If you are still struggling to make ends meet and are waiting for the economic recovery to show up in your paycheck, the recent data released by the U.S. Census Bureau will come as no surprise to you. The median income of Americans after adjustment for inflation fell from $54,462 in 2013 to $53,657 in 2014, a difference that is statistically insignificant.
Consider that this adjusted median value is calculated during a time of relatively low inflation. Wages are unable to surpass even the low amount of inflation that exists today.
Census researchers noted that while our economy is in a recovery stage and has been for some time, there is a long way to go to restore America’s collective wealth. The 2014 median income value was 6.5 percent below that of 2007, the last annual data point before the Great Recession took hold.
Part of the flattening effect can be attributed to a demographic shift. According to Edward Welniak, the Census Bureau’s Chief of Income Statistics within the Housing and Household Economics group, there were 1.2 million more non-family households in 2014 than in 2013. Non-family households often have lower incomes, thus skewing the statistics toward lower median incomes.
However, it is hard to argue that the Census data shows anything other than a very slow recovery. Even though unemployment fell throughout 2014, wage gains are modest at best. The classic economic theory of lower unemployment driving up wages through demand has not yet materialized.
The change in income inequality as measured by the Gini index was statistically insignificant, suggesting no hidden differentials in income that were cancelling out in the aggregate.
Poverty numbers were equally disappointing. Using the Office of Management and Budget (OMB) definition of poverty, the 2014 poverty threshold for a family of four as a weighted average was $24,230. Approximately 9.5 million families fell within this poverty criterion. The poverty rate in 2014 rose slightly to 14.8 percent, up 0.3 percent from 2013. As with median income, the changes were statistically insignificant.
Was there any good news in the Census Bureau’s data? There were a few bright spots, including a significant drop in those without health insurance. 33 million Americans are still uninsured, just over 10 percent of the population, compared to 41.8 million uninsured Americans in 2014. For children under age 19, the uninsured rate dropped from 7.5 percent to 6.2 percent. Given the coverage mandates of the Affordable Care Act, any other insurance outcome would have been a shock.
With respect to poverty, the supplemental poverty measure that includes in-kind benefits showed a lower poverty rate for children compared to the official rate, down to 16.7 percent from 21.5 percent. Any children in poverty is an unacceptable outcome, but at least the supplemental numbers show that government programs such as SNAP and refundable tax credits are lessening the burden.
The Census Bureau press release, complete with links to the corresponding full reports, may be found here.
So far in 2015, the income and wage pattern has held with unemployment falling all the way to 5.1 percent as of this writing. That is near the point considered as full employment and wages still have not risen — in part due to a large pool of workers that are underemployed or not currently looking for work.
Without a significant change in the fourth quarter, the Census Bureau analysis for 2015 wages and unemployment will likely be more of the same. In that case, 2015 would be the fourth consecutive year of static median incomes during an economic recovery — an unusual recovery indeed.
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- Lowest jobless claims in 41 years
- Labor’s share of income is falling
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