House­hold in­come rises to new high

Cen­sus Bu­reau says the me­dian topped pre-re­ces­sion lev­els last year, but the re­port is not all rosy.

Los Angeles Times - - FRONT PAGE - By Don Lee

WASH­ING­TON — Af­ter a long pe­riod of plod­ding eco­nomic growth, sig­nif­i­cant earn­ings gains over the last two years have fi­nally en­abled the av­er­age Amer­i­can house­hold to sur­pass the peak in­come level it reached in 1999.

The me­dian house­hold in­come in the U.S. climbed to $59,039 last year, up 3.2% from 2015 af­ter ad­just­ing for inf la­tion, the Cen­sus Bu­reau re­ported Tues­day.

That comes on the heels of a 5.2% jump in in­come in 2015, the high­est an­nual per­cent­age in­crease on record.

The back-to-back in­creases brought the me­dian in­come — in which half of house­holds earn more and half less — above the pre­vi­ous peak of $58,665 in 1999.

The me­dian house­hold in­come in Cal­i­for­nia rose 3.4% last year to $66,637, sur­pass­ing the ear­lier high of $65,852 in 2006.

The na­tional mea­sure of poor peo­ple in the U.S. also im­proved sig­nif­i­cantly for the sec­ond year in a row: The poverty rate fell last year to 12.7%, from 13.5% in 2015 and 14.8% in 2014.

That trans­lates into a de­cline of about 6 mil­lion peo­ple in poverty over the last two years.

The lat­est poverty rate is com­pa­ra­ble to 2007, the year be­fore the Great Re­ces­sion took hold. But there were still 40.6 mil­lion poor peo­ple in the na­tion last year. A house­hold with two adults and two chil­dren was con­sid­ered poor if the to­tal an­nual in­come was less than $24,339.

“We con­sider 2015 and 2016 to be the turn­ing point on the real me­dian house­hold in­come front, as em­ploy­ment and wage gains, com­bined with mod­est con­sumer price in­fla­tion, have boosted the well-be­ing of many Amer­i­can house-

holds,” said Chris G. Christo­pher Jr., ex­ec­u­tive di­rec­tor of IHS Markit, an eco­nomic re­search firm.

“Real me­dian house­hold in­come has fi­nally com­pleted its nine-year slog of dig­ging out of the ditch,” he said.

But the an­nual cen­sus re­port was not as glow­ing be­neath the sur­face, and econ­o­mists are con­cerned that bud­get pro­pos­als cur­tail­ing things such as food stamps could thwart con­tin­u­ing progress.

The ef­fect of Pres­i­dent Trump’s promised tax re­form could also change trends for the poor and mid­dle class.

Although the lat­est data showed solid gains for blacks and Lati­nos and younger adults, me­dian in­comes for full-time, year-round work­ers, men and women, were es­sen­tially flat in 2016, re­flect­ing slug­gish wage growth that has per­sisted into this year.

What’s more, a key mea­sure of in­come dis­par­ity re­mains at the high­est level in at least half a cen­tury.

And although the me­dian in­come for ur­ban dwellers jumped 5.4% last year to $61,521, house­holds in ru­ral ar­eas saw their earn­ings ba­si­cally stag­nate at less than $46,000.

“In some ways, that, in par­tic­u­lar, was the story of the 2016 elec­tion,” said Harry Holzer, a Ge­orge­town Univer­sity pub­lic pol­icy pro­fes­sor, not­ing the large sup­port Trump drew from dis­af­fected ru­ral vot­ers.

“The ma­jor cities are thriv­ing. They have strong growth and highly ed­u­cated peo­ple who are do­ing par­tic­u­larly well,” he said. The cen­sus re­port “em­pha­sizes this di­vide that has be­come very ap­par­ent in Amer­ica.”

Still, the lat­est im­prove­ment in in­comes and poverty was gen­er­ally stronger than what some an­a­lysts were ex­pect­ing. Though the eco­nomic re­cov­ery and re­cent wage gains have been slug­gish by his­tor­i­cal stan­dards, the cur­rent pe­riod of growth is one of the long­est on record, which has con­tin­ued to lift the num­ber of peo­ple em­ployed.

There were 2.2 mil­lion more men and women work­ing year-round and in full­time jobs last year than in 2015.

That in turn also has helped boost the per­cent­age of peo­ple in the U.S. with health in­sur­ance, a sep­a­rate but im­por­tant mea­sure of eco­nomic well-be­ing.

The in­creased em­ploy­ment, cou­pled with changes brought by the Af­ford­able Care Act un­der Pres­i­dent Obama, has sharply low­ered the ranks of Amer­i­cans with­out med­i­cal cov­er­age in re­cent years.

The Cen­sus Bu­reau said Tues­day that 8.8% of peo­ple in the U.S. went with­out health in­sur­ance in 2016 for the en­tire year. That com­pares with an unin­sured rate of 9.1% in 2015 and 13.3% in 2013. The Af­ford­able Care Act, also known as Oba­macare, had its first full year of ef­fect in 2014.

Cen­sus of­fi­cials cau­tioned that me­dian in­come fig­ures since 2013 are dif­fi­cult to com­pare di­rectly with pre­vi­ous years be­cause of a change in how the Cen­sus Bu­reau col­lects in­come data.

But other eco­nomic re­search in­di­cates that me­dian house­hold in­come is now at an all-time high — and still grow­ing.

“We see a con­tin­ued up­ward trend for 2017,” said Gor­don Green, a for­mer Cen­sus Bu­reau chief of in­come and poverty statis­tics. His firm, Sen­tier Re­search, which tracks eco­nomic data from monthly cen­sus statis­tics, said that by his anal­y­sis, the me­dian in­come in the U.S. this spring sur­passed the pre­vi­ous high.

Whether the gains and the rate of growth con­tinue will de­pend on fu­ture eco­nomic growth and govern­ment poli­cies.

“Be­yond this year, it’s hard to pre­dict,” Holzer said. “A lot de­pends on when the next down­turn is com­ing.”

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