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US incomes fall to 1989 levels. How did that happen?

A Census report signals that for much of America, the economic downturn has produced not one lost decade but two. But the data also show that federal safety-net programs helped keep people out of poverty.

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Claudia Pedroza, 39, and her eight-year-old daughter Karla Osorio at the Jefferson Action Center in Lakewood, Colo., in July. Pedroza’s family struggles to make ends meet and she was waiting to apply for help with food, toiletries and seeks a new frying pan.

Kristen Wyatt/AP

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The typical US household saw its income fall last year to 1989 levels. 

That news, contained in a US Census Bureau survey released Wednesday, points to difficult questions of how the US can get back on a track of job growth and rising prosperity.

Median incomes fell 1.5 percent in 2011, while the official poverty rate remained essentially unchanged at 15 percent.

A family right in the middle of the income spectrum had an income of $50,054, which is actually lower than the 1989 median level of $50,624 expressed in 2011 dollars. The implication: For much of America the economy has produced not just one lost decade but two. Stagnation has even hit wealthier and more educated households (the 95th percentile in the Census data) for the past decade.

Why the hard times? And what can be done about it?

Those questions were already urgent before this latest data release. The presidential election campaign is pivoting largely around the economy and what role the government should play in it. This year, since the time period of the Census data, conditions have improved somewhat – with about a million Americans gaining jobs and hourly wages rising about 5 cents an hour. But the unemployment rate remains high, as does economic anxiety, even among people with jobs.

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