We learned from the Census Bureau this morning that the decent employment growth in 2014 yielded no improvements in wages and, not surprisingly, no improvement in the median incomes of working-age households or drop in the number of people living in poverty. Wage trends greatly determine how fast incomes at the middle and bottom grow, as well as the overall path of income inequality, as we argued in Raising America’s Pay. This is for the simple reason that most households, including those with low incomes, rely on labor earnings for the vast majority of their income.

The Census data show that from 2013–2014, median household income for non-elderly households (those with a head of household younger than 65 years old) decreased 1.3 percent from $61,252 to $60,462. This decrease unfortunately exacerbates the trend of losses incurred during the Great Recession and the losses that prevailed in the prior business cycle from 2000–2007. Median household income for non-elderly households in 2014 ($60,462) was 9.2 percent, or $6,113, below its level in 2007. The disappointing trends of the Great Recession and its aftermath come on the heels of the weak labor market from 2000–2007, during which the median income of non-elderly households fell significantly from $68,941 to $66,575, the first time in the post-war period that incomes failed to grow over a business cycle. Altogether, from 2000–2014, the median income for non-elderly households fell from $68,941 to $60,462, a decline of $8,479, or 12.3 percent.

Income Real median household income, all and non-elderly, 1995–2014 All households All households- imputed series All households- new series Non-elderly households Non-elderly households- imputed series Non-elderly households- new series 1995-01-01 $52,555 $54,231 $60,378 $62,268 1996-01-01 $53,319 $55,020 $61,506 $63,431 1997-01-01 $54,417 $56,152 $62,298 $64,248 1998-01-01 $56,394 $58,193 $64,823 $66,852 1999-01-01 $57,815 $59,659 $66,493 $68,575 2000-01-01 $57,718 $59,559 $66,849 $68,941 2001-01-01 $56,460 $58,261 $65,819 $67,879 2002-01-01 $55,801 $57,580 $65,145 $67,184 2003-01-01 $55,752 $57,530 $64,573 $66,594 2004-01-01 $55,558 $57,330 $63,816 $65,814 2005-01-01 $56,172 $57,963 $63,399 $65,384 2006-01-01 $56,589 $58,394 $64,250 $66,261 2007-01-01 $57,348 $59,177 $64,554 $66,575 2008-01-01 $55,303 $57,067 $62,436 $64,391 2009-01-01 $54,933 $56,685 $61,603 $63,532 2010-01-01 $53,497 $55,203 $60,012 $61,890 2011-01-01 $52,680 $54,360 $58,559 $60,392 2012-01-01 $52,595 $54,272 $59,127 $60,978 2013-01-01 $52,779 $54,462 $54,462 $59,393 $61,252 $61,252 2014-01-01 $53,657 $60,462 Chart Data Download data The data below can be saved or copied directly into Excel. The data underlying the figure. Note: CPS ASEC changed its methodology for data years 2013 and 2014, hence the break in the series in 2013. Solid lines are actual CPS ASEC data; dashed lines denote historical values imputed by applying the new methodology to past income trends. Non-elderly households are those in which the head of household is younger than age 65. Shaded areas denote recessions. To account for the redesign of the CPS ASEC survey, when the difference between the original data for 2013 and the redesigned data for 2013 is small in magnitude (less than a 1 percent difference) and statistically insignificantly different, data for 2013 is an average of the original and redesigned data. When the difference between them is relatively large in magnitude (1 percent or greater) or statistically significantly different, we display a break in the series and impute the ratio between them to historical data. Source: EPI analysis of Current Population Survey Annual Social and Economic Supplement Historical Income Tables (Tables H-5 and HINC-02) Share on Facebook Tweet this chart Embed Copy the code below to embed this chart on your website. Download image

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 over the last dozen years. In 2014, the median man working full-time, full-year experienced a slight decrease in real earnings of 0.9 percent, from $50,834 to $50,383. On the other hand, the median woman working full-time, full-year saw a slight increase of 0.5 percent, from $39,427 to $39,621. By these measures, real wages have failed to grow since 2007 for either men or women. Looking over a longer horizon, the trends are starkly disappointing. The median woman working full-time, full year saw her earnings grow from $30,180 in 1973 to $39,757 in 2002, and then stagnate in the 2002–2007 recovery and during the recession since 2007, reaching only $39,621 in 2014. Since 1973, the median man working full-time, full-year has seen no sustained growth, dropping from $53,291 in 1973 to $51,902 in 2002 and falling further over the 2002-07 recovery and the recession to $50,383 in 2014.

To get household incomes rising we will need to get real wages of the typical man and woman to rise, something that we haven’t seen for more than a decade.