Recession Officially Over for Median Household Income

Ivan Schwartz
September 15, 2017

Montana and Louisiana expanded their Medicaid programs in 2016, joining 29 other states in accepting increased federal funding under the Affordable Care Act.

"Real median household income has finally completed its nine-year slog of digging out of the ditch", IHS Markit Executive Director Chris Christopher said, with more gains expected in 2017 and 2018.

More than 40.6 million people in the United States were living in poverty a year ago, 2.5 million fewer than in 2015 and 6.0 million fewer than in 2014, Census said. This is also the second year in a row the poverty rate reduced.

It showed that Social Security benefits lifted 26.1 million people out of poverty, while refundable tax credits helped 8.2 million people and food stamps prevented 3.6 million from being in poverty.

The new data also found the poverty rate declined in 17 of the 25 most populous metropolitan areas, and stayed unchanged in the remaining eight metropolitan areas. The median income in black households rose 5.7 percent, to $39,500 a year, while Hispanic households made a $47,700 median income. This is the second consecutive annual increase since 2007, the year before the Great Recession hit. The South and the Western regions of the USA saw the biggest income increases, while the Northeast and Midwest saw no statistically significant change at all. That's because the wealthiest Americans also saw an increase in their income.

In fact, median income has not even caught up with its pre-recession level, according to the Economic Policy Institute, a left-leaning group, which crunched the Census data to account for the change. Female full-time workers, however, saw their median earnings rise by less than 1/10 of 1 percent to $50,574, or just 81 percent of male earnings. But a full decade after the crisis began, median 2016 household incomes are above or approaching those in 2007.

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As I've noted in the past, a median household income obscures substantial demographic differences.

Jumps to median income varied wildly throughout the province. And the bottom 20% of earners took in just 3.1% of the total earnings in 2016, the same 3.1% as in 2015. About 23 percent of working Texans ages 18 to 64 were uninsured in 2016, compared to a national average of 12.1 percent. The coefficient in 2016 measured 0.4813, compared with 0.4832 in 2015.

To get a clearer picture of income inequality across USA households, consider adjusting your choice of statistical measures.

The percentage of people without health insurance for 2016 was 8.8 percent, down from 9.1 percent in 2015. The overall income gap among racial groups persists, however.

But medical expenses increased the number of people in poverty by 10.5 million. The poverty rate for foreign-born persons was 15.1 percent in 2016, lower than the poverty rate of 12.3 percent for native-born persons. Polun is concerned about the effect of the state budget on poverty. However, the poverty rate declined by 1.5 percentage points for foreign-born persons, which was double the 0.7 percentage point decline for native-born persons.

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