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Biden discusses new program to lower internet costs for low-income families
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WASHINGTON - A new report reveals that the inflation-adjusted median income of U.S. households rebounded last year to roughly its 2019 level.
The data, which was published Tuesday by the Census Bureau, found that the real median household income was $80,610 in 2023 – a 4% increase from the 2022 estimate of $77,540.
According to the government agency, this is the first statistically significant annual increase in median household income since 2019, before the COVID-19 pandemic began. Household income in 2019 was $81,210, the highest since 1967 and the highest ever recorded in this report.
"We are back to that pre-COVID peak that we experienced," Liana Fox, assistant division chief in the Social, Economic and Housing Statistics Division at the Census Bureau, told The Associated Press.
Aerial shot of suburban tract housing in Ann Arbor, Michigan on a sunny day in Fall. (Credit: Getty Images)
For most demographic subgroups analyzed, median household income in 2023 was higher than in 2022. Median household incomes rose 5.4% for White households to $84,630 and increased 2.8% for Black Americans to $56,490. There was no significant change in median incomes for Asian ($112,800) and Hispanic ($65,540) households.
But the ratio of women's median earnings to men's widened for the first time in more than two decades as men's income rose more than women's in 2023.
Proportion of Americans living in poverty fell slightly
The proportion of Americans living in poverty also fell slightly last year to 11.1% from 11.5% in 2022. But, under an alternative measure of income, the proportion of children in poverty rose from 12.4% to 13.7%. The bump in child poverty comes two years after it had plunged to just 5.2% when the pandemic-era expansion of the child tax credit provided enhanced benefits to families. But the credit expired in 2022.
"If you want to reduce poverty in the short run, you transfer income to poor families," said Steven Durlauf, an economist at the University of Chicago.
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The figures could become a talking point during the 2024 presidential campaign if Vice President Kamala Harris were to point to them as evidence that Americans' financial health has largely recovered after inflation peaked at 9.1% in 2022.
Meanwhile, former President Donald Trump might counter that household income grew much faster in his first three years in office than in the first three years of the Biden-Harris administration, though income fell during his administration after the pandemic struck in 2020.
Inflation falls
On Wednesday, economists predicted that the government will report that inflation fell from 2.9% in July to 2.6% in August. The Federal Reserve, whose target level for inflation is 2%, is poised to start cutting interest rates next week.
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The jump in incomes also reflected job creation last year, which helped reduce the unemployment rate to a half-century low of 3.4% in April 2023.
Between 2022 and 2023, the number of total workers increased by 2.2 million, or 1.3%, the report found. In addition, the proportion of Americans in the age group of 25-to-54-year-olds with jobs averaged 80.7% last year, the highest level in 23 years.