U.S. Incomes Declined More During Recovery Than In Recession: Study

Study: U.S. Incomes Fell More During Recovery Than In Recession

The U.S. economy may technically be in a recovery, but it likely doesn’t feel that way for many Americans when grabbing for their wallets.

Median annual household income has fallen more during the recovery than it did during the recession, according to a new study from former Census Bureau officials Gordon Green and John Code. Between December 2007 and June 2009, when the U.S. economy was in recession, incomes declined 3.2 percent. While during the recovery between June 2009 and June 2011 incomes fell 6.7 percent, the study found.

The lack of income growth may explain why for most Americans the recovery still feels like a recession. Eight in 10 Americans believe the recession is an ongoing problem, according to a recent Gallup poll. And workers don't anticipate things will pick up any time soon. Nine out of 10 Americans said they don't expect to get a raise that will be enough to compensate for the rising costs of essentials like food and fuel, according an American Pulse survey released in June.

Slow job growth is likely also exacerbating the feelings of recession and weighing on household incomes. U.S. employers added 103,000 jobs in September, too few jobs drive the unemployment rate below 9.1 percent and barely enough to keep pace with population growth, the Department of Labor reported last week. Those Americans that are employed are continuing to get squeezed by their employers. Profits per employee went up for the second year in a row in 2010, according to financial analysis company Sageworks.

If the U.S. continues its sluggish jobs growth pace it could drive incomes even lower. Americans who are jobless for more than 99 weeks lose any unemployment benefits driving their incomes to zero and weighing on the national average, according to 24/7 Wall Street.

The recession’s and the recovery’s drag on income growth has put some Americans in a worse position than they were decades ago. The median income for U.S. males was worse in 2010 than in 1968 on an inflation-adjust basis.

In some states the recession and the recovery only exacerbated a decline in incomes that’s been taking place for longer. The median household income in Wisconsin plunged 14.5 percent between 1999 and 2010, The Milwaukee Wisconsin Journal Sentinel reported.

If union membership continues to decline in states like Wisconsin, incomes may keep falling. A boost in union membership would increase middle-class incomes by more than $1,000, a bump that would be more than if the unemployment rate fell by four percent, according to the Center for American Progress.

Still, even if Americans are forced to continue to watch their incomes dwindle the U.S. economy won’t necessarily get pushed back into a recession. Recent data including last week’s jobs report indicates that the economy is growing slowly, not contracting, Bloomberg reported.

Before You Go

Popular in the Community