A recent report indicated that the average income received by a household was more than 8 percent lower than it was in 2007. Is this accurate? And, if so, what does it mean? N.C. State University economist Mike Walden explains.
“It is accurate …, and 2007 is used because that is the start of the recession. First of all what this is: Household income takes money from all sources, not just what people earn, but money that they’re getting from their pensions, as well as public assistance. And indeed the number’s right — … if you take this and average for all households — it is average income — income is down 8 percent since 2007.
“Big reason — I don’t think you need an economist to understand this … — the rise in unemployment. More people are not working. They may be receiving unemployment checks, but those checks don’t cover 100 percent of what they lost when they were working or when they went on unemployment. So big reason for why that number’s down.
“Now, good news is we’ve had some recent improvement in that number. Indeed, if you looked at it a year ago, median household income was down 10 percent. So now it’s down only 8 percent. So we are moving in the right direction, if you can call that right direction.
“Also, these changes in income don’t account for changes in household size. There has been a trend for households to get smaller. So in some sense, that lower income is not being spread among as many people. But still it’s a bad number. It’s a challenging number, and it continues to indicate this is still a very challenged economy.″