Freshly released data from the Census Bureau reveals a continued dip in inflation-adjusted household incomes for the third consecutive year in 2022. Nevertheless, a notable drop in overall income inequality emerged as a silver lining.
In a significant stride, the poverty rate among the Black population reached a historic low at 17.1 percent, although it remains the highest among the racial groups tracked by the Census Bureau.
The report, unveiled on Tuesday, sketches a nuanced portrait of the US economic landscape. The dip in incomes was more pronounced for some demographics, chiefly due to the pervasive influence of inflation.
Real median household incomes in the United States saw a 2.3 percent decline in 2022 compared to the preceding year, with any nominal gains nullified by soaring inflation rates.
This marks the third successive year of waning real median household incomes, underscoring the urgency of addressing inflationary pressures.
In response to escalating inflation, the US Federal Reserve initiated an assertive series of interest rate hikes last year, propelling its primary lending rate to a 22-year pinnacle.
While the Fed’s measures have notably curbed inflation this year, it still hovers above the long-term target of two percent.
The Census Bureau discerned a 1.2 percent reduction in income inequality from 2021 to 2022, propelled by a slump in real income within the middle and upper echelons of the income spectrum.
However, once taxes enter the equation, inequality experiences a sharp upturn.
Census Bureau official, Liana Fox, explained, “The steeper relative declines in post-tax income at the bottom and middle of the income distribution are attributable to the expiration of a number of tax policies.”
Among these policies were the Child Tax Credit and Earned Income Tax Credit.
The dichotomy between pre- and post-tax incomes also exerted a palpable influence on child poverty rates. The official figures indicated a decline, but this figure more than doubled when accounting for tax policies.
Fox elaborated, stating, “This change reflects the expiration of refundable tax credits and the pandemic-era stimulus benefits.”
President Joe Biden attributed the rise in child poverty to Republican lawmakers' reluctance to extend the augmented Child Tax Credit implemented during the pandemic.
He expressed, “The rise reported today in child poverty is no accident—it is the result of a deliberate policy choice congressional Republicans made to block help for families with children while advancing massive tax cuts for the wealthiest and largest corporations.”
“No child should grow up in poverty, and I will continue to fight to restore the expanded Child Tax Credit to give tens of millions of families the tax relief and breathing room they deserve,” he added.
The 2022 Census Bureau data also spotlighted a decrease in the proportion of individuals lacking any form of health insurance, dropping to 7.9 percent. This decline was observed across nearly every age group, marking the second consecutive year of reduction following a spike during the Covid-19 pandemic.
