US Incomes Keep Falling Though Recession is Over

The New York Times published a report according to which US household incomes fell more in the two years following the end of the recession than during the downturn itself.

In a grim sign of the enduring nature of the economic slump, household income declined more in the two years after the recession ended than it did during the recession itself, new research has found. Photo: Celeste Cota/Flickr

A study which was conducted by two former Census Bureau officials that between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909.

If to compare during the recession — from December 2007 to June 2009 — household income fell just 3.2 percent.

The bigger drop in the two years after the recession suggests why Americans feel a growing sense of anxiety about the nation’s economic prospects even as the economy has been growing since the recession ended.

Gordon W. Green Jr., who wrote the report with John F. Coder, called the decline “a significant reduction in the American standard of living.”

In another study, Henry S. Farber, an economics professor atPrinceton, found out that people who lost jobs in the recession and later found work again made an average of 17.5 percent less than they had in their old jobs.

“As a labor economist, I do not think the recession has ended,” Mr. Farber said. “Job losers are having more trouble than ever before finding full-time jobs.”

Mr. Farber added that this downturn was “fundamentally different” from most previous ones. Historically, other economists say, financial crises and debt-caused bubbles have led to deeper, more protracted downturns.

The average length of time a person who lost a job was unemployed increased to 24.1 weeks in June 2009 during the recession, from 16.6 weeks in December 2007, according to the federal Bureau of Labor Statistics.

After the end of the recession, that figure has continued growing, and reached 40.5 weeks in September, the longest in more than 60 years.

Mr. Green and Mr. Coder found that income dropped more, in percentage terms, for some groups already making less, a factor that they say may have contributed to rising income inequality.

From June 2007 to June of this year, they said, median annual household income declined by 7.8 percent for non-Hispanic whites, to $56,320, and by 6.8 percent for Hispanics, to $39,901. For blacks, household income declined 9.2 percent, to $31,784.

The report follows an official Census Bureau study last month that showed the US poverty rate rose sharply in 2010 to 15.1 percent, the highest since 1993, from 14.3 percent a year earlier.

It was the fourth consecutive rise in the number of people below the poverty line, to 46.2 million.

The US definition of poverty is an annual income of $22,314 for a family of four, and $11,139 for a single person in 2010.

Median annual income declined most for households headed by someone with an associate’s degree, dropping 14 percent, to $53,195, in the four-year period that ended in June 2011, the report said.

For households headed by people who had not completed high school, median income declined by 7.9 percent, to $25,157. For those with a bachelor’s degree or more, income declined by 6.8 percent, to $82,846.

President Obama recently called the economic situation “an emergency.” Over the weekend he assailed Congressional Republicans for opposing his jobs bill, which includes tax cuts that would raise take-home pay.

Republicans blame Mr. Obama for the slump, saying he has issued a blizzard of regulations and promised future tax increases that have hurt business and consumer confidence.

Those arguments may be heard repeatedly this week, as the Senate begins debating the jobs bill. The full bill — a mix of tax cuts, public works, unemployment benefits and other items, costing $447 billion — is unlikely to pass, but individual parts seem to have a significant chance. [via The New York Times and Yahoo!]

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