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Census Bureau data show improving income—but increasing inequality

Last week, the U.S. Census Bureau released numbers for median income in the United States. Overall, the numbers are positive, with median incomes for all families rising 3.2 percent to $59,039 in 2016. This is a slower rate of increase than 2015, which saw median income growth of 5.2 percent. The poverty rate also decreased 0.8 percent from 2015 to 2016 to 12.7 percent, making it the second annual decline in poverty. The poverty rate has still not returned to its 2007 level of 12.5 percent.

While the media’s portrayal of the new numbers has been very upbeat, the last couple of years of income growth is not nearly enough to counteract the income losses suffered by most Americans during the Great Recession. The main reason for this is the unequal distribution of income gains over the past two years. The Economic Policy Institute estimates that families in the top fifth of the income distribution saw faster growth than in 2015, while the bottom 80 percent of families saw slower growth. The marginal increases in income growth are insignificant in the face of such widening inequality.

This is very different from the period between 1947 and 1979, when the top income bracket was not the only segment of society that reaped the benefits of economic growth. The below graph from the Economic Policy Institute shows average annual family income growth by income group from 1947 to 2016:

The anti-worker policies enacted over the years have been responsible for this shift from a more egalitarian society to one where the upper 5 percent of the income bracket gain almost all the new income.

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