Household income drops for 4th straight year

The income for the typical American household fell last year for the fourth consecutive year. This is the longest sustained period of decline since the early 2000s. It is reported that Americans are poorer now then they were in 1999 after taking into account how inflation erodes the value of the dollar.

By Dennis Cauchon
September 12, 2012
USA Today

The income of the typical American household fell last year for the fourth consecutive year, the longest sustained period of decline since the early 2000s. Americans are now poorer than they were in 1999 after taking into account how inflation erodes the value of the dollar.

Median household income fell after adjusting for inflation to $50,100 in 2011, down 1.5% from a year earlier.

The Census Bureau's annual income report is considered a key indicator of the economic health of the nation and its middle class. Median income is the true middle point of American households — half made more, half made less in 2011.

Census also released other key measures Wednesday:

• Poverty. An estimated 15% of Americans lived in poverty last year, down slightly from 15.1% in 2010 . That means 46.2 million people were in poverty in 2011. Brookings Institution demographer William Frey says this number is especially important this year because Hispanic children reached an all-time high rate of poverty last year.

• Health insurance. The share of Americans without health coverage at any time during 2011 fell to 15.7% in 2011, down from 16.3% in 2010. The drop in the number of uninsured could reflect the early stages of the health care overhaul, such as allowing parents to insure children up to age 26.

The new report offers an imperfect partial answer to the presidential campaign question: Are Americans better off than four years ago? The income numbers show households have not recovered to the level when President Obama took office in 2009 or when George W. Bush was president in 2008 and the recession had begun.

Household income, however, is an imperfect measure of personal finances. The Census Bureau counts as income only cash received on a regular basis, such as wages, Social Security and unemployment checks. It doesn't include the growing value of Medicare, Medicaid, food stamps, the Earned Income Tax Credit, most employer benefits or capital gains from the sale of stocks or businesses.

Still, the numbers provide a detailed picture of how the diverse country is faring.

The report showed a significant increase in income inequality. The income for the top 5% of households — those making $186,000 or more — rose 5.3% last year. The income of the bottom four-fifths of households fell or was unchanged in different income groups.

Changes at the very top — the top 1% of households — were greatest of all, said David Johnson, chief of social, economic and housing statistics for the Census. The result was a "widening of the gap between the top and the bottom," Johnson says.

The median income for all households was reduced slightly because of the aging of the population, a trend that is expected to continue. Seniors make less than those in their prime earning years. That reduced the median income of all American households about $200 in 2011, Johnson said.

However, as a group, seniors continue to enjoy income growth, partly because of the steadiness of Social Security and the protection of Medicare from some medical expenses. Median household income rose 2% to $33,118 in 2011 for those 65 and older. By comparison, household income fell 4% to $55,937 for those 55 to 64.

Brian Wooldridge, 39, of Newport, Del., worked in warehousing and inventory control in North Carolina for 15 to 20 years. But when he moved to Delaware about a year ago to care for his mother, he couldn't find a similar job. So now he scours Internet job sites and has a half-dozen temp agencies looking for jobs for him.

"There are jobs out there, but there are so many people applying," Wooldridge said. "You go to one interview, and you've got 50 or 100 other people there. You get to a second interview, and they say they went with someone else with more experience."

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