2016 Median Household Income Still Below 1999 Peak

Median household income climbed 3.2 percent in 2016 to $59,039, according to the Census Bureau. This median appears to be a record high, surpassing the long-standing 1999 median of $58,665 (in 2016 dollars). Unfortunately, the two medians are not comparable because of a redesign of the Current Population Survey's income questions in 2014. The new income questions capture much more income from IRA and 401(k) withdrawals, which resulted in a methodological boost to median household income.

So how does the $59,039 median of 2016 compare with the 1999 all-time high after accounting for changes in methodology? We still haven't caught up, according to the Economic Policy Institute, which for comparative purposes adjusted the medians prior to 2013 for changes in CPS methodology. Here are the results of the Institute's analysis...

Median household income (in 2016 dollars)
2016: $59,039
2007: $59,993 (adjusted)
1999: $60,506 (adjusted)

With the 1999 and 2007 medians adjusted to reflect new CPS methodology, the 2016 median is 1.6 percent below the 2007 median, when the Great Recession began. The 2016 median is 2.4 percent below the 1999 median, which is still the all-time high.

Source: Economic Policy Institute, By the Numbers: Income and Poverty, 2016

Trouble With the Redesigned CPS

Not everyone is happy with the redesigned Current Population Survey. An Employee Benefit Research Institute report questions some of the new numbers emerging from the redesign.

First, some background. The Census Bureau redesigned the Current Population Survey's income questions to better capture retirement income. The new income questions were presented to a split CPS sample in 2014 (collecting data for 2013) and to the full sample in 2015 (collecting data for 2014). The new questions successfully captured more retirement income, long known to be underreported. But anomalies are emerging in other CPS data. In particular, EBRI is troubled by a drop in retirement plan participation. Among full-time workers aged 21 to 64 in 2013, the percentage who participated in a retirement plan was only 49.5 percent based on the new questions versus 53.0 percent based on the old questions. In 2014 (when the entire CPS panel was asked the new questions), participation fell to 46.6 percent. The redesigned CPS is not only showing lower participation, says EBRI, but also declining participation—a larger decline than ever recorded in CPS data going back to 1987.

What really bugs EBRI is this: the biggest decline is occurring in the segment most likely to participate in a retirement plan—full-time workers aged 21 to 64 with earnings of $75,000 or more. The 2013 new questions found their participation to be 63.4 percent versus 68.6 percent with the old questions. In 2014, their participation declined to 61.1 percent. These declines are questionable, says EBRI, because other surveys show rising retirement plan participation.

"While the redesign of the CPS questionnaire achieved one of its primary goals of capturing more income—especially pension income—it appears to have had a serious impact on the results of other variables within the survey," EBRI researcher Craig Copeland concludes. In the future, he says, researchers may have to turn to alternative sources—such as the National Compensation Survey—to accurately track retirement plan participation.

Source: Employee Benefit Research Institute, The Effect of the Current Population Survey Redesign on Retirement-Plan Participation Estimates

MMWR iPad App

If you want to follow the latest health statistics on your iPad, then this might be the app for you: Morbidity and Mortality Weekly Report, now available free from the iTunes store. Using this app you can easily access current or past volumes of the CDC's MMWR, Surveillance Summaries, Recommendations & Reports, and Vital Signs.

But wait...there's a problem. The "current" volume accessed through the app is October 5, 2012--a couple weeks behind the October 26 issue now available. As this new app gets up and running, let's hope it gets more current.