American families are finally getting a break almost 10 years after the Great Recession decimated household income and eroded personal wealth.
Median household income rose 3.2 percent to $59,039 last year, marking the second consecutive year of income gains since the economic crisis, the U.S. Census Bureau said Tuesday. That puts income just 1.6 percent below what households earned before the recession started in late 2007, according to the Economic Policy Institute, a left-leaning think tank.
The country’s poverty rate fell 0.8 percent to 12.7 percent, which the Census said means 2.5 million fewer people lived in poverty last year than in 2015. Still, nearly 41 million Americans remained in poverty in 2016.
Income inequality and wage stagnation have plagued most American households in the post-recession years, crimping family budgets at a time when the cost of essentials such as health care have risen sharply. In his presidential campaign, Donald Trump appealed to many voters who are feeling the effects of these trends with his pledge to boost economic growth to at least 3 percent annually and to spur the creation of manufacturing jobs.
Still, male workers — one of President Trump’s core group of supporters — earned less last year than they did a year earlier, while income inequality shows no signs of abating, according to the latest Census data.
“We’re back to where we were before the recession,” said Sheldon Danziger, president of the Russell Sage Foundation, which focuses on poverty research. “You have an economy that has flat-lined for people with a high school degree or less since the 70s and flat-lined for the middle class during the last 20 years.”
Despite the income gains of the past two years, he added, the economy “has been broken for a long time” due to rising income inequality, a trend that is still evident in Census’s latest data.
In the post-recession economy, the fortunes of the topwhile wages for lower-income households stagnated or fell. The top 5 percent of income earners captured 22.6 percent of all income last year, an increase of 0.5 percent from 2015. Half a century ago, the highest 5 percent of earners controlled just 17.2 percent of all income.
The poorest U.S. households, by comparison, have a smaller share of income than ever before. They earned just 3.1 percent of all income last year, unchanged since 2013. Before the recession began, they earned 3.4 percent of all income, a share that stood at 4 percent of all income in 1967.
In dollar terms, the inequality between America’s top-earning households and the poorest is stark. Americans in the top 5 percent took home more than $375,000 in income last year, compared with just $12,943 for those in the bottom quintile.
Danziger said he isn’t hopeful the Trump administration will seriously tackle poverty or lift the fortunes of low-paid workers.
“An administration that wants to take away Obamacare isn’t interested in poverty,” he said. “The poor is not their constituency.”
Another trouble spot can be found for full-time male workers, who saw their incomes slide last year. Men who work full time earned $51,640 last year, or about 0.4 percent less than in 2015, the Census said. Women, on the other hand, boosted their annual income by 0.7 percent to $41,554, which contributed to a smaller gender wage gap. Women now make 80.5 cents to every $1 earned by men, or an increase of 1.1 percent from 2015. It also marks the first annual increase since 2007, the Census said.
The income improvement marks the second year of gains for U.S. workers. In 2015, median household income jumped 5.2 percent, reaching $56,500, which was the first annual increase in median household incomes since 2007, or before the recession began.
The Census data said it changed its income questions in 2014, which makes it difficult to make comparisons before that year. Nevertheless, the Census data indicates that the most recent income gains have pushed household income close to where it stood in 2007. According to EPI’s estimates, which compensates for the difference in income measurement before 2014, the median household earned about $59,992 in 2007, slightly more than the $59,039 reported in 2016.
It’s important to note the Census data reports on 2016 income and poverty rates, which means the information doesn’t reflect the policies of Mr. Trump, who was inaugurated in January 2017.