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Median income tops pre-recession peak; poverty rate wanes

WASHINGTON -- The median American household last year earned more than it did in 1999, the Census Bureau said Tuesday, a reminder of the damage done by the recession and of the modest recovery that followed.

Incomes for the median U.S. household, adjusted for inflation, rose 3.2 percent from 2015 to 2016 to $59,039. The median is the point at which half the households fall below and half are above.

Last year's figure is slightly above the previous peak of $58,665, reached in 1999. It is also the first time since the recession ended in 2009 that the median household earned more than it did in 2007, when the recession began.

Trudi Renwick, an assistant division chief at the Census Bureau, cautioned that median income figures of the past few years are difficult to compare directly with prior years because of a change in how the Census Bureau collects income data. At the same time, she noted: "This has been two consecutive years of very strong income growth."

Still, census data are closely watched because of their comprehensive nature. They're based on interviews with 70,000 households and include detailed data on incomes and poverty across a range of demographic groups.

The median U.S. income has now posted solid gains for two straight years. Yet that growth came after a steep recession and a slow recovery that left most American households with only meager pay increases.

"We consider 2015 and 2016 to be the turning point on the real median household income front, as employment and wage gains, combined with modest consumer price inflation, have boosted the well-being of many American households," said Chris Christopher Jr., executive director of IHS Markit, an economic research firm.

"Real median household income has finally completed its nine-year slog of digging out of the ditch," he said.

The lack of meaningful raises has left many people feeling left behind economically, a sentiment that factored into the 2016 elections.

The census report covers 2016, the last year of the Obama administration.

The income gains reflect mostly a rise in the number of Americans with jobs and in people working full time, the agency said. About 1.2 million more Americans earned income in 2016 than in 2015, and 2.2 million more had full-time year-round jobs.

The improved incomes have been widely shared. Black median household income jumped 5.7 percent to $39,490 year over year. Among Hispanics, it rose 4.3 percent to $47,675. For whites, the gain was 2 percent to $65,041.

Asian-Americans reported the highest household incomes at $81,431, which was little changed from 2015.

Other measures of Americans' economic health also improved. The poverty rate fell last year to 12.7 percent from 13.5 percent, the Census Bureau said. The number of people living below the poverty line dropped 2.5 million to 40.6 million.

And the proportion of Americans without health insurance declined to 8.8 percent, the report showed, down from 9.1 percent.

The report found that the gender gap in wages narrowed last year for the first time since 2007. Women earned 80.5 percent of men's earnings, up from 79.6 percent in 2015.

The strong gains in household income over the past two years are likely to sharpen the political debate between President Donald Trump, who is pressing to overhaul the nation's economic policies, and Democrats who now have more ammunition to argue that such changes would mess with success.

The most immediate battleground: Trump's push for large tax cuts.

"The challenge for policymakers now is to build on the last few years' progress and not worsen poverty and inequality," said Robert Greenstein of the Center on Budget and Policy Priorities, a liberal think tank. He said many of the items on Trump's agenda "would raise poverty, widen inequality, or reduce health insurance coverage."

The Economic Policy Institute, a liberal research organization based in Washington, estimated that without the Census Bureau's change in methodology, median household income was still roughly 2.3 percent below the record high -- and 1.6 percent below the level reached in 2007.

Information for this article was contributed by Christopher S. Rugaber of The Associated Press, by Don Lee of Tribune Washington Bureau and by Binyamin Appelbaum of The New York Times.

Business on 09/13/2017

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