Business & Tech

Evan Horowitz | Quick Study

Households are making more money, but individuals aren’t

Newly released census data show household income is up, but it’s not as simple as that.
Newly released census data show household income is up, but it’s not as simple as that.

Household incomes grew strongly in 2016, rising 3.2 percent, according to data released Tuesday by the Census Bureau. It was the second straight year of wallet-filling increases for families, adding up to the best two-year period since the 1960s.

Poverty fell, too, for adults and for children, which finally brings the overall US poverty rate back to where it was before the recession of 2007-2009.

And yet, beneath the peal of good news, there are some whispers of trouble.


For instance: Households might be taking in more cash, but individual workers aren’t. Paychecks were actually flat among full-time workers in 2016, according to the very same census report.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

How can this be? The most likely explanation is that people are working more. Household incomes rise naturally when a new family member joins the workforce, or when a part-timer switches to full time. This happened a lot in 2016, as a strong labor market made room for more than 2 million additional full-time workers.

That’s a good thing, a sign that people who want work are finding steady jobs. But ideally you’d like to see both trends tilting upward: more full-time workers and better hourly pay — particularly at this stage of an economic recovery, when unemployment is low and companies should be fighting to attract workers.

Virtually everywhere you look in Tuesday’s census release, you find the same mix of positive news and worrying undercurrent.

Consider the distribution of winners and losers. Even in the best of times, some households fare better than others. But you want to ensure the pain isn’t concentrated in one ethnic group, or in some marginalized community.


In 2016, income gains were widely shared among people of all backgrounds, with minority groups enjoying some of the biggest boosts. Black households saw their median income rise nearly 6 percent, and Hispanic households more than 4 percent — both better than the national average. Also, both groups enjoyed substantial reductions in poverty.

But even if race wasn’t a big differentiator, geography was. Those lucky enough to live near an urban center saw income growth of more than 5 percent, compared with an approximately 1 percent increase in nonmetropolitan areas.

And there were large regional discrepancies as well, with households in the South and West outperforming those in the Northeast — and all three leaving the Midwest far behind.

Perhaps the purest example of the trouble with Tuesday’s census numbers is the news that the gender gap shrank for the first time since 2007. On its face, that might seem like a long-overdue step in the march toward equal pay in the often-unequal American workplace.

But consider why the gender pay gap shrank. It’s not because women’s earnings increased substantially in 2016. In fact, they changed so little the Census Bureau couldn’t tell whether it was just statistical noise.


But men’s earnings actually went down. That’s been the story since at least 2007. The gender pay gap has been shrinking not so much because women are getting big raises but because men have taken big cuts. Their earnings are still 1.1 percent lower than they were in 2007.

It’s important not to get carried away by the dark clouds, here. Mostly, the economic sky is still blue, with rising household incomes, falling poverty rates, and a swelling number of full-time, year-round jobs.

But if these were really boom times, earnings should be going up, too — with ample gains for all Americans, men and women, urban and rural, Midwest and West. That didn’t quite happen in 2016.

.   .   .

A niggling note: Many outlets are reporting that household incomes reached the highest level on record in 2016, but it’s not so.

In 2013, the Census Bureau changed its questions in order to capture forms of income that were previously overlooked or underreported. As a result, the pre-2013 numbers can’t be directly compared with the more recent numbers.

When you try to adjust for the question changes, what you actually find is that the median household income remains slightly lower than it was before the recession in 2007, and well below the high from 1999.

Evan Horowitz digs through data to find information that illuminates the policy issues facing Massachusetts and the United States. He can be reached at Follow him on Twitter @GlobeHorowitz.