Recently released data from the U.S. Census Bureau on household income and poverty offer some good news for American families overall, with positive potential impacts on housing. U.S. annual household incomes grew 5.2 percent year-over-year in 2015, to $56,516, the first annual increase since 2007 and the strongest pace of income growth in a decade. That’s about $2,800 more in the average American’s pocket last year.
Perhaps more importantly, some typically economically disadvantaged groups posted particularly strong gains. Income growth was strongest among Hispanic households, up 6.1 percent from 2014 compared to 4.4 percent for non-Hispanic whites, 4.1 percent for blacks and 2.5 percent for Asians. However, Asians had overall higher incomes and ended with the largest dollar gains ($2,800), versus $2,600 for non-Hispanic whites and Hispanics and $1,500 for blacks (figure 1). This is notable because Hispanics, in particular, were hard-hit during the housing bust and the Hispanic homeownership rate has struggled get back to pre-crisis levels. Strong household income growth among this largely young population should bode well for housing (and consumption) demand moving forward.
Household income growth among full-time-employed women exceeded income growth among full-time employed men – 2.7 percent versus 1.5 percent, respectively – the fourth time in the past five years this has occurred (although, unlike previous years, the difference was not statistically significant in 2015). The wage gap between full-time employed men and women narrowed substantially in the 1980s and 1990s as wages rose for women but were constant for men, according to the data. However, the gap flattened during the 2000s as incomes stabilized for both genders. Data for the first half of the 2010s suggest that the wage gap between men and women has again begun to narrow, although at a very modest pace.
As household incomes have increased, poverty has started to retreat. After declining for much of the 1990s and then increasing during the 2000s – particularly during the recession – the poverty rate remained stubbornly high from 2010 through 2014, before falling last year to its lowest level since 2008. Still, except for the recent recession, the poverty rate is currently higher than it has been at any time since 1996.
Poverty declined across the board for most demographic groups, but fell the most for Hispanics (-2.2 percentage points, to 21.4 percent) and blacks (-2.1 percentage points, to 24.1 percent). The poverty rate fell by 1 percentage point among non-Hispanic Whites, to 9.1 percent; and was down 0.6 percentage points (not statistically significant) among Asians, to 11.4 percent.
Over the longer horizon, the nation has made better progress in reducing poverty among the elderly (those aged 65 and up) than among children (those under 18 years old). The poverty rate among senior citizens is down 6.5 percentage points since 1981, while the poverty rate among children is a scant 0.3 percentage points below where it stood at the start of the Reagan Administration (figure 2).
In a potential sign of shifting residential patterns, the poverty rate declined more in central cities (-2.1 percentage points, to 16.8 percent) than in suburban areas (-1.1 percentage points, to 10.8 percent), although it still remains higher in cities.