Why the Rich Get Richer & the Poor Stay Put

Sarah Shemkus, Salary.com contributing writer

The typical American household had less income last year than the year before and the gap between the richest and the poorest is growing, according to newly released numbers from the U.S. Census Bureau.

Adjusted for inflation, median household income in 2011 was $50,054, down 1.5 percent from the 2010 midpoint. The decline was driven largely by households in the West, where income fell 4.1 percent, to $52,376, over the same period.

The Asian population fared the best, with a 2011 median household income of $65,129, essentially unchanged from the previous years. Black households were hardest hit, with a 2.7 percent decline in median income over the same period, from $33,137 to $32,229.

Nationally, household income has dropped 8.1 percent since 2007.

Even as median income edged downward over the past year, the poverty rate has stayed relatively stable at about 15 percent. For families headed by single mothers, however, the poverty rate was significantly higher last year at 34.2 percent, representing nearly 16,500,000 people.

(Last year the poverty threshold for a single parent with two children was $18,123.)

Meanwhile, the gulf between the poor and the wealthy has been growing ever wider over the past two decades.

In 1991, those households in the bottom fifth of income took in a median of $11,638 per year (adjusted for inflation), while those in the top fifth had a median annual income of $141,923.

Twenty years later, the average income of the lowest earners has barely budged; last year the bottom fifth had a median income of $11,239. The yearly earnings of the top fifth, however, were up to $178,020 in 2011, an increase of 25 percent over the past 20 years.

Over the same time period, the median earnings of those households in the middle rose slightly, from $48,551 to $49,842.

There is a glimpse of good news in the numbers: The percentage of people lacking health insurance fell from 16.3 percent to 2012 to 15.7 percent last year. The number of uninsured children dropped from 9.6 percent to 9.2 percent.

Article by Sarah Shemkus and courtesy of Salary.com