U.S. median income rises but is still 6 percent below its 2007 level
08/21/2013 9:25 PM
08/21/2013 9:25 PM
Median household income has begun to recover the past two years, but households still have not come close to regaining the buying power they had before the financial crisis began, a new study says.
The study, issued Wednesday by two former Census Bureau officials, suggests why many people remain glum even though the economy is growing and unemployment has declined.
Although median annual household income rose to $52,100 in June from its recent inflation-adjusted trough of $50,700 in August 2011, it was still $2,400 lower — a 4.4 percent decline — from the end of the recession in June 2009.
That’s also 6.1 percent — or $3,400 — below its level in December 2007, when the economic slump began.
Since the end of the recession, the study said, household income has declined for all but a few population groups. Some of the largest percentage declines occurred for groups whose income was already well below the median, such as African-Americans, Southerners, people who did not attend college and households headed by people under age 25.
“Groups with low incomes tended to have steeper declines in income,” said Gordon W. Green Jr., who wrote the report with John F. Coder, a colleague at Sentier Research, which specializes in analyzing household economic data.
Households headed by people ages 65 to 74 were the only group in the study that experienced a statistically significant increase in post-recession income, helped perhaps by the decision of some older workers to remain in the workforce or re-enter it.
The figures, adjusted for changes in the cost of living over time, include income before taxes and exclude capital gains. The number of households with income above the median is the same as the number below.
The data offer a potential preview of the official Census Bureau statistics on income and poverty for 2012, scheduled to be released next month. The Sentier numbers are based on the Current Population Survey, a monthly government survey of about 50,000 households. The researchers used the same definition of income as the Census Bureau uses in its annual report on income and poverty. The two sets of estimates have shown broadly similar trends in recent years.
The economy has been growing since 2009, but more slowly and inconsistently than many Americans would like and many economists had predicted.
President Barack Obama has made the economy’s condition his main focus this summer, promising new efforts to encourage economic growth, including a series of proposals on higher education that he is expected to announce today. Though taking credit for some improvement in the economy, he has acknowledged that many Americans have yet to see the benefits.
In the recession and after, many people went back to school, earning associate or bachelor’s degrees. Such credentials have helped, the new data indicate, but they have been no guarantee against loss of income.
Households headed by people with only a high school diploma have seen their post-recession income decline by 9.3 percent to $39,300 in June of this year, the report said. For households headed by people with an associate degree, median income declined by 8.6 percent in those four years to $56,400. And among households headed by people with a bachelor’s degree or more, median income declined by 6.5 percent to $84,700.
Since the end of the recession, the report said, income has declined by 3.6 percent for non-Hispanic white households to $58,000 and by 4.5 percent for Hispanic households to $41,000. Those changes were smaller than the 10.9 percent decline to $33,500 for non-Hispanic black households, whose economic problems are likely to be a focus when Obama speaks next week on the 50th anniversary of the March on Washington.
Median income for households headed by people 65 to 74 years old increased by 5.1 percent to $43,000, even though in many cases the head of the household was retired. By comparison, median income for households headed by people under age 25 fell 9.6 percent in the last four years to $31,300.