Modest income growth in 2012 barely begins to offset lost decade driven by financial crisis and decade-long wage stagnation

This morning, the Census Bureau released its report on income, poverty, and health insurance coverage in 2012. It shows that from 2011 to 2012, median household income for non-elderly households (those with a head of household younger than 65 years old) increased 1.0 percent from $56,802 to $57,353. However, that modest growth barely begins to offset the losses incurred during the Great Recession. Between 2007 and 2011, median household income for non-elderly households dropped from $62,617 to $56,802, a decline of $5,815, or 9.3 percent. Furthermore, the disappointing trends of the Great Recession and its aftermath come on the heels of the weak labor market from 2000-2007, where the median income of non-elderly households fell significantly, from $64,843 to $62,617, the first time in the post-war period that incomes failed to grow over a business cycle. Altogether, from 2000 to 2012, median income for non-elderly households fell from $64,843 to $57,353, a decline of $7,490, or 11.6 percent.

Stagnant wages over last ten years

The key driver of these income trends, besides lower employment and hours in the aftermath of the financial crisis, has been wage stagnation. In 2012, the median man working full-time, full-year experienced a slight increase in real earnings of 0.4 percent, from $49,209 to $49,398. The median woman working full-time, full-year also saw a 0.3 percent drop, from $37,893 to $37,791. Looking over a longer horizon, the trends are stark. The median woman working full-time, full year saw her earnings grow from $29,261 in 1973 to $38,548 in 2002, and then stagnate for a decade, to $37,791 in 2012. Since 1973, the median man working full-time, full-year has seen no sustained growth, dropping from $51,668 in 1973 to $50,323 in 2002 and falling further over the last ten years to $49,398 in 2012.