|Date:||22 March 2018|
|Authors:||Jonathan Cribb , Agnes Norris Keiller and Tom Waters|
The latest official data on household incomes, covering the year 2016–17, has been published today by the Department for Work and Pensions. This means that we now have five years of data on household incomes since living standards reached their recent post-recession trough in 2011–12. In this briefing note, IFS researchers briefly summarise what the newly released data tell us about how living standards have changed after five years of recovery, how this differs between different groups, and the implications for income inequality and poverty.
Key findings on the recovery from 2011–12 to 2016–17 include:
1. According to new government data just released, real median (middle) household income grew by 1.9% in 2016–17. This means it has grown by 8.1% since the start of the recovery in 2011–12, and by 5.6% since 2007–08.
2. In 2016–17, middle income households saw slightly higher income growth than richer or poorer households. This continues the pattern seen since 2011–12: middle incomes have grown twice as fast as incomes for low or high income households.
3. Income inequality has been essentially unchanged in recent years. Overall, it is below its pre-recession level, similar to the level in the early 1990s, but still above its level in the early 1980s.
4. 2016–17 saw further small declines in absolute income poverty to 19%. It has now fallen by 3 percentage points during the recovery, with falls for children, pensioners and working age adults.
5. There has been no change in overall relative poverty in 2016–17. Relative poverty has now been around 21% or 22% in every year since 2002–03. However, during the recovery, child and pensioner relative poverty has risen by 3 ppts each – not due to falling living standards for poor families, but because their incomes have not kept pace with those on middle incomes.