Another reason, besides the housing bust, that Americans nearing retirement age might have suffered most from the financial crisis: The typical American age 55-64 has a household income of almost 10 percent less than it was when the recovery officially began three years ago, according to a new report from Sentier Research.
The report found that after adjusting for inflation, the median household income for Americans of all ages was 4.8 percent lower in June than it was when the recovery technically started in June 2009, to $50,964 from $53,508.
The decline looks even worse when comparing today’s incomes to those when the recession began in December 2007. Then, the median household income was $54,916, meaning that incomes have fallen 7.2 percent since the economy last peaked.
Income losses vary significantly by age. Householders between the ages of 55 and 64 have taken the biggest hit. Their household incomes have fallen to $55,748 from $61,716 over the past three years, a decline of 9.7 percent.
Younger Americans also sustained huge earnings cuts. The inflation-adjusted median household income for those 25 to 34 years old fell 8.9 percent, while that for people 24 and under fell 6.1 percent.
Incomes for the oldest Americans, on the other hand, have risen steadily since the recovery began. Among householders between the ages of 65 and 74, the inflation-adjusted median household income rose 6.5 percent — to $42,113 from $39,548. Among those age 75 and older, the increase was 2.8 percent — to $26,991 from $26,244.
It is not clear why incomes rose for older people when everyone else suffered income losses.
Income losses since the recovery began also varied depending on educational attainment. People with the least education and people with the most education had smaller income losses. This supports the idea that the job market in the United States is “hollowing out,” as the Massachusetts Institute of Technology economist David Autor has proposed, meaning that high-skilled and low-skilled jobs are growing while midskilled jobs are thinning out.
The median household income of high school dropouts has fallen 5.3 percent — to $24,495 from $25,860 — while that for college graduates has fallen 5.9 percent — to $83,378 from $88,570.
Meanwhile, incomes for those with midlevel educational attainment — a high school diploma, some college but no degree, or an associate’s degree — slid much further.
The biggest percentage decline was for people who took some college courses but never got a degree. Their median income fell 9.3 percent over the course of the recovery so far, to $46,200 from $50,948.
