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U.S. Incomes Up, Poverty Rate Down in 2019
https://www.wsj.com/articles/u-s-inc...19-11600180606
When adjusted for inflation, incomes hit their highest level since 1967
By and Updated Sept. 15, 2020 4:12 pm ET
Americans’ median household income was $68,700 in 2019, up 6.8% from the prior year.
Photo: Callaghan O'Hare/Bloomberg News
WASHINGTON—American incomes rose sharply and poverty fell in the final year of the country’s decadelong economic expansion, according to Census Bureau figures released Tuesday.
Median household income was $68,700 in 2019, up 6.8% from the prior year and the highest figure on record. The poverty rate was 10.5%, a drop of 1.3 percentage points from the year before. It was the fifth consecutive annual decline in poverty and put the poverty rate at its lowest level since 1959, the first year it was tracked.
The figures show how incomes improved during most of the last five years before the coronavirus pandemic drove the U.S. into a recession in February. When adjusted for inflation, incomes last year hit their highest level since the bureau began measuring it this way in 1967.
“It was a pretty banner year for households, and really across the income distribution, we got a lot of eye-popping figures in this release,” said David Deull, principal economist at IHS Markit, who described 2019 as the “late-stage expansion high watermark benchmark.”
Trudi Renwick, an assistant division chief at the U.S. Census Bureau, said, “We do see in the data that we have an increase in employment, that we have an increase in earnings, and those would all tend to push median household income up.”
The bureau also said that the share of Americans without health insurance at the time they were surveyed in 2019 was 9.2%, an increase of 0.3 percentage point from 2018. About 29.6 million Americans lacked health insurance, according to the survey, about 1 million more than the previous year. Using a separate survey, the bureau found that 8% of Americans lacked coverage for all of 2019.
The percentage of people with employer-provided coverage was slightly higher in 2019 than the prior year, reflecting growth in employment, while the percentage of people with Medicaid coverage decreased slightly. Private plans covered 67.4% of people, while public plans such as Medicare and Medicaid covered 35.4%. People can be covered by more than one type of plan during a year.
The bureau’s main household survey for the report was conducted in March and April, as the pandemic was surging. The survey response rate was 73%, 10 percentage points lower than a year earlier, the bureau said. It found higher levels of nonresponse at lower income levels and said that its normal adjustments didn’t completely reflect that shift. It said that reported income gains and the drop in poverty would have been slightly smaller if it had used an unofficial set of adjustment factors that better reflected the shift. However, median household income would still have hit a record.
Real median incomes of white, Black, Asian, and Hispanic households all increased from the prior year. Lower-income households did particularly well after missing out on income gains earlier in the expansion. The mean income of the lowest fifth of households rose 9% last year, a larger gain than for any other quintile of households.
Several measures of income disparity showed little change. The top fifth of households—with incomes above $142,500—collected 51.9% of income, while the top 5%—with incomes above $270,000—collected 23%. The lowest fifth—making less than $28,100—collected 3.1% of income. A household at the 80th percentile collected about twice the income of a household at the 50th percentile—the median—and five times the income of a household at the 20th percentile.
Since last year, the country’s plunge into a recession has drastically altered the economic landscape. Economists said the 2020 figures are likely to show notable disparities in whose incomes suffered, with some households being better off because of stimulus payments and extra unemployment benefits.
“The pandemic has created a lot of uncertainty,” said Jim Sullivan, a professor of economics at the University of Notre Dame. “People don’t know what their future jobs will be, what their incomes will be.”
Kevin Hassett, who was chairman of the White House Council of Economic Advisers under Mr. Trump, said the 2017 tax law increased growth and wages and pointed to the declining inequality evident in the report.
“If you’re a social justice warrior and you’re looking at the data, you would have to say that the Trump years, through the beginning of the pandemic, were the sort-of best years for advances in social justice since World War II,” he said on a webcast Tuesday with the American Council for Capital Formation.
Write to Janet Adamy at janet.adamy@wsj.com
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