Stagnant Wages and Shrinking Safety Nets Fuel a Deepening Divide

The average American household income remained largely unchanged over the past five years, according to the U.S. Census Bureau’s latest report on income, poverty, and health insurance coverage. While median household income in 2024 was reported at $83,730 — a 1.3% increase from 2023 — it is essentially flat compared to the peak of $83,260 recorded in 2019, marking a stark contrast to the robust 21% rise in income observed from 2014 to 2019. The stagnation in income growth highlights the uneven effects of the post-pandemic economic recovery, with higher-income households benefiting more significantly. The top 10% of households saw inflation-adjusted income increase by 4.2% to $251,000, while the poorest one-tenth of households experienced a modest 2.2% increase to $19,900.

This uneven distribution underscores growing income inequality, a trend that has continued since the early 2020s. Despite the economy maintaining relatively low unemployment levels, the lack of substantial income growth for middle- and lower-income households has led to widespread dissatisfaction. Heather Long, chief economist at Navy Federal Credit Union, noted that the stagnation is exacerbated by a frozen job market, tariffs, and proposed Medicaid cuts, all of which could further strain household budgets in the coming year. The data also reveal significant disparities across demographic groups, with Asian and Hispanic households experiencing stronger income growth in 2024, while Black household incomes declined by 3.3%. Additionally, the gender wage gap widened in 2024, with women earning 80.9% of what men earned — a drop from 82.7% in 2023.

Government programs have played a key role in mitigating poverty, though their future remains uncertain under proposed legislative changes. The Child Tax Credit (CTC), for instance, lifted 4.1 million people out of poverty in 2024, according to the Census Bureau. However, the Republican megabill passed in July 2024 includes provisions that could reduce the CTC’s effectiveness by removing eligibility for some low-income families and denying the credit to children without at least one parent with a Social Security number. This change, set to take effect in 2025, is estimated to affect nearly 2 million children. Additionally, the megabill proposes a 20% reduction in SNAP benefits, which lifted 3.6 million people above the poverty line in 2024, further intensifying concerns about food insecurity and economic hardship for vulnerable populations.

Health coverage also remains a pressing issue, with the uninsured rate holding steady at 8.0% in 2024, despite significant fluctuations in the types of coverage available. The unwinding of the pandemic-era Medicaid expansion contributed to a sharp decline in Medicaid enrollment, from 84 million in 2023 to 74 million in 2024. However, gains in ACA marketplace enrollment partially offset these losses, with enrollment rising from 16.2 million in 2023 to 21 million in 2024. Enhanced premium tax credits have made ACA coverage more affordable, particularly for low- and moderate-income individuals who lost Medicaid coverage. Still, the Congressional Budget Office (CBO) estimates that the expiration of these enhanced tax credits in 2025, combined with proposed cuts in health programs, could leave 15 million people without health coverage by 2034. This would represent one of the largest declines in health coverage since the passage of the Affordable Care Act.

The overall data indicate that while the U.S. economy remains resilient in some respects — including historically low unemployment and record-high median incomes for certain groups — it has failed to deliver broad-based economic progress for most Americans. The lack of income growth, combined with the erosion of social safety net programs, points to a growing risk of increased poverty and inequality in the coming years. Policymakers face a critical decision: whether to extend the enhanced premium tax credits, protect food assistance programs like SNAP, and preserve health coverage for millions of Americans, or to continue on a path that prioritizes tax cuts for high-income individuals and corporations. The long-term implications of these choices will shape the economic well-being of the nation for years to come.