American Household Incomes Return to Pre-Pandemic Gains

Part of working with the economy has been monitoring it to see when things return to a pre-pandemic normal. New numbers from the Census Bureau indicate that the median household finally achieved an important milestone by returning to what incomes used to mean before Covid-19 and taking inflation into account.

The report Income in the United States: 2023 said that real median household income — real as in taking inflation into account — was $80,610 last year, a 4% increase from the 2022 estimate of $77,540. This is the “first statistically significant annual increase in real median household income since 2019.” The data is based on pre-tax, including Social Security and other benefit programs, but not including other transfer programs like SNAP and Medicaid.

The household median increase was 5.7% for non-Hispanic white households ($89,050); 2.8% for black households ($57,490); 0.4% for Hispanic, any race ($65,540); and -0.2% for Asian ($112,800). Income inequality was largely unchanged.

The total number of workers between 2022 and 2023 increased by 1.3%. The number of full-time, year-round workers was not statistically different.

Real median earnings for full-time, year-round male workers increased by 3.0%. For full-time, year-round female workers, it was up by 1.5%. In other words, women in the workforce took a significant hit. Full-time, year-round female-to-male earnings ratios fell from 84.% to 82.7%. This is the first time since 2003 of a statistically significant annual decrease in the female-to-male earnings ratio.

There were significant differences in household income changes by geographic area. The largest increase, 6.6% to $81,020, was in the Midwest. Next was a 3.3% increase to $73,280 in the South. The Northeast had the third largest jump — 3.2% to $86,250 — and the West had the lowest, at 2.4% to $88,290.

Income changes varied by presence inside a metropolitan statistical area (3.7%) and outside (7.5%). For households in MSAs, those inside principal cities saw no significant change in their incomes from 2022, while households outside principal cities witnessed a median increase of 4.2%.

Households in MSAs but outside the principal cities had the highest average, at $90,140. Next were the households in the principal cities, with a median income of $73,540. Households outside of MSAs earned an average of $62,520.