WASHINGTON — Recent data reveals that the inflation-adjusted median income of U.S. households has recovered to approximately 2019 levels, despite facing the highest price surge in 40 years. This rebound has helped restore purchasing power for most Americans.
The percentage of Americans living in poverty has slightly decreased to 11.1% in 2023, down from 11.5% in 2022. However, for the first time in over two decades, the gap between women’s and men’s median earnings has widened, with men experiencing a more substantial increase in income.
According to the Census Bureau’s annual report, the inflation-adjusted median household income rose by 4% to $80,610 last year, compared to $77,450 in 2022. This marks the first increase since 2019, bringing the figure close to that year’s amount of $81,210. The median income represents the midpoint, with half of the population earning above and half below this level, offering a more stable view unaffected by extreme income variances.
“We are back to the pre-COVID peak that we experienced,” stated an expert from the Census Bureau.
These statistics are expected to influence discussions in the upcoming presidential campaign, particularly if key figures highlight the recovery in Americans’ financial health following an inflation peak of 9.1% in 2022. Economists are also predicting a drop in inflation rates from 2.9% in July to 2.6% in August. As the Federal Reserve prepares to potentially lower interest rates next week, these economic shifts could become focal points in political debates.
While some may argue that household income grew significantly during previous administrations, it is noteworthy that incomes fell during the pandemic in 2020.
Although the median household income has returned to 2019 levels, this recovery has not translated into increased living standards over the past several years. In contrast, median incomes had risen by 14% from 2015 to 2019.
The reported figures reflect pre-tax incomes, including Social Security and other benefits, but do not account for non-cash assistance programs like food stamps and Medicaid.
The rise in incomes is attributed to robust job creation, resulting in a significant drop in the unemployment rate to a historic low of 3.4% in April 2023. Additionally, employment among prime-age workers (aged 25-54) reached an average of 80.7% last year, the highest rate in 23 years.
Analyzing income by race, median household income increased by 5.4% for white households to $84,630, while Black households saw a 2.8% rise to $56,490. Incomes for Hispanic households remained stable at $65,540, and Asian households reported similar stability at $112,800.
Despite an overall decline in poverty rates, a different measurement indicates that child poverty increased from 12.4% in 2022 to 13.7% in 2023. This uptick follows a significant drop to 5.2% two years prior, a result of enhanced benefits from the child tax credit that expired in 2022.
Additionally, the Census Bureau reported that 92% of Americans had health care coverage in 2023, a figure consistent with the previous year; however, the percentage of uninsured children rose slightly to 5.8%.
