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posted on 23 April 2015

Median Household Income Lower in March 2015

from Sentier Research

According to new data derived from the monthly Current Population Survey (CPS), median annual household income in March 2015 was $54,203, about 0.8 percent lower than the February 2015 median of $54,639. The Sentier Household Income Index for March 2015 was 95.4 (January 2000 = 100).

Despite the income decline in March, real median annual household income has shown some solid improvement since the low point in our household income series that occurred in August 2011. Median income in March 2015 ($54,203) was 2.1 percent higher than in March 2014 ($53,087), and 5.5 percent higher than in August 2011 ($51,358). The period since August 2011 has been marked by an uneven, but generally upward trend in the level of real median annual household income. Many of the month-to-month changes in median income during this period have not been statistically significant. However, the cumulative effect of the various month-to-month changes since August 2011 resulted in the income improvement noted above. (See Figure 1 - full report here)

[click on image to enlarge]

According to Gordon Green of Sentier Research:

Even though there was an income decline between February and March, there has been a general upward trend in median income since the low-point reached in August 2011. Our time series charts clearly illustrate that although the economic recovery officially began in June 2009, the recovery in household income did not begin to emerge until after August 2011.

Highlights

The March reading on the labor market from the U.S. Bureau of Labor Statistics showed some improvement compared to February:

  • The official unemployment rate in March 2015 was 5.5 percent, the same as in February 2015.
  • The median duration of unemployment was 12.2 weeks in March 2015, down from 13.1 weeks in February 2015.
  • The broader measure of employment hardship, which includes the unemployed, marginally attached workers (of which discouraged workers are a subset), and persons working part-time for economic reasons, was 10.9 percent in March 2015, about the same as in February 2015 (11.0 percent.)

Real median annual household income in March 2015 can be put into broader perspective by comparisons with previous levels of household income since the recession began and dating back to the start of the last decade:

  • The March 2015 median income of $54,203 was 1.7 percent lower than the median of $55,122 in June 2009, the end of the recent recession and beginning of the "economic recovery."
  • The March 2015 median was 3.5 percent lower than the median of $56,149 in December 2007, the beginning month of the recession that occurred more than seven years ago.
  • The March 2015 median was 4.6 percent lower than the median of $56,817 in January 2000, the beginning of this statistical series.

The Sentier Household Income Index (HII) shows the value of real median annual household income in any given month as a percent of the base value at the beginning of the last decade (January 2000 = 100.0 percent):

  • The Sentier HII for March 2015 stood at 95.4 compared to 98.8 in December 2007, when the "great recession" began, and 97.0 in June 2009, when the "economic recovery" subsequently began.
  • The Sentier HII in August 2011 was 90.4 compared to 95.4 in March 2015.

Notes:

Income amounts in this report are before-tax money income and have been adjusted for inflation; income amounts have been seasonally adjusted, unless otherwise noted.

Estimates of median annual household income and the Household Income Index (HII) provide the only measures of change in household income during 2013 and 2014. The U.S. Census Bureau issued its official estimates of income and poverty for calendar year 2012 in a report released on September 17, 2013.

The estimates in this report are based on the Current Population Survey (CPS), the monthly household survey that provides official estimates of the unemployment rate. The CPS samples approximately 50,000 households and 135,000 household members each month. As is the case with all surveys, the estimates are subject to sampling and nonsampling errors. All comparisons made in the report have been tested and found to be statistically significant at the 90-percent confidence level, unless otherwise noted.

Household income is defined as the sum of the incomes of all household members. Income refers to all sources of money income including earnings from work, Social Security, interest, dividends, cash welfare, retirement pensions, unemployment compensation, veterans' benefits, etc. Income excludes capital gains and losses, and lump-sum, one-time amounts. Household income is measured before the payment of federal and state income taxes and Social Security payroll taxes.


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