Household Income Finally Back to Prerecession Level
Despite drop in average earnings, Census Bureau shows a clear 2016-2017 move from part-time to full-time work
Median household income in America finally has recovered from the Great Recession of 2008, the U.S. Census Bureau reported Wednesday.
The report, based on the bureau’s Current Population Survey (CPS), shows that the median income — the point at which half of households in the country make more and half make less — was $61,372 last year. That represents a 1.8 percent increase over 2016.
Census Bureau officials caution that direct comparisons to years prior to 2014 are impossible because of changes to the survey methodology that year. But the agency estimates that after making adjustments for the changes and controlling for inflation, the median household income last year was roughly the same as 2007. And that was not substantially different from 1999, indicating wage stagnation that has lasted for nearly 20 years.
The data show that median earnings actually fell by 1.1 percent for all workers employed full time and year-round. Trudi Renwick, an assistant division chief at the Census Bureau, speculated that new entrants into the labor market disproportionately were in lower-paying jobs, pulling down the average. But she added that household income rose because more people are working, and they are working longer hours.
“We do have the number of workers up by 1.7 million,” she told reporters on a conference call. “And the number of full-time, year-round workers are actually up by 2.4 million. So we’re continuing to see that shift from part-time, part-year work to full-time, full-year work.”
The 1.8 percent overall increase in median household income represents a slowdown from the previous two years. The figure increased by 5.1 percent from 2014 to 2015 and by 3.1 percent between 2015 and 2016.
Elise Gould, senior economist at the left-leaning Economic Policy Institute (EPI), told reporters that the earnings decline was a surprise given the employment gains and the tight labor market.
“While any reduction in poverty or increase in income is a step in the right direction, most families have just barely made up the ground lost over the past decade,” she said.
In 2017, 12.3 percent of Americans were living below the poverty line. For a family of four, that was $24,858 a year.
This represents a decline from the 12.7 percent mark in 2016. It is the third consecutive decline and has fallen by 2.5 percentage points since 2014.
Real median earnings for men, $54,146, increased by 3 percent over 2016. But the change for female workers was not statistically significant.
“This is an awful sign for workers and families,” Gould said.
But Robert Rector, senior research fellow in domestic studies at the conservative-leaning Heritage Foundation, said the census report is encouraging as it shows “a significant pickup” in household income.
“That shows pretty strong growth,” he told LifeZette. “I look at the poverty numbers, in particular … The good news is that poverty dropped rather substantially in 2017.”
“I look at the poverty numbers, in particular … The good news is that poverty dropped rather substantially in 2017.”
Rector said the official poverty rate includes cash welfare payments under the Temporary Assistance to Needy Families (TANF) program but excludes some $400 billion in noncash welfare spending such as food stamps and housing assistance.
“They obscure that fact,” he said.
Rector said the poverty statistic, because it does exclude most of the government safety net, “really is measuring the ability of people to provide for themselves.”
But it makes poverty appear worse than it actually is, Rector said. He explained how a Department of Labor consumer expenditure survey, which captures household spending on a monthly basis, does a better job of describing poverty because it reflects the impact of safety net programs including food stamps.
Using those data cuts the overall poverty rate from 12.3 percent to 3.7 percent, Rector said. He added that the poverty rate for children would be 8.4 percent using the Department of Labor data, rather than the Census Bureau estimate of 17.5 percent.
The Census Bureau attempts to provide a more nuanced look at poverty through the supplemental poverty measure (SPM), which includes noncash government programs not included in the official measure, while subtracting costs such as commuting, child care, taxes, and health care.
For 2017, the SPM rate was 13.9 percent, not statistically different from the 2016 rate, according to the Census Bureau.
But Rector dismissed the usefulness of that measure, created under Barack Obama in 2011. He said it’s a measure of inequality, not poverty, and is tied to the median income. In other words, if incomes were to magically double overnight for all Americans, the SMP would remain unchanged.
“It’s the ultimate deep state gimmick … It’s like running a race with a moving finish line,” he said. “You’ll never cross the finish line.”