After almost a decade, the typical American household is finally making about what it did before the Great Recession.
Do not expect wild celebrations to break out in the streets.
The key measure of a what a typical U.S. household makes rose 3.2 percent to $59,039 in 2016, according to new data from the U.S. Census Bureau. That’s the first time the annual household income number climbed back to the level it hit back in 2007 when the median income was $58,149.
The next year, a banking bust sank the country into the worst economic downturn in decades and sent income growth into what turned out to be nearly a lost decade. In fact, 2016 incomes are effectively back to where they were at their all-time peak in 1999, when they hit $58,665.
The measure, known as real median household income includes a range of income, like paychecks, dividends, rents, profits, alimony, child support and government benefits like social security, disability, workers compensation and unemployment. Produced through an annual survey of roughly 100,000 American households, it’s a closely watched, inflation-adjusted, ballpark figure of how a “typical” American household’s financial situation has developed over the year.
And from the statistical point of view, things have really been on the upswing. The 2016 increase, follows a 5.2 percent increase in median household income in 2015, which was was the largest on records that stretched back a half century. Since 2012, when incomes fell to their lowest recent level, they’ve risen 10.7 percent. Some 2.2 million Americans gained full-time, full-year work last year. The poverty rate fell to 12.7 percent, effectively back to where it was before the Great Recession. All good things.
So if people are better off, why does everybody seem so miserable? Roughly 67 percent of the American public says it is dissatisfied with the direction the country is going in, according to recent data from Pew Research. And Americans are increasingly gloomy about the outlook for the country, with 48 percent saying that future for the next generation will be worse than today. That’s more morose than during the worse of the Great Recession and the long slow recovery. And from a longer term perspective, research has shown that Americans of middle and less than middle income are significantly less happy than they used to be.
Well, it’s actually not a huge mystery. While it’s a good thing that incomes surpassed their pre-recession levels, another way of looking at is that American households have spent the last decade clawing back to even.
More broadly, it’s important to keep in mind is that these gains in income are due to people working more, not necessarily getting paid more. Wages have largely gone nowhere for decades. In fact, the slightly different category of earnings — which includes salaries, wages and income from self employment — the news was not so great. Wages for fully employed men and women essentially showed no change over the year. And earnings for men who worked full-time throughout 2016 were $51,640, that’s basically where they were in the early 1970s.