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Poverty Remains Higher, and Median Income for Non-Elderly is Lower, Than When Recession Hit Bottom: Poor Performance Unprecedented for Four-Year Recovery Period

This analysis was updated on August 26, 2008 to reflect 2007 Census Data.  Click here to view the new analysis.


Overall median household income rose modestly in 2005 — but significantly less than normal for a year during an economic recovery — while the poverty rate remained unchanged, also an unusual development for a recovery year.  For the first time on record, poverty was higher in the fourth year of an economic recovery, and median income no better, than when the last recession hit bottom and the recovery began.

In addition, the 1.1 percent increase in median income that occurred in 2005 was driven by a rise in income among elderly households.[1]  Median income for non-elderly households (those headed by someone under 65) fell again in 2005, declining by $275, or 0.5 percent.  Median income for non-elderly households declined for the fifth consecutive year and was $2,000 (or 3.7 percent) lower in 2005 than in the recession year of 2001.

Furthermore, the poverty rate, at 12.6 percent, remained well above its 11.7 percent rate in 2001, while overall median household income was $243 lower in 2005 than in 2001 (not a statistically significant difference). 

In a related development, the median earnings of both male and female full-time workers declined in 2005.  Median earnings for men working full time throughout the year fell for the second straight year, dropping by $774, or 1.8 percent, after adjusting for inflation.  The median earnings of full-time year-round female workers fell for the third straight year, declining by $427, or 1.3 percent.