That 5.2% Jump In Household Income?

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Nope, People Aren’t Suddenly Getting Big-Fat Paychecks

The median income for men is below 1974 levels.

We’ll be hearing and reading about this for a long time, in all kinds of iterations: “Americans last year reaped the largest economic gains in nearly a generation,” the New York Times gushed. “Household incomes surged 5.2% in 2015, first gain since 2007,” the Wall Street Journal raved. Everyone was happy. Poverty rates dropped 1.2 percentage points. Finally, some good data in that beleaguered sector! The middle class and those below had been getting hammered for too long.

The impetus of these happy moments in the US economy is the Census Bureau’s Income and Poverty survey for 2015. It reported that median household income – 50% of households earn more, 50% earn less – rose 5.2% to $56,516, adjusted for inflation via the Consumer Price Index.

Median household income had been declining in fits and starts since the peak in 1999. But even after this phenomenal rise in 2015, it was still 1.6% lower than in 2007 and 2.4% lower than in 1999.

Nevertheless, it was welcome news, after years of dreary data points on this topic – though it left me scratching my head. Something didn’t quite add up, given other data we have on wage increases, which have remained a dreary topic. Then I checked with Lee Adler at The Wall Street Examiner, and he sent me back to the drawing board.

The 70-page report was based on survey data on a sample of 95,000 addresses across the US. The sample is very large for a survey, which makes the results more reliable and allows plenty of room to drill down into the details, and split the numbers by age, race, gender, and so on, and still have a sufficiently large sample size in each group.

To show some aspects of the range of the data: The median income of “family households” was $72,165. Within that group, “married couple households” made $84,626. “Non-family households” – a single person, for example – made only $33,805.

And then there were the crucial data points that explained the bout of head-scratching earlier. People are not suddenly getting big-fat paychecks:

  • “Men with earnings” saw their income rise only 1.5%
  • “Women with earnings” saw their income rise 2.7%.

Women have come a long way since the 1980s, in terms of median income, though not nearly far enough. Adjusted for inflation, it went from $30,000 in 1980 to $40,742 in 2015. And I hope women will make more progress going forward.

But men? Good grief! Their earnings in 2015, at $51,212, were lower on an inflation adjusted basis than they’d been in 1974! 

Check it out. The chart is interactive. Hover over the lines to get the data points for each year:

Screen Shot 2016-09-16 at 1.29.36 PM

If soothsayers want to know why men are frustrated, and more than frustrated, they can just look at the chart above: no improvement in real wages since 1974! For the median middle-class man in the workforce today, that boils down to no improvement in his entire working life!

So with men’s median income inching up only 1.5% and women’s income 2.7% in 2015, how could household income have jumped 5.2%? Something else must have been at play. Here are some thoughts.

1. Quirks in the data either for 2014 and/or 2015. Quirks in statistical data aren’t that unheard of, even in large surveys.

2. The number of men working full-time rose by 1.4 million in 2015, according to the report. The number of women rose by 1 million. Hence, with more people finding full-time work, some part-time workers became full-time workers, and that benefits median household incomes.

3. Then there are the millennials. They’re now entering the workforce in large numbers. Some of the live-at-home millennials have found a job finally, or a better job, and that benefits household incomes. Other millennials, upon graduating from college with a good job, moved back in with mom and dad because housing is too expensive. And that would benefit household incomes.

4. “Household income” isn’t just what the amount that income earners in that household bring home from their jobs. The survey also asks questions about the amount of “money income” each person 15 years and older in the household has received from these 18 sources, which include income from government benefits from investments:

  1. Earnings
  2. Unemployment compensation
  3. Workers’ compensation
  4. Social security
  5. Supplemental security income
  6. Public assistance
  7. Veterans’ payments
  8. Survivor benefits
  9. Disability benefits
  10. Pension or retirement income
  11. Interest
  12. Dividends
  13. Rents, royalties, and estates and trusts
  14. Educational assistance
  15. Alimony
  16. Child support
  17. Financial assistance from outside of the household
  18. Other income

The Census report sheds no light on how much of role each of these 18 sources of income played in the household total, and how much other factors were involved. We know that dividend payments have surged, and so has dividend income. Rents have surged too, and so has rental income. “Educational assistance” might include student loans, which have soared also. The possibilities are endless.

All we know is that the median income from wages has ticked up at a frustratingly slow rate: 1.5% for men and 2.7% for women. And that is no reason to celebrate.

And now CEOs have the “unfortunate new normal.” Read…  The Chilling Thing CEOs of Corporate America Said about Jobs

  • gininitaly

    What would have been interesting is comparing those income levels to CEO salaries and corporate profits during the same period.

  • The peak in wages in America was way back in 1968…Nearly FIFTY YEARS AGO!!
    So actually, wages have been stagnant and DECLINING since 1968!!
    What does this mean???
    Well, adjusted for INFLATION, workers in America today in reality only receive 60 CENTS per hour as the SLAVE WAGES endure and the American SLAVES go further into more and more unsustainable DEBT!!
    OH!! And IF the minimum wage was adjusted for INFLATION, that minimum wage would be $21.63 per hour today in 2016.
    What does this mean? It means to me that this country AMERICA is
    America itself is ONE GIGANTIC LIE!!!!

  • DHFabian

    It does have the ring of propaganda about it, since it excludes the masses of truly poor. In real life, not everyone is able to work, and there aren’t jobs for all. The US shipped out a huge number of jobs since the 1980s, ended actual welfare in the 1990s. The last I heard, there are 7 jobs for every 10 jobless people who still have the means to pursue one (you can’t get a job without a home address, phone, etc.). If we exclude a good chunk of deaths, we can similarly claim that gun violence isn’t a real problem.

    To my knowledge, we no longer have the means to estimate US poverty rates. We largely relied on welfare statistics in the past. I suppose we have jail and morgue statistics, assuming they indicate job/economic status of each person/body. We have no means of taking a survey, obviously.

  • stephenverchinski

    So lets be smart and deny the party duopoly that has taken us to the cleaners. No R nor D but Go Jill Stein!