US middle class income in biggest rise in almost 50 years
Following seven years of stagnant and falling earnings, the household income of the typical American family in 2015 posted the biggest rise in almost 50 years.
Median household income (the mid-point where 50% are above and 50% below) in the United States in 2015 was $56,516, an increase in real (inflation-adjusted) terms of 5.2% from the 2014 median income of $53,718. This is the first annual increase in median household income since 2007, the year before the most recent recession. The biggest rises in income were among the lower levels.
Average income which is skewed because of very high incomes at the top, rose 4.5% to $79,263.
The inflation-adjusted rise was the biggest annual gain recorded since the yearly survey of incomes began in 1967. However, median household incomes were 1.6% below the 2007 level and 2.4% below the all-time high hit in 1999.
The number of people in poverty fell by 3.5m, leading the poverty rate to fall from 14.8% to 13.5%, the largest one-year drop since 1968, with even larger improvements for African Americans, Hispanic Americans, and children. Meanwhile, the ratio of earnings for women working full-time, full-year to earnings for men working full-time, full-year increased to 80% in 2015, the highest on record.
The Census Bureau said that the official poverty rate does not reflect the full effect of antipoverty policies because it includes only pre-tax income and excludes the direct effect of key policies like the Supplemental Nutrition Assistance Program (SNAP) and the Earned Income Tax Credit (EITC). The Supplemental Poverty Measure, which is designed to include the effects of these programs but also takes into the cost of basic needs when setting the poverty threshold, decreased 1.0%age point in 2015, from 15.3% to 14.3%.
The Census Bureau also said that every state has seen declines in its health uninsured rate since 2013 as the major coverage provisions of the Affordable Care Act (known as Obamacare) have taken effect. In 2015, the percentage of people without health insurance coverage for the entire calendar year was 9.1%, or 29.0m.
The White House said that solid employment growth and robust real wage growth so far this year suggest that incomes are continuing to rise in 2016, and, "building on the progress shown in today’s Census report, the president will continue to call on Congress to take steps to invest in job creation, wage growth, and equal pay for equal work."
As of August, total nonfarm job growth has averaged 182,000 jobs a month so far in 2016, and hourly earnings for private-sector workers have increased at an annual rate of 2.8%, much faster than the pace of inflation (1.3% as of July, the latest data available).
US businesses have now added 15.1m jobs since private-sector job growth turned positive in early 2010 — about 10% of current non-farm employment.
Inequality
The Gini coefficient is a measure of the deviation of the distribution of income among individuals or households within a country from a perfectly equal distribution. A value of 0 represents absolute equality, a value of 100 absolute inequality.
The US Gini coefficient was 36 in 1967 and 46 in 2015 while in 2014 in Europe, the Gini coefficient of equivalised disposable income was 31 for Ireland, Germany and the EU28; 24 for Norway in 2015 and 25 for Sweden in 2014.
In the past quarter of a century in the US, there has been a growing divergence between households with different levels of educational attainment. The median household led by an individual with a master’s degree is up $7,655 on 1991. Those with some college, but no degree, earn $7,768 less and those with a high-school diploma but no further education earn $6,316 less.
While median household income remains lower than 1999, households at the 80th, 90th and 95th percentiles have never earned more.
The Census Bureau said that comparing changes in household income at selected percentiles shows that income inequality has increased from 1999 (the year that household income peaked before the 2001 recession) to 2015. Incomes at the 50th and 10th percentiles declined 2.4% and 9.9%, respectively, while income at the 90th percentile increased 5.7% between 1999 and 2015. Since 1999, the 90th to 10th percentile income ratio (10.42 in 1999 and 12.23 in 2015) has increased 17.4%.
