The Key to U.S. Income Statistics: Average Family Income is Growing; Median Family Income is Falling
While the United States economy is no longer in recession, the recovery hasn’t meant American families are back to where they were before the 2008 crash. While the average income is growing, the median income, that is, the point at which half the families make more money and half the families make less money, is falling.
A survey (pdf) by the Federal Reserve Board shows that between 2010 and 2013, the average family income rose 4%, but the median family income fell 5% during that period. That means the income gains have been concentrated among the wealthy, with the poor and middle class still struggling to see a real recovery.
Fed chair Janet Yellen acknowledged as much in a speech Friday in Boston. “The extent of and continuing increase in inequality in the United States greatly concern me,” she said. “I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.”
The trend of income declines at the lower end of the spectrum isn’t a just phenomenon of the recovery. “Families at the bottom of the income distribution saw continued substantial declines in average real incomes between 2010 and 2013, continuing the trend observed between the 2007 and 2010 surveys,” the Fed reported.
Meanwhile, middle-class and upper-middle class families (between the 40th and 90th percentiles) have been just treading water and “have failed to recover the losses experienced between 2007 and 2010.”
So, who has benefitted from the recovery? The wealthy, of course. “Only families at the very top of the income distribution saw widespread income gains between 2010 and 2013, although mean and median incomes were still below 2007 levels,” the survey said.
To Learn More:
Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances (Federal Reserve Board) (pdf)
\What Janet Yellen Said, and Didn’t Say, About Inequality (by Neil Irwin, New York Times)
Census Bureau Confirms Growing Wealth Inequality (by Noel Brinkerhoff, AllGov)
Average American’s Net Worth has Dropped One-Third in 10 Years (by Steve Straehley, AllGov)
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