Authors: Elizabeth Kneebone and Emily Garr
The 2000s were a difficult economic decade for typical American families, who experienced falling real incomes even before the onset of the Great Recession. This subject area portrays trends in the economic well-being of households, the size of the “middle class,” and the shifting location and characteristics of America’s sizeable and growing poor population. Findings on income and poverty include:
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The middle class shrank over the course of the decade as income for the typical U.S. household declined. In 2008, U.S. median household income was $52,029—a real decline of $2,241 since 1999. Over the same period, the share of households earning “middle class” incomes fell by 1.8 percentage points. In 2008, racial income disparities persisted, with the typical black household lagging U.S. median income and the typical Asian household exceeding it by nearly the same margin ($17,000 and $18,000, respectively).
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Even as incomes fell for the typical metropolitan household, large disparities persisted across and within metro areas. Between 1999 and 2008, metro areas in every Census region saw median incomes decline. Midwestern metro areas—led by regions like Detroit, Grand Rapids, and Youngstown—experienced the greatest decline in median income (8.2 percent). Meanwhile, the difference in median income between the 10thranked and 90th-ranked metro area rose from $19,500 to $22,000.
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Suburbs are home to the fastest growing and largest poor population in the country. Between 1999 and 2008, the suburban poor population grew by 25 percent—almost five times the growth rate of the primary city poor—so that by 2008 the suburbs were home to almost one-third of the country’s poor population, and 1.5 million more poor than primary cities. While city and suburban poor residents generally resemble one another, slightly more of the suburban poor are high-school graduates, married, and white; blacks and Latinos make up a disproportionate share of the poor in both cities and suburbs.
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Income declined and poverty increased in the first year of the Great Recession, particularly in Sun Belt metro areas. Metro areas in California and Florida saw some of the greatest declines in median household income, along with the largest increases in city and suburban poverty between 2007 and 2008, likely reflecting the early timing and impact of the housing market collapse. Based on unemployment increases over the past year, Sun Belt metro areas like Cape Coral, Modesto, and Stockton, and manufacturing metro areas like Detroit and Youngstown may see their poverty rates rise by at least 3 percentage points in 2009.
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