Family income finally regains 1989 level

 

The good news is that income for the median family has been rising since 1993. Median family income is the annual income received from all sources by the family in the middle of the income scale -- half of all families have a lower income and half have a higher one. The economic condition of the median family is probably the most useful indicator of the economic well-being of the typical American family.

The bad news is that, due to the declines that occurred during and after the 1990 recession, it was not until 1997 that median family income regained its 1989 level (the peak just before the recession). Black families were the exception -- since these families have a lower average family income than whites, this group's income grew fast enough to regain its 1989 levels in 1994.

Taking a longer view paints an even bleaker picture. The chart shows that in recent years, income growth for the median family has been snail-like. Between 1947 and 1973, median family income grew from $20,102 to $40,979, or by 104%. This growth rate worked out to 2.8% a year on average, or a doubling in income every 25 years.

After 1973, however, the growth rate in median family income slowed markedly. Over the 24 years from 1973 to 1997, median family income rose an average of 0.35% a year. At this rate, it will take 198 years for family income to double.

Source: EPI, "Prosperity Gap."