Average U.S. Household Has Lost 5% in Annual Income Since Economic “Recovery” Began
The rich are getting richer, and the poor really are getting poorer. According to a new report, Americans are earning less today on average than they were when the Great Recession, which began in December 2007, ended in June 2009. Using Census Bureau data, economists Gordon Green and John Coder determined that real median household income has actually fallen by 4.8% since the recession’s end. Even more surprisingly, they found that the decline since June 2009 was larger than the 2.6 percent decline that occurred during the recession. Adding them together, Green and Coder conclude that average household income has fallen 7.2% since December 2007.
According to Green, “almost every group is worse off now than it was three years ago, with the exception of households with householders 65 years old and over. For some groups of households—Blacks, men living alone, younger and upper-middle age brackets, those with some college but no degree, the unemployed, the self-employed, and those living in the West—the declines tended to be larger than average.” Racial inequality is reflected in the fact that income for white households declined by 5.2% while income for black households dropped by 11.1%, or more than twice the rate.
Not everyone has experienced a drop in income, however. As AllGov reported in July, a study from Northeastern University found that “corporate profits captured 88 percent of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1 percent” of growth since the recovery began in 2009. Corporations are posting record profits, while investors, who are disproportionately wealthy already, are earning large capital gains that are taxed at special low rates, leading to greater inequality and even slower economic growth.
To Learn More:
Household Income Down by 4.8% Overall Since “Economic Recovery” Began (by Gordon Green and John Coder, Sentier Research) (pdf)
Family Income Has Plunged Since the “End of the Recession” (by Noel Brinkerhoff, AllGov)
Recession Recovery Boosted Profits … but Not Wages (by Noel Brinkerhoff, AllGov)
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