US household income rose slightly last year, roughly matching 2019 level

Audio By Carbonatix

Enlarge

WASHINGTON (AP) — The income for the typical U.S. household barely rose last year and essentially matched its 2019 peak, the Census Bureau said Tuesday, a stark illustration of the impact that the pandemic inflation spike had on Americans’ finances.

The report also showed that the highest-earning households received healthy inflation-adjusted income increases, while middle- and lower-income households saw little gain.

Median household income, adjusted for inflation, in 2024 was $83,730, the Census Bureau said, a 1.3% increase from the previous year’s level of $82,690. The median is the midpoint between the highest- and lowest-income households, and helps filter out the impact of very high and very low incomes that can skew averages.

The figures help illustrate why many Americans have been dissatisfied with the economy since the pandemic, even as unemployment has been historically low: Median household incomes are essentially unchanged from five years earlier, the report showed. Median household income was $83,260 in 2019, the report said, and the slightly higher figure for 2024 is within the margin of error and therefore reflects little change from five years earlier, Census officials said.

That is a sharp contrast from the preceding five-year period, from 2014 to 2019, when median household income rose nearly 21%, according to Census data.

“It’s not hard to see why middle-class Americans are frustrated,” said Heather Long, chief economist at the Navy Federal Credit Union. “The frozen job market, tariffs and Medicaid cuts are going to put even more of a squeeze in 2025 on middle and lower-income households.”

For richest 10% of households, incomes rose 4.2% to $251,000, while for the poorest one-tenth incomes increased just 2.2% to $19,900. A household is defined by Census as a family unit or an individual living alone or living with people who aren’t relatives.

The agency includes all sources of cash income, including wages, investment income, and payments from government programs such as Social Security and unemployment insurance. It doesn’t include non-cash benefits, such as food aid — formerly known as food stamps — or tax credits, or the substantial stimulus payments made by the first Trump administration in 2020 or the Biden administration in 2021 that significantly boosted Americans’ finances.

Wages and salaries for most Americans rose at a healthy clip as the economy emerged from the pandemic in 2021 and 2022, as businesses were desperate to find and keep employees. But with prices rising sharply as well, overall household income fell for three years after 2019, and rose in 2023 for the first time in four years.

The worst inflation spike in four decades in 2021 and 2022 soured most Americans on the economy, eroded sharp wage gains that occurred as employers desperately sought workers after the pandemic, and contributed to Vice President Kamala Harris’ defeat in last year’s election. Inflation, as measured by the consumer price index, fell in 2024 to an annual average of 2.9%, down from an average of 8% two years earlier.

The results also varied by demographic group, with Asian and Hispanic households reporting solid income gains. The median inflation-adjusted income for Asians jumped 5.1% to $121,700, while for Hispanics it rose 5.5% to $70,950. White incomes barely rose and were $92,530 last year, while Black incomes dropped 3.3% to $56,020.

Earnings for women barely rose, while male earnings increased 3.7%, widening the gender wage gap for the second straight year after two decades of narrowing. Women on average now earn 80.9% of what men earn, down from 82.7% in 2023.

Liana Fox, an assistant division chief at Census, said the decline in women’s earnings relative to men’s could reflect some of the cooling in the job market after hiring had ramped up in the aftermath of the pandemic. The unemployment rate fell to a half-century low of 3.4% in 2023, then rose to 4.1% by the end of last year. Fox noted that the ratio of women’s income to men’s last year was similar to pre-pandemic levels.

Amanda Nothaft, director of data and analysis at the University of Michigan’s Poverty Solutions project, said the drop in the ratio could also reflect the departure of some higher-income women from the workforce. The proportion of women working or looking for work jumped to a record high after the pandemic but has since eased, in part as return-to-office mandates have reduced workplace flexibility.

The Census report also included data on poverty, which showed that the poverty rate fell modestly, to 10.6%, from 11% in 2023. The agency defines poverty for a family of four as income below $31,000.

Census also tracks what’s known as the supplemental poverty measure, which includes non-cash benefits such as food aid. That figure was unchanged last year, at 12.9%.

Wendy Chun-Hoon, president and executive director at the Center for Law and Social Policy, said that the expiration of the Biden administration’s child tax credit, as well as subsidies for child care and other aid, have made it harder to cut poverty, particularly among African-American households. Chun-Hoon was head of the Labor Department’s Women’s Bureau during the Biden administration.

“Policy absolutely matters,” Chun-Hoon said. “Unless we make more permanent changes, any gains we see will be temporary.”

Kevin Corinth, deputy director of the Center on Opportunity and Social Mobility at the American Enterprise Institute, said there were some positive signs in the report. Median incomes for married couples jumped 5% to $128,700, he noted, and also rose for workers with only a high school diploma.