from Sentier Research
According to new estimates derived from the monthly Current Population Survey (CPS), median annual household income in February 2014 was $53,093, higher than the January 2014 median of $52,477, and 3.8 percent higher than the post-recession low-point reached in August 2011.
Real median annual household income has shown some improvement over the past two and a half years since the low point in August 2011. Median income in February 2014 ($53,093) was 2.4 percent higher than in February 2013 ($51,873), and 3.8 percent higher than in August 2011 ($51,152). 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 has resulted in the income improvement noted above. (See Figure 1 below.)
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According to Gordon Green of Sentier Research,
This monthly increase in median household income between January and February 2014 extends an uneven but upward trend. 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. While many of the month-to-month changes in median income since the low-point in August 2011 have not been statistically significant, an overall upward trend is clearly evident.
Highlights
The February reading on the labor market from the U.S. Bureau of Labor Statistics indicates a situation that was not that different from January:
- The official unemployment rate in February 2014 was 6.7 percent, about the same level as in January 2014 (6.6 percent).
- There was, however, and increase in the median duration of unemployment from 16.0 weeks in January 2014 to 16.4 weeks in February 2014.
- 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 12.6 percent in February 2014, about the same level as in January 2014 (12.7 percent).
Real median annual household income in February 2014 can be put into broader perspective by comparisons with previous levels of household income dating back to the start of the last decade:
- The February 2014 median income of $53,093 was 3.3 percent lower than the median of $54,907 in June 2009, the end of the recent recession and beginning of the “economic recovery.”
- The February 2014 median was 5.0 percent lower than the median of $55,911 in December 2007, the beginning month of the recession that occurred just over six years ago.
- The February 2014 median was 6.2 percent lower than the median of $56,586 in January 2000, the beginning of this statistical series.
The 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 HII for February 2014 stood at 93.8 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 HII in August 2011 was 90.4 compared to 93.8 in February 2014.
- The HII had increased steadily from August 2011 (the low point) to December 2011: 90.4 in August, 90.9 in September, 91.5 in October, 91.7 in November, and 92.6 in December.
Notes:
Income amounts in this report are before-tax money income and have been adjusted for inflation; income amounts are expressed in February 2014 dollars and 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.
