An Extraordinary Year of Income Growth in Pennsylvania

Yesterday the Census Bureau released data from the American Community Survey showing that median household incomes in Pennsylvania rose by just over $2,400 in the last year, strong evidence that an economy nearing full employment generates rising wages for workers. Higher-income families have now surpassed their pre-Great Recession incomes but the lower-income half of families have not.

Median household income in Pennsylvania rose from $53,290 in 2014 to $55,702 in 2015, an increase of 4.5 percent, according to the report. That reflects both a fall in the unemployment rate and a rise in median earnings for workers.

Strikingly the income growth that Pennsylvania households experienced was broadly shared with statistically significant increases in income in the last year for each income quintile. Households earning less than $23,005 a year saw the biggest percentage gains as their incomes rose 4.5% (an increase of $544), every other quintile saw percentage gains between 3.4 and 3.9% over the same period.

As extraordinary as 2015 was in terms of broad-based income growth the impact of years of declining income remains significant. Median household incomes in 2015 remained essentially unchanged from their prerecession levels (2007). And despite strong growth for low-income Pennsylvanians in 2015 their incomes remain 4.2% below prerecession levels.  Households with incomes greater than $69,000 (the Fourth and Highest quintiles) have incomes now 1.9% and 3.6% higher than in 2007, increases of about $1,600 and $6,600 in actual dollars. 

While one very strong year has made up part and for some families all of the ground lost since 2007, as The State of Working Pennsylvania 2016 shows, it has not reversed the stagnation or decline of wages (and for most families, incomes) that goes back to 2000 and, in some cases, to the late 1970s. That’s why families in Pennsylvania still need “The Agenda to Raise Pennsylvania’s Pay” outlined at the end of SWPA 2016. That agenda would keep unemployment low through job-creating investments in infrastructure and education. It would also use policies to lift wages and therefore incomes more directly. Only with such an agenda can we get beyond a few good years for wages and incomes—as in the late 1990s—and lock in broadly shared prosperity for the long term.

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