American household income finally topped 1999 peak last year

After years of sluggish growth, typical U.S. household incomes finally topped pre-recession levels in 2016 and reached an all-time high, according to information released by the Census Bureau Tuesday. (File/Associated Press)

WASHINGTON — In a stark reminder of the damage done by the Great Recession and of the modest recovery that followed, the median American household only last year finally earned more than it did in 1999.

 

Incomes for a typical U.S. household, adjusted for inflation, rose 3.2 percent from 2015 to 2016 to $59,039, the Census Bureau said. The median is the point at which half the households fall below and half are above.

Last year’s figure is slightly above the previous peak of $58,665, reached in 1999. It is also the first time since the recession ended in 2009 that the typical household earned more than it did in 2007, when the recession began.

Trudi Renwick, the bureau’s assistant division chief, cautioned the census in 2013 changed how it asks households about income, making historical comparisons less than precise.

Still, the Census data is closely watched because of its comprehensive nature. It is based on interviews with 70,000 households, and includes detailed data on incomes and poverty across a range of demographic groups.

Elise Gould, a senior economist at the Economic Policy Institute, said adjusting for the change in methodology, median income still remains below its 1999 peak. Yet she added the census report shows American households have made significant economic progress in 2015 and 2016.

Median household income rose $4,641, or 8.5 percent, from 2014 through 2016. That’s the best two-year gain on records dating to 1967, according to analysts at the Center on Budget and Policy Priorities.

Yet that improvement comes after a steep recession and a slow recovery that left most American households with barely any income increases. The lack of meaningful raises has left many people feeling left behind economically, a sentiment that factored into the 2016 elections.

The report also showed income inequality worsened last year, extending a trend in place for roughly four decades. Average incomes among the wealthiest five percent climbed 5.5 percent to $375,088. Average incomes for the poorest one-fifth of households, meanwhile, rose 2.5 percent to $12,943.

Still, underneath the broad improvements nationwide, pockets of hardship remain.

Poverty rates fell in the Northeast and South in 2016, but were mostly unchanged in the Midwest and West.

Una Osili, a researcher at the Salvation Army and a professor of economics at Indiana University, said the nonprofit group reported a spike in requests for health-related assistance in the Midwest last year, driven mostly by demand for opioid addiction treatment.

That happened even in states like Indiana, where the unemployment rate and poverty fell, she said.

In Nevada and some other Western states, the economic recovery has raised housing costs, offsetting some of the benefit of income growth.

 

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