Americans got raise last year for first time since 2007

Christopher S. Rugaber
Associated Press

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.

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 below the $57,423 reached 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.”

Even so, it follows years of tepid pay gains that contributed to widespread political turmoil, driving insurgent presidential candidacies from GOP nominee Donald Trump and 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 EPI.

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.