WASHINGTON — In a long-awaited sign that middle-class Americans are finally seeing real economic gains, U.S. households got a raise last year after seven years of stagnant incomes. Rising pay also lifted the poorest households, cutting poverty by the sharpest amount in nearly a half-century.
Higher minimum wages in many states and tougher competition among businesses to fill jobs pushed up pay, while low inflation made those paychecks stretch further. The figures show that the growing economy is finally benefiting a greater share of American households.
State-by-state numbers have not been released yet.
The median U.S. household’s income rose 5.2 percent in 2015 to an inflation-adjusted level of $56,516, the Census Bureau said Tuesday. That is the largest one-year gain on data stretching back to 1967. It is up 7.3 percent from 2012, when incomes fell to a 17-year low.
Still, median incomes remain 1.6 percent below the $57,423 level in 2007. The median is the point where half of households fall below and half are above. The report “was superb in almost every dimension,” Larry Mishel, president of the liberal Economic Policy Institute, said on a conference call with reporters. “This one year almost single-handedly got us out of the hole.”
Still, it follows years of tepid pay gains that contributed to political turmoil, driving insurgent presidential candidacies from GOP nominee Donald Trump to Democratic primary contender Sen. Bernie Sanders. Median household income remains 2.4 percent below the peak it reached in 1999.
The solid gain will likely impact the presidential campaign. Incomes are now higher than in 2009 when President Obama took office.
The Census report shows that the increase was driven by the poorest Americans, who saw the largest increase. Half of the states and Washington, D.C. have increased their minimum wages since 2014, according to the Economic Policy Institute.
Greater competition for low-wage jobs has also pushed up wages. The unemployment rate fell from 6.2 percent to 5.3 percent last year, and 2.4 million Americans found full-time, year-round jobs. That’s forced restaurants and retail employers to lift pay to attract workers.
Income for the poorest 10 percent of households jumped 7.9 percent last year, while for the wealthiest 10 percent, incomes rose just 2.9 percent. That narrowed the gap between the two groups by the largest amount on record.
The proportion of Americans in poverty also fell sharply last year, to 13.5 percent from nearly 14.8 percent. That is the biggest decline in poverty since 1968. There were 43.1 million people in poverty last year, 3.5 million fewer than in 2014.