For years, slow wage growth has plagued the US economy, perplexing workers, economists, and policymakers alike. But the latest numbers from the Federal Reserve’s triennial consumer finance survey offers some good news on this front. Between 2013 and 2016, the median income of US households grew by 10%, to $52,700, compared with a 5% decline between 2010 and 2013. And it gets better: Across every income percentile, race group, and education level, the median income has increased over the past three years. What’s more, the growth has been particularly strong for those without a high school diploma and minority groups.
While the overall level of median income is still lower than it was before the crisis—about $2,000 less than in 2007, adjusted for inflation—the latest data suggests a welcome turnaround from the time just after the crash, when poorer people, those without college degrees, and ethnic minorities saw their incomes fall faster than others.
Still, these gains haven’t closed the gap when it comes to inequality. In the past three years, the median income of households in the top 10th percentile of the income range increased by 9%, compared with a 3% increase for households in the bottom fifth.
In terms of net wealth—a broader measure defined as the difference between gross assets and liabilities—there has been an even larger concentration of wealth for the richest Americans. The richest 1% of households accounted for nearly 39% of total wealth in 2016, up from 36% percent in 2013. Meanwhile, the bottom 90% controlled just under 23% of total wealth.
Digging into the details
When it comes to education, income gains for families where the head of household doesn’t have a high school diploma outstripped all the others, relatively speaking. Between 2013 and 2016, the median household in the US with no high school education experienced a 15% increase in income. The typical household with a college degree saw incomes rise 2% in the same period.
That said, college-educated Americans still vastly out-earn their peers. A college degree earns a household more than double the median income of a high school diploma.
The Fed’s latest survey also shows strong gains in income among ethnic minorities. Between 2013 and 2016, the median income for Hispanic households rose by 15%, for black households by 10%, and for white households by 6%. The median income of black households has increased by 25% over the past 20 years.
Still, these gains haven’t done much to close the racial income gap. In 2016, the median income for a white household was $61,200 versus $38,500 for Hispanic households and $35,400 for black households.
Once other assets are taken into account, inequality is even more severe. In the past two decades, the net wealth of the typical black household has declined by 23%. For white households it has risen by more than 20% and jumped by nearly 43% for Hispanic households.
Even once this increase in wealth is taken into account for Hispanics, the concentration of wealth among white households is striking. In 2016, the median net worth of white households was around 10 times that of black and Hispanic households.