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U.S. Incomes Fell More in Recovery, Sentier Says

August 24, 2012

American incomes declined more in the three-year expansion that started in June 2009 than during the longest recession since the Great Depression, according an analysis of U.S. Census Bureau data by Sentier Research LLC.

Median household income fell 4.8 percent on an inflation-adjusted basis since the recession ended in June 2009, more than the 2.6 percent drop during the 18-month contraction, the research firm’s Gordon Green and John Coder wrote in a report today. Household income is 7.2 percent below the December 2007 level, the former Census Bureau economic statisticians wrote.

“Almost every group is worse off than it was three years ago, and some groups had very large declines in income,” Green, who previously directed work on the Census Bureau’s income and poverty statistics program, said in a phone interview today. “We’re in an unprecedented period of economic stagnation.”

While gains in hourly earnings and average hours worked per week may have had “a minor mitigating effect” on income declines, they couldn’t offset a jobless rate that hasn’t fallen below 8 percent since February 2009 and a record duration of unemployment, according to the Annapolis, Maryland-based firm.

The average duration of unemployment increased to a record 41 weeks in November and remains at 39 weeks, Labor Department data show. Almost 5.2 million Americans have been out of work for at least six months.

Earnings Drop

Real median annual household income fell to $53,508 from $54,916 during the 18-month recession from December 2007 to June 2009, according to the firm’s study of income data for the 36- month period ended in June 2012. Incomes kept falling during the 36-month period since then, dropping to $50,964 in June 2012.

Men living alone experienced the worst drop in income, losing 9.4 percent, while married couples fared best with a 3.6 percent decline, the report shows. Incomes are before tax and adjusted for changes in consumer prices and expressed in constant June 2012 dollars.

“Median annual household income declined significantly for both family and non-family households,” Green and Coder wrote. “Real median annual household income declined more significantly for younger households.”

Incomes for all age groups below 65 years fell, while older Americans saw increases. Incomes for those 55 to 64 fell the most, losing 9.7 percent, followed by the 8.9 percent decline for 25- to 34-year-olds. The two gains were among those 65 to 75, whose incomes rose 6.5 percent, and those 75 and up who experienced an increase of 2.8 percent.

By education, Americans with some college lost the most, with incomes falling 9.3 percent, followed by an 8.6 percent slump for those with associate degrees, the report said. Those without high school degrees lost the least, falling 5.3 percent.

Green is a former chief of the governments division at the Census Bureau, the report said. Coder was chief of the Income Statistics Branch at the bureau, where he oversaw collection and processing of income data and developed new survey methods.