Recovery Disconnects Most Americans From Prosperity
More Americans continued to take on roommates or boarders than before the recession, women had fewer children, and people were still flocking to college or graduate school as a way to postpone their entry into the job market.
Those are just some measures of a tepid U.S. economy recorded last year in new Census Bureau reports that offer a portrait of a nation struggling to fully rebound from the worst downturn since the Great Depression. The data show a geographically uneven recovery in which the middle class is slipping and, on the basis of median household income, no better off than it was in 1989.
Unless there’s significant progress in the next few years, that reversal could be a watershed in American history.
“There is a remarkable disconnect between overall macroeconomic growth and the prosperity of middle- and low-income Americans,” said Jared Bernstein, a onetime chief economist for Vice President Joe Biden who’s now a senior fellow at the Center for Budget and Policy Priorities in Washington. “We’re not just talking about a fringe group being left behind. We are talking about the broad middle class.”
Amid the still shaky economy, demographers say they see a few positive trends -- including an uptick in people moving -- even if they appear to reflect a bottoming-out of measures collected last year, three years into the recovery.
“None of the indicators are close to where they were before the recession, but they are heading in the right direction,” said William Frey, senior demographer at the Washington-based Brookings Institution.
In a report earlier this week, the Census Bureau said the proportion of Americans living in poverty in 2012 -- 15 percent -- remained close to a two-decade high and median household income was stagnant. That data, like the latest released today on how Americans are coping, shows the economic expansion hasn’t filtered down to most people. Rising stock prices and home values have helped the more affluent, while those on the lower and middle tiers contend with high unemployment and sluggish wages.
For the middle class, that report showed the median household income of $51,017 last year was slightly less than what was recorded in 1989, when adjusted for inflation. That means an average family 24 years ago was making more than those in 2012.
The data comes as the U.S. economy slowly recovers from an economic slump that sent the unemployment rate to a 26-year high of 10 percent in October 2009. The jobless rate has since fallen and was at 7.3 percent in August.
With stock portfolios recovering -- the Standard & Poor’s 500 Index as of yesterday had risen 21 percent since Dec. 31 -- the wealthy have shaken off much of the recession.
The top 10 percent of earners -- those with household income above $114,000 -- collected more than half the nation’s total income in 2012, according to an updated research paper published earlier this month by University of California, Berkeley economist Emmanuel Saez. That’s the largest proportion since the government started gathering such data in 1917.
The study, using preliminary 2012 data, also found that those with the top 1 percent of incomes saw their earnings grow 31.4 percent from 2009, when the recession ended, to 2012. The bottom 99 percent saw growth of just 0.4 percent.
The Census Bureau’s findings released today come from the American Community Survey, which takes a sampling from about 3 million addresses that include households as well as group living situations such as nursing homes and prisons. It looked at demographic, economic, housing and social characteristics and provided geographic detail for cities or counties with as few as 65,000 people.
Frey’s analysis of the new data incorporated a basket-full of measures collected in the survey, ranging from fertility to the mobility of the nation’s residents.
One of those measures, the proportion of people in households who are non-relatives, grew to 5.9 percent in 2012, up from 5.8 percent the previous two years and above the 5.5 percent recorded in 2007 before the recession was fully under way. The most recent number showed only a slight increase from the previous year, suggesting that the trend of taking on roommates or boarders to save money may have leveled off.
Households that included “other relatives,” such as a grandchild or elderly parent, remained at elevated levels as well. That number stayed even at 7.3 percent in 2012, the same as 2011. The figure was 6.7 percent in 2007.
The fertility rate for women ages 15 to 50 also stayed lower than before the start of the recession, with 54 births per thousand women in that age group. That was unchanged from 2011 and down from 58 in 2008, the first full year of the recession.
Lower birth rates have long been tied to economic distress, with declines also seen during the Great Depression of the 1930s and the recession in the early 1970s. Typically in these economic situations couples put off marriage or childbearing because of a lost job or concern about losing one and lowered income, resulting in fewer births.
When there are fewer jobs to go around, more people also tend to head for college and graduate school, as a way of putting off their job searches. That continued in 2012, with about 23.9 million Americans enrolled in higher education. That was essentially unchanged from the previous year, though well above the 20.8 million recorded in 2007.
Reflecting the improving housing market, one area of modest gains captured in the ACS is the mobility of Americans. Many hunkered down during the recession and didn’t move to find work or better jobs because declining values for their homes left them unwilling to sell.
“In 2012, the volume of domestic migration in the U.S reached the highest level in five years,” wrote Ken Johnson, a senior demographer with the Carsey Institute at the University of New Hampshire, in an analysis of the new data. “The 2012 ACS suggests a modest increase in migration between 2011 and 2012 continuing an upward trend from a low point in 2010.”
Johnson said almost 16.9 million people moved between counties in 2012, up 1.1 percent from 2011. Migration between states accounted for 7.1 million of these moves, up almost 5 percent from two years ago.
“In some states, hard hit by the recession, migration gains are increasing from the minimal gains or outright losses of the recession,” Johnson wrote.
He cited Florida, saying it gained migrants from other states for the fourth straight year after two years of unprecedented migration loss during the recession. The net increase of about 109,000 residents from other states was 77 percent greater than in 2011 and was the largest migration gain in seven years.
“The U.S. has long benefited from a very fluid domestic labor force that allows talent and expertise to shift to areas of the country where the economy is growing,” Johnson wrote. “By freezing the population in place the recession reduced this labor force mobility.”
Among the 25 most-populous metropolitan areas, the District of Columbia had the highest median household income in 2012, at $88,233, as it continued to benefit from federal spending and the lobbying industry. At the opposite end of that list was Tampa-St. Petersburg in Florida, an area with a large proportion of retirees on fixed incomes, at $44,402.
After Washington, the metropolitan areas with top median household incomes were San Francisco, $74,922; Boston, $71,738; Baltimore, $66,970; Minneapolis-St. Paul, $66,282; Seattle, $65,677, and New York, $63,982.
Among states and the District of Columbia from 2000 to 2012, the District of Columbia recorded the largest inflation-adjusted increase in median household income, going to $66,583 from $53,995, the Census Bureau said. The few states that recorded statistically significant income gains during that period -- North Dakota, Wyoming, Louisiana and South Dakota -- tended to have ties to the energy industry.
States recording large inflation-adjusted declines from 2000 to 2012 were often those that suffered manufacturing losses during the recession, including Michigan (down 19.1 percent), Mississippi (down 15 percent), Georgia (down 13.7 percent), Indiana (down 13.2 percent) and Tennessee (down 12.2 percent).