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Daniel Carroll |

Research Economist

Daniel Carroll

Daniel Carroll is a research economist in the Research Department of the Federal Reserve Bank of Cleveland. His primary research interests are macroeconomics, public finance, and political economy. Currently, he is studying the implications of progressive income taxation for the distributions of wealth and income.

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Economic Trends

Trends in Household Income over the Past Decade

Daniel Carroll

The past decade has been rough for households. The US economy experienced a small recession in 2001, grew rapidly through 2006, and then finished with a massive recession. An investment in the S&P 500 Composite Index made in January of 2001 would have had a negative return in December of 2010.

Household income has followed a similar pattern, declining by 2.7 percent in real terms over the period. The decline in income has been widespread across education levels, with the exception of the very top. However, education appears to have offered a considerable degree of insulation from the longer-term trend in income, as the decline of real household income is inversely related to the level of education. From 2001 to 2009, while median incomes fell for those with anything less than a PhD, the decline was generally greater for those with less education. The real income of households headed by PhD’s actually rose considerably.

As for the income trends of different age groups, today’s young and middle-aged households have significantly lower income in real terms compared to their counterparts nearly a decade ago. In stark contrast, real income has increased in all age groups over 55, particularly for those over 65 years, where median income is up 11.9 percent from 2001.

A considerable portion of this growth can be explained by social security income. The average real benefit paid to retired workers and their spouses has risen by 10.5 percent. According to one report of census data by the Employee Benefit Research Institute, nearly 90 percent of age 65+ households received social security, and, on average, social security provided about 40 percent of income for these households.


“Income of the Elderly Population Age 65 and Over, 2008.” Notes. Employment Benefit Research Institute. Vol 31, No. 6.June 2010.