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US incomes are up, but not for everyone

  • A growing U.S. economy is generating higher incomes for millions of American households.
  • Not everyone is benefiting from the ongoing recovery.
  • For the 2015-2016 period, a typical household's income rose by 8.5 percent or $4,600 – more than any two-year period since the Census began collecting the data in 1967.

As a growing U.S. economy continues to generate higher incomes for millions of American households, not everyone is benefiting from the ongoing recovery.

Overall, the median household notched solid economic gains last year, building on improvement in 2015.

Incomes for a typical U.S. household, adjusted for inflation, rose 3.2 percent in 2016 to $59,039, according to the latest Census data. The median is the point at which half the households fall below and half are above.

For the 2015-2016 period combined, the typical household's income rose by 8.5 percent or $4,600 – a bigger gain than any two-year period since the Census began collecting the data in 1967, according to the left-leaning Center on Budget and Policy Priorities.

The gains also helped lift millions of households out of poverty, driving down both the poverty rate and the share of Americans not covered by health insurance.

The poverty rate fell last year to 12.7 percent from 13.5 percent, the Census said, cutting the number of people living below the poverty line by 2.5 million to 40.6 million. The share of households now living below the poverty line has fallen back to pre-recession levels, though it remains about 1.5 percentage points higher than its lowest point in 2000.

The economic gains came as employers continued to expand payrolls as the recovery from the Great Recession entered its eighth year, providing paychecks to millions of workers who had been sidelined by the historic downturn.

The improvement also was bolstered by federal economic assistance programs, including the SNAP program (formerly known as food stamps), refundable tax credits, Supplemental Security Income, and housing and home energy assistance programs.

But despite the overall improvement, the income gains continue to flow unevenly. As it has for the last four decades, much of the rising income last year went to the upper rungs of the economic ladder.

Average incomes among the wealthiest 5 percent climbed 5.5 percent in 2016 to $375,088. Among the poorest one-fifth of households, incomes rose by just 2.5 percent to $12,943.

The latest data also highlighted longstanding racial and ethnic economic disparities, though the gains were felt by most demographic groups.

Though their incomes continue to lag, the median for African-American households jumped 5.7 percent to $39,490 in 2016 from the previous year, the most of any group. Among Latinos, incomes rose to 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.

The disparity in household income gains was a major theme in the 2016 election, with both parties pledging to help boost the economic well-being of middle-class Americans. The issue has also become central to the current debate on tax reform taking shape on Capitol Hill.

The current political divide also shows up in the latest income data, with the average household income for red states showing a long-running shortfall compared with states that voted for Democratic candidate Hillary Clinton in 2016.

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