Middle-class income rose to the highest recorded levels in 2017 and the national poverty rate declined as the benefits of the strong economy lifted the fortunes of more Americans, the U.S. Census reported Wednesday.
The median U.S. household earned $61,372 last year, meaning half of the families in the country brought in more income than this and half earned less.
Crossing the $61,000 mark signals the American middle-class may have finally earned more than it did in 1999, although the Census Bureau cautions that median income last year was not statistically different from 1999 or 2007. A change in methodology in 2013 makes precise comparisons difficult. All the income figures have been adjusted for inflation and are reported in 2017 dollars.
Middle-class household income has been rising steadily in recent years as the economy has rebounded from the deep recession and millions of Americans have found jobs again. The extra pay from having another person in the home working again or working additional hours is the largest factor contributing to rising income.
"We’re continuing to see a shift from part-time to full-time work, so some of that could explain an increase in income,” said Trudi Renwick, an assistant division chief at Census Bureau.
The Census Bureau also reported that the U.S. poverty rate declined modestly to 12.3 percent, the lowest level in years and a sign the economic devastation from the Great Recession is subsiding.
But by other measures, the economy is still not working for everyone. The percentage of Americans without health insurance stalled last year after several years of progress to extend coverage to more people under the Affordable Care Act.
The percentage of Americans without health insurance was essentially unchanged from 2016 to 2017 — staying at about 8.8 percent, or 28.5 million people — despite the overall economic boom. That marks a leveling off in the decline in the number of Americans without insurance — a number that trended steadily downward from 2010 to 2016, in part due to the implementation of the Affordable Care Act.
The number of Americans in poverty also did not change dramatically from the previous year, with the official poverty rate falling slightly from 12.7 percent in 2016 to 12.3 percent last year, according to the Census Bureau.
“That surprises me. I was expecting better improvement with the economy,” said H. Luke Schaefer, of the University of Michigan. “It’s something experts and policymakers should take a look at.”
Economists have been worried about why wage growth has been so sluggish lately, but Americans are compensating for that by working longer hours or having another family member find employment. Job openings hit a record high in July, the Labor Department reported this week, and there are now more jobs available than unemployed workers.
Households can vary in size from a single person to multiple adults and children residing under the same roof, but the average U.S. household has 2.6 people. Median household income is generally viewed as the best gauge of how a typical middle-class home is faring financially, although the Census Bureau changed how it collects income data in 2013, making it harder to do an “apples-to-apples” comparison of median income last year to median income before the change.
Still, economists say the trends on income and poverty are moving in the right direction and have been showing improvement for the past three years as the unemployment rate has fallen. Incomes would likely be rising even faster if wages were growing more.