Incomes for a typical U.S. household, adjusted for inflation, rose 1.8 percent, from $60,309 in 2016 to $61,372. The proportion of Americans living in poverty also dropped for the third straight year, to 12.3 percent from 12.7 percent.
The figures suggest that the nation's very low unemployment rate - 3.9 percent - is forcing businesses to convert more part-time workers to full-time status. And with the ranks of the unemployed dwindling, companies are hiring more people who previously weren't looking for work. During 2017, the unemployment rate averaged 4.4 percent, the lowest level in 17 years.
The number of people with jobs rose by 1.7 million in 2017, the Census report said. And the number of workers with full-time permanent jobs increased by 2.4 million.
"We're continuing to see that shift from part-time, part-year work to year-round, full-time work," Trudi Renwick, an assistant division chief at the Census Bureau, said.
At the same time, the data underscores the lasting damage the Great Recession did to the majority of American families. U.S. households are still earning essentially the same that they did in 2007 just before the Great Recession. And their inflation-adjusted median income remains slightly below the record in 1999 of $62,000, Census said.
"The income of a typical household today is about where it was 18 years ago," said Robert Greenstein, president of the Center for Budget and Policy Priorities.
The median is the point at which half the households are below and half are above. In can be a more telling measure than the average, which is distorted by extremely high incomes among the wealthiest households.
Last year's median income increase was slower than gains of 5.1 percent in 2015 and 3.1 percent in 2016.
Some of that slowdown reflected sharply higher inflation, which was just 0.1 percent in 2015 and 1.3 percent the following year. It rose to 2.2 percent in 2017.
Higher prices for gas, housing and other goods and services are eroding income gains even more this year. Consumer prices increased 2.9 percent in July from a year earlier, matching June's pace as the fastest in six years.
Wealthier Americans pulled further ahead last year. Even steady growth over the previous eight years hasn't been enough to counter long-running trends to greater economic inequality. Income growth was strongest for the richest 5 percent of households, rising 3 percent to $237,034. For the poorest one-fifth of the population, incomes rose just 0.5 percent.
"Well-worn patterns of inequality re-emerged, with stronger growth at the top," said Elise Gould, a senior economist at the Economic Policy Institute, a liberal think tank. "While any reduction in poverty or increase in income is a step in the right direction, most families have just barely made up the ground lost over the past decade."
As a result, the wealthiest 5 percent received 3.9 times the income earned by the median U.S. household. That's the highest on records dating back to 1967. In 2007, before the Great Recession, that multiple was 3.5.
The income gap between black and white households also widened, though Latinos narrowed their gap with whites. The median income for a white household rose 2.6 percent to $68,145 even as the median for African-American households slipped 0.2 percent to $40,258. Latino household incomes, however, jumped 3.7 percent to $50,486.
Asian households remain the wealthiest, with a median income of $81,331, though that was 2.2 percent lower than in 2016.
The wage gap between men and women stayed the same, with women working full-time earning just 80.5 cents for every dollar earned by a male full-time worker.
In the past three years, the poverty rate has fallen 2.5 percentage points. Still, nearly 40 million Americans remain poor by the Census Bureau's count.
Census also considers the impact of various government assistance programs on reducing the ranks of the poor. The agency found that the food stamp program, formally known as SNAP, lifted 3.4 million people out of poverty. Rental subsidies did the same for 2.9 million.
President Donald Trump and House GOP leaders have proposed cuts in both those programs, Greenstein said, as well as Medicaid.
"Were such cuts to be enacted, we would almost certainly see increases in poverty as a result," he said.
The Census report found no significant change in the proportion of Americans without health insurance last year, even though President Donald Trump and the Republican-led Congress spent months trying to repeal the Obama-era Affordable Care Act.
An estimated 28.5 million people remained uninsured in 2017, or 8.8 percent of the population, according to the Census. Had the Republican repeal succeeded, that number could have increased by 20 million people or more over time.
The Census report did find that 14 states had notable losses in coverage, while 3 states experienced gains. All the states with gains had taken full advantage of the Obama health law by also expanding their Medicaid programs.
But so had most of the states with coverage losses, including Massachusetts, whose state-based overhaul had been a template for the Obama law.
Associated Press Writer Ricardo-Alonso Zaldivar contributed to this report.
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