Courtesy of Doug Short.
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In September, the Census Bureau released its annual estimates of U.S. household and family incomes.
The report does not make pleasant reading. Indeed, much within the survey questions a central premise of the American Dream: that each generation builds upon what prior generations have bequeathed to attain new levels of comfort and security. If the trends in the Census Bureau?s survey persist, it may be that the best hope for the current generation of Americans coming of age is to at least hold on to the material comforts their parents have known and enjoyed; or, if sacrifices must be made, to manage the loss of affluence known in a gentle slide rather than a sudden descent.
Much ink has already been expended on the fall in median family and household incomes since the Great Recession commenced. Overall, the Census Bureau survey reports median family incomes have declined by 1.6 percent from 2007 to 2010. It is not the magnitude of the decline but the fact of a decline which is significant. The last three years constitute the only rolling three year period since 1947, when the Census Bureau first began estimating U.S. family incomes, that the median family income has declined. And, these figures are in nominal dollars, unadjusted for the effects of inflation. Adjusted for inflation, the contraction is sharper.
This pain has not been shared equally. Families just starting out (in the 15 to 24 year age range) saw a 14.7 percent decline in median income from 2007 to 2010. Families in the next age cohort – 25 to 34 years – experienced a 3.9 percent decline in nominal median income. Every age cohort below 65, except one – the 55 to 64 year group – saw nominal median family incomes decline from 2007 to 2010. What of families in the 65 years and older group? Well those families witnessed a 9.4 percent increase in median income from 2007 to 2010. Despite the recession, senior citizens saw a considerable absolute (and, relative, to other age brackets) increase in median family incomes. This observation is true whether measured in current or constant dollars.
A key reason for this divergence is the relentless increase in Social Security benefits. From December 2007 to December 2010, the average monthly payment under the Old Age and Survivorship Income (OASI) program – what we think of as Social Security – increased by 9.4 percent.
In stark contrast is the precipitous decline in the youngest age group. While this age group has experienced reversals in prior recessions, the median income declines seen have never been of this magnitude. It will take many years, or a spurt of extremely rapid growth, for the generation just starting out to reclaim the ground lost.
But we are not optimistic. There is no lobby or interest group to exert the pressure or influence on their behalf. In the considerations of party politics they are our forgotten generation.
Notes:
The Census Bureau measures median and average income based on household and family. Household is a fairly expansive definition that encompasses the family unit. In 2010, the Census Bureau estimated there were 118.7 Million households in the U.S., of which 78.6 Million were categorized as families.
Median income is reported two ways: unadjusted for inflation (current $s) or adjusted for inflation (in this instance, expressed in terms of 2010 purchasing power).
(Source: U.S. Census Bureau, Income, Poverty and Health Insurance Coverage in the United States: 2010.)
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