Median US Household Income Rises 6.8% to $68,700 in 2019, Poverty Rate Falls for Fifth Year
Tuesday, September 15, 2020
Americans’ incomes rose sharply last year and fewer people were living in poverty, but a growing number went without health insurance for the second straight year.
The numbers were skewed by reduced responses to U.S. Census survey takers during the COVID-19 pandemic but, even after accounting for that shortfall, still show healthy income gains and a decline in poverty.
Median U.S. household income increased 6.8% to $68,700, the U.S. Census Bureau said. That followed advances of 3.1% in 2016, 1.8% in 2017 and 0.9% in 2018. On an inflation-adjusted basis, median income last year was the highest on records dating to 1967.
Household income includes bonuses, Social Security, public assistance payments and interest and dividend from investment, among other sources.
The report provides an almost halcyon snapshot of Americans’ household finances before the COVID-19 pandemic shut down much of the economy, triggering the layoffs or furloughs of more than 20 million workers and reduced hours or wages for millions more.
The record 101/2-year-old economic expansion, which ended with the coronavirus crisis in February, continued to provide jobs to more Americans, lifting many out of poverty. There were 34 million people in poverty last year, 4.2 million fewer than in 2018. The poverty rate fell for the fifth straight year, to 10.5% from 11.8% in 2018, with the share falling in every region.
Unemployment averaged 3.7% last year and sank to a 50-year low of 3.5% before climbing to the current 8.4% as a result of virus-induced business closures and their ripple effects.
But the number of people without health insurance increased for the second straight year, to 29.6 million, up by 1 million from 2018. The share of those without coverage increased to 9.2% from 8.9%. The portion of people with employer-provided coverage rose to 55.4% from the 55.2%. The share with Medicaid fell to 19.8% from 20.5%.
The Trump administration has taken steps to weaken the Affordable Care Act, such as repealing a requirement that Americans have coverage or pay penalty and issued guidance that allows states to revoke Medicaid from people who aren’t working a minimum number of hours each month. This year, the administration challenged the legality of the entire law before the Supreme Court.
Census officials noted the response rate to its annual survey was just 73% in March because of the health crisis, compared to about 83% in prior months and a year earlier. Elise Gould, senior economist at the left-leaning Economic Policy Institute, says the low rate raises "significant concerns about data quality."
Low-income Americans, who were laid off in disproportionate numbers by restaurants, retailer and businesses, in particular were less likely to respond to survey takers, Census says. After attempting to adjust for that gap to simulate a normal survey, Census found that median income would have increased 4.1% instead of 6.8% and the poverty rate would have declined 0.9 percentage points -- instead of 1.3 percentage points -- to 10.9%.
And while the improvements in income and poverty mark “a step in the right direction, many families have just barely made up for lost ground from the Great Recession” of 2007-09, Gould says.
After correcting for data collection inconsistencies before and after 2013, median income is 6.5% above the 2000 level, Gould says. And, she says, last year was the first in which nonelderly household income topped the 2000 level. That translates into average annual growth of just 0.2% over the past two decades.
The West led the nation in household income gains at 7%, followed by the Northeast (6.8%), the South (6.1%) and Midwest (4.8%).
Median income rose 10.6% for Asians to $98,174; 7.9% for Blacks to $45,438; 7.1% for Hispanics to $56,113; and 5.7% for whites to $76,057. For the first time since the Great Recession, Blacks topped their 2007 inflation-adjusted income level, according to EPI.
Income inequality remained a stark issue for the nation, but it was largely unchanged from the previous year. The top quintile, or fifth, of households by income received 51.9% of all income while those in the bottom quintile got 3.1%.
Among workers, the median earnings of men increased 2.1% to $57,456 while women’s median earnings increased 3% to $47,299. Women earned 82% of male pay on average, similar to 2018, Census said.