Every month, Doug Short
takes a look at the latest median household income figures from
Sentier Research. The data for March recently became available, as you can see in the chart above.
"Real" median household income—that is, adjusted for inflation—is down 0.73 percent from February and up just 1.3 percent from March 2013. Median annual income is now 7.5 percent below its peak in January 2008. That's $4,309 less today than it was six years ago.
From John Coder and Gordon Green at Sentier:
Real median annual household income in March 2014 can be put into broader perspective by comparisons with previous levels of household income since the recession began and dating back to the start of the last decade. The March 2014 median
income of $53,043 was 4.0 percent lower than the median of $55,261 in June 2009, the end of the recent recession and beginning of the “economic recovery.” (Since the recession ended consumer prices have increased by 9.7 percent, creating a sizable “headwind” for changes in median annual household income.) The March 2014 median was 5.7 percent lower than the median of $56,271 in December 2007, the beginning month of the recession that occurred over six years ago. And the March 2014 median was 6.9 percent lower than the median of $56,950 in January 2000, the beginning of this statistical series. These comparisons demonstrate how significantly real median annual household income has fallen over the past decade, and how much ground needs to be recovered to return to a median income level that existed more than ten years ago.
While there continues to be significant differences of opinion over how inflation should be calculated, even using the Consumer Price Index—a formula that some critics perceive as a major underestimate of true inflation—the economic damage from that 7.5 percent drop in real median household income is not nickels and dimes.
Please read below the fold for more analysis.
We know why. Despite the fact millions more people are working now than were on the job two, three and four years ago, even if they have a full-time job quite similar to that before the recession forced them onto the unemployment rolls, they are getting paid less now. And while millions more are working, many are only part-timers.
Short has another way of looking at the numbers, too:
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?"). [...]
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.
