Broad-based income gains across many different types of families were realized between 2013-16, with families lacking a high school diploma and nonwhite and Hispanic families experiencing larger proportional gains in incomes than other families between 2013 and 2016, the Federal Reserve reported today.
Issuing its triennial Survey of Consumer Finances for 2016 (an update from 2013), the Fed also reported that more-educated families and white non-Hispanic families continue to have higher incomes than other families. In addition, the Fed survey reported that families at the top of the income distribution saw larger gains in income between 2013 and 2016 than other families, consistent with widening income inequality.
(Separately, in a speech at the Federal Reserve Bank of Kansas City, in Kansas City, Mo., Fed Gov. Lael Brainard focused on labor market disparities before a session titled “Banking and the Economy: A Forum for Minority Bankers.” In her remarks, Brainard repeated comments from a speech the previous day, where she said that “large disparities in opportunity based on race, ethnicity, gender, or geography mean that the enterprise, exertion, and investments of households and businesses from different groups are not rewarded commensurately.”)
Overall, the Fed survey found that between 2013 and 2016, median family income grew 10%, and mean family income grew 14%. Families throughout the income distribution experienced gains in average real incomes between 2013 and 2016, the Fed survey reported, reversing the trend from 2010 to 2013, when real incomes fell or remained stagnant for all but the top of the income distribution.
Other key points reported by the Fed from the survey included:
- Overall, between 2013 and 2016, median net worth grew16%, and mean net worth grew 26%.
- The large gains for families at the top of the income and wealth distributions in mean and median net worth followed modest gains between 2010 and 2013.
- Families near the bottom of the income and wealth distribution experienced large gains in mean and median net worth after experiencing large declines between 2010 and 2013.
- More-educated families and white non-Hispanic families continue to have higher wealth than other families.
- Homeownership rates decreased between 2013 and 2016 to 63.7%, continuing a decline from their peak of 69.1% in 2004. For families that own a home, mean net housing values (value of a home minus outstanding mortgages) rose.
- Retirement plan participation and retirement account asset values rose between 2013 and 2016 for families across the income distribution, with the largest proportional increases in participation occurring among families in the bottom half of the income distribution.
- Ownership rates and the value of direct and indirect holdings of corporate equities increased between 2013 and 2016, with the largest proportional increase in ownership among families in the bottom and upper-middle parts of the income distribution.
- Business ownership increased from 2013 to 2016 to 13.0%, nearing its 2010 level. These gains were broad based, occurring throughout the income distribution, with the largest proportional gains occurring among the highest earners.
The improvements in economic activity along with rising house and corporate equity prices combined to support increases in average and median family net worth (wealth) between 2013 and 2016, the Fed reported, after both measures remained stagnant between 2010 and 2013.