Sentier Research spokesman Gordon Green summarizes these data:
The lack of significant change in real median annual household income between June and July 2014 underscores the uneven trend in the series since the low-point reached in August 2011. Our time series charts clearly illustrate that although the economic recovery officially began in June 2009, the recovery in household income did not begin to emerge until after August 2011. While many of the month-to-month changes in median income since the low-point in August 2011 have not been statistically significant, an overall upward trend is still clearly evident.
Short explains why he would rather use a different way to present the data:
The next chart is my preferred way to show the nominal and real household income—the percent change over time. Essentially I have taken the monthly series for both the nominal and real household incomes and divided them by their respective values at the beginning of 2000. The advantage to this approach is that it clearly quantifies the changes in both series and avoids a common distraction of using dollar amounts ("How does my household stack up?").More analysis below the fold.
The stunning reality illustrated here is that the real median household income series spent most of the first nine years of the 21st century struggling slightly below its purchasing power at the turn of the century. Real incomes (the blue line) hit an interim peak at a fractional 0.7% in early 2008, far below the nominal illusionary peak (as in money illusion) of 27.2% six months later and now at 32.5%, a record high. In contrast, the real recovery from the trough has been depressingly slight. [My emphasis—MB]
The July 2014 real median annual income is 5.7% below our turn-of-the-century starting point and 6.4% below its interim high in January 2008. Note, however, that the Sentier calculations are based on pre-tax data. The expiration of the 2% FICA tax cut in December of 2012 put an additional hit on disposable incomes, especially for those households on tight budgets. [...]
As the excellent data from Sentier Research makes clear, the mainstream U.S. household was struggling before the Great Recession. At this point, real household incomes are in worse shape than they were four years ago when the recession ended.
And finally, here's one more way to view the median household income:
[UPDATE: New Deal democrat at the Bonddad blog points out an obvious error in the above sentence. Household income includes more than just earnings, but pension and interest payments as well.]
What we're seeing here, not that it's news to anyone who has followed the trend over the past few years, is how marginal the recovery has been on the wage end of things even though job growth itself has improved significantly. A report by the National Employment Law Project makes the situation clear:
• Lower-wage industries constituted 22 percent of recession losses, but 44 percent of recovery growth.Not a good trend, to say the least.
• Mid-wage industries constituted 37 percent of recession losses, but only 26 percent of recovery growth.
• Higher-wage industries constituted 41 percent of recession losses, and 30 percent of recovery growth.
Today, there are nearly two million fewer jobs in mid- and higher-wage industries than there were before the recession took hold, while there are 1.85 million more jobs in lower-wage industries.