Census Bureau: Median Incomes Climbing for First Time Since 2007

Government statistics indicate long streak of wage stagnation may finally be at an end

by Brendan Kirby | Updated 12 Sep 2017 at 4:18 PM

After a lost decade, Americans finally have begun making real gains, according to a report released Tuesday by the U.S. Census Bureau.

The agency released data on income, poverty, and health insurance for 2016. The highlights include:

  • The median household income was $59,000, up 3.2 percent from 2015.
  • The poverty rate in 2016 ticked down by 0.8 percentage point to 12.7 percent. There were 40.6 million people living in poverty.
  • The supplemental poverty rate — a measure developed during President Barack Obama’s administration as a better measure of poverty — was 13.9 percent, slightly less than in 2015. The statistic is based on whether people have enough money to pay for basic needs and includes factors not counted in the official rate, such as government-support programs and the cost of medical expenses. It also adjusts for geographic disparities in housing costs.
  • The number of Americans who did not have health insurance for the entire year was 28.1 million, or about 8.8 percent, a decline of 0.3 point from 2015.

Last year, the Census Bureau reported that the median household income rose 5.2 percent between 2014 and 2015, the first gains since 2007. The financial collapse the following year triggered the Great Recession, the effects of which lingered for most of Obama's presidency and hammered the middle class.

It also was the first year since the recession that the poverty rate was no statistically different than it was before the crash in 2007.

The income gains were fairly broad. For the second year in a row, median income rose for households headed by Hispanics, non-Hispanic whites, and blacks. Asian-Americans had the highest median income of any group, $81,400, but it was not statistically different than the previous year.

Households gained the most on the Northeast and West, but the median income was essentially flat in the Midwest and actually declined in the South.

“These are two consecutive years of strong income gains,” Trudi Renwick, chief of the Poverty Statistics Branch, told reporters Tuesday.

The 2016 median income figure is the highest ever, although census officials cautioned that direct comparisons to data before 2014 are not possible because the bureau changed the questions asked in the Current Population Survey that year to get more detailed and precise information on income.

The strong back-to-back growth in median income drew skepticism from some experts. Peter Morici, an economic policy expert at the University of Maryland, said the income gains do not jibe with persistently slow increases in the Gross Domestic Product.

“That seems like an awful lot to me considering the economy grew so little,” he said. “It really makes you wonder if someone’s cooking the books … I find it all very implausible.”

Stephen Moore, an economist who served as an adviser to Donald Trump’s 2016 presidential campaign, said it could be that the income numbers in 2015 and 2016 are a lagging indicator that reflects the economic turnaround from recession to growth in the early years of the Obama presidency.

But Moore added the disparity is puzzling.

“I’m a little mystified by the numbers,” he said. “That is a paradox.”

Josh Bivens, director of research at the Left-leaning Economic Policy Institute, told reporters on a conference call that it is not shocking that the GDP and income figures would diverge because money income accounts for only about 60 percent of the GDP. The census figures do not include things such as employer contributions to health insurance and government transfer payments.

Moore said the statistics suggest it has been a “bicoastal recovery,” that has not been spread evenly across the country. Many people felt no improvement since 2000, he said.

“It’s the reason Hillary [Clinton] didn’t win, in my opinion,” he said.

Elise Gould, a senior economist at the Economic Policy Institute, lamented that income gains from 2015 to 2016 were weaker than the year before and more uneven. The think tank, after attempting to adjust for the changes in the Census Bureau’s methodology, concluded that the household median income still was below the level in 2007.

“This report overall is a sign of mostly sunshine with a few clouds … We are definitely pulling ourselves out of the deep hole of the Great Recession,” she said. “Unfortunately, we are still not back to the levels that we had in 2007.”

Gould also noted that inequality has grown since 2007. Since then, he top 5 percent of households have enjoyed income gains of 8.7 percent while incomes fell by 2.7 percent during that period for the bottom fifth.

The new census figures show that the percentage of Americans who had health insurance for at least part of the year was much higher in 2016 than in 2013, before key provisions of the Affordable Care Act took effect. At the same time, the tiny increase in the insured rate suggests Obamacare has reached the limit of what it can accomplish.

Michael Tanner, a senior fellow at the libertarian Cato Institute, said the uninsured rate would shrink somewhat if the 20 states that have declined to expand Medicaid did so. But he added, “There are some questions about the value of Medicaid as insurance. It’s pretty marginal.”

Tanner said the 28 million people in America without insurance includes illegal immigrants who are not eligible for Obamacare subsidies and people who cannot afford private insurance or do not consider it to be a good deal.

“You’re not going to see large changes,” he said. “You’ve simply got a group out there who are extremely hard to reach.”

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