What recovery? Full-time workers are earning less

Full-time workers saw their earnings dip 1.1 percent last year, according to new Census data, marking what some economists said was a surprising shift given the growing U.S. economy. 

The decline in full-time earnings in 2017 came even as American median household income rose 1.8 percent, the U.S. Census Bureau said Wednesday. While that may seem contradictory, household income captures more than full-time wages, such as government benefits like Social Security payments. 

The lower pay for full-time workers could reflect the influx of part-time workers entering the workforce at lower wages, Census officials said. But some economists expressed concern about the trend, noting that many Americans are still struggling to regain the ground they lost in the financial crisis and the recession.

"It's an unfortunate sign for workers and their families," said Elise Gould, senior economist at the Economic Policy Institute, a left-leaning think tank. She said she had expected the Census data would have shown some gains for full-time workers.

While American median household income rose 1.8 percent last year to $61,372, it represented a slower rate of growth than during the previous two years, the Census said. While that marks the third consecutive year of income gains, the rate of increase in the first year of the Trump administration was considerably slower than in the last two years of the Obama administration. 

"The big reason for the slower growth was higher inflation," Gus Faucher, chief economist at the PNC Financial Services Group, said in an email. "Also, job growth slowed from 2015 to 2016 to 2017, weighing on income growth."

A decade after the financial crisis, many Americans are still struggling to play catch-up. Income growth in the post-recession years was largely captured by the richest Americans, leaving low-wage and middle-class workers struggling to keep up with the rising costs of essentials like rent and health care. A recent study from the Urban Institute found almost half of Americans struggle to pay for their basic needs such as groceries or housing. 

"Median household income grew 1.8 percent in 2017, a slowdown from the 3.2 percent increase in 2016 and 5.2 percent increase in 2015," wrote Heidi Shierholz, director of policy at EPI and a former chief economist at the U.S. Department of Labor. "This slowdown is not what working families need!"

In 2016, median household income grew 3.2 percent. In his presidential campaign, Donald Trump pledged to boost economic growth to at least 3 percent annually and to spur the creation of manufacturing jobs, a sector that's suffered a long-term decline in employment. 

The poverty rate declined 0.4 percentage points to 12.3 percent, representing 39.7 million Americans. 

Full-time workers

Stagnant wages have become a hallmark of the decade-long recovery from the Great Recession, something that the latest Census data do little to dispel. Even as corporations report stronger profits, most workers are failing to participate in their growth. That was the case in 2017, when Americans who worked full-time jobs throughout the year saw their earnings slip 1.1 percent. 

Nevertheless, the lower income could represent the influx of lower-skilled workers entering the job market, PNC's Faucher said. 

"As the labor market recovery has continued and the job market has tightened, employers have turned to workers with lower skills and less education, and who have been out of the workforce for longer," he noted. "They also may have other marks against them, such as a criminal record. These workers generally receive lower pay."

That was echoed by Census officials, who said more Americans are shifting from part-time work into full-time jobs, although at lower wages. 

Earnings for men with full-time jobs slipped 1.1 percent to $52,146, while pay for women in full-time positions declined by the same percentage to $41,977, the Census said. About 2.4 million men and women joined the full-time workforce last year, it added.

The data support previous findings that while workers at the highest rung of the income ladder -- CEOs and top executives -- are enjoying pay gains, the rank-and-file are failing to capture measurable gains. 

The richest vs. poorest

America's richest households are enjoying greater income gains than middle-income or poor households, the Census data indicate. 

The top 5 percent of U.S. households saw their annual income rise 3 percent to $237,034 last year. Since 2007, the year before the recession, income for the richest households has jumped 13 percent. 

But annual income for families at the median has increased just 3 percent since 2007. And the poorest households in the bottom 10th percentile are actually earning less than they did more than a decade ago. 

A top in income? Maybe not

Even though household income appears to be the highest ever recorded by the Census, officials cautioned against making that comparison because it changed income questions in 2014, resulting in a boost in reported income for that year and subsequent years. The Census said the change makes it difficult to compare with income prior to the change. 

But adjusting for the difference, the Census said income in 2017 wasn't different from pre-recession income in 2007 or from an earlier peak in 1999. 

In:
• 2020 Census