans with a bachelor's degree, who saw poverty rates increase by 0.3 percentage points (but who nonetheless still have lower poverty rates than other demographic groups). Black Americans continue to experience the highest poverty rates—21.2 percent in 2017—of any racial group. Children, meanwhile, continue to experience the highest poverty rates of any age group—12.8 million Americans under the age of 18 were living in poverty in 2017, constituting 32.3 percent of Americans in poverty.

In its companion report on health insurance coverage in the U.S., the Census Bureau concluded that slightly less than 9 percent of Americans did not have health insurance at all in 2017. These numbers are unchanged from 2016, suggesting that progress at decreasing the uninsured rate in America has stalled under the Trump administration. The uninsured rate in Medicaid expansion states was 6.6 percent, in comparison to 12.2 percent in non-expansion states.

While the numbers released today are largely positive, they also serve as a reminder that, nine years into the economic recovery, many American households are only now reaching pre-Recession income levels.

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