Next Tuesday, the 2012 income numbers will be released by the Census Bureau and will reveal whether or not U.S. households have begun to dig out of the hole left by the Great Recession.
Between 2007 and 2011, median household income dropped by 8.1 percent (Excel file). Unfortunately, Tuesday’s numbers are unlikely to show much of a rebound for the median household in 2012.
Two things that will have pushed the income numbers in a positive direction are average weekly hours worked, which increased by 0.3 percent in 2012, and the share of the population that is employed, which grew by 0.3 percent when considering the entire 16+ population and 0.8 percent when considering just “prime-age” workers (workers age 25-54). However, those increases will be at least partially offset by the fact that due to the weak labor market, workers were earning less per hour in 2012 than they did in 2011. (Real hourly wages for the median worker dropped by 0.6 percent in 2012.) Putting these factors together, my back-of-the-envelope calculation is that, in 2012, median household income likely grew somewhere between zero percent and one-half of one percent.
The figure below shows 2012 household income if the growth rate were to fall in the middle of that range, at one-quarter of one percent. It demonstrates that, if my rudimentary prediction holds, the situation remains grim. It would mean that the typical household’s real income in 2012 was 7.9 percent below where it was before the recession started in 2007.
Another point the figure shows is that weak income growth was not a new phenomenon emerging in the recessionary years since 2007. Between 2000 and 2007, the real income of the median household dropped by 0.6 percent. The weak income growth over 2000-2007, combined with the large income losses since 2007, means that between 2000 and 2012 (again, if my rudimentary prediction holds), real median household income dropped by 8.5 percent. In other words, the typical household has already experienced more than a lost decade.
We will be blogging the highlights of the release Tuesday so check back here. If you’d like to call in to a press call about the numbers, email email@example.com,