from Sentier Research
According to new data derived from the monthly Current Population Survey (CPS), median annual household income in July 2013 was $52,113, not statistically different than the June 2013 median of $52,181.
Real median annual household income has recovered from its low point of $50,803 in August 2011, but since December 2011 income changes have presented no clear trend. Median income decreased by 1.7 percent between December 2011 ($52,136) and January 2012 ($51,255). The median gradually increased by 1.5 percent between January 2012 and May 2012. This was followed by a period from May 2012 to January 2013 in which none of the month-to-month changes in median income were statistically significant. There was a decline in median income of 1.1 percent between January 2013 and February 2013, which was the first significant decline since the change recorded between December 2011 and January 2012. There were no significant month-to-month changes in median income between February 2013 and May 2013. Median income increased by 0.7 percent between May 2013 and June 2013, which marked the first statistically significant increase in the median in just over a year. With the latest reading for July 2013, we have returned to the situation of no significant month-to-month change in median income. Thus, a comparison of the median in December 2011 ($52,136) with July 2013 ($52,113) indicates a period of income stagnation. (See Figure 1.)
According to Gordon Green of Sentier Research:
Since December 2011 we have been in a period of income stagnation without any clear trend of direction. Real median annual household income has essentially remained at the same level over this time period, despite significant reductions in the official unemployment rate, the average duration of unemployment, and a broad measure of employment hardship. The failure of an improved labor market to translate into higher levels of household income raises troubling questions about the types of jobs created over the past year and a half, the level of pay that they generate, and the effect on household income levels from people who have dropped out of the labor force altogether.
- The July reading on the labor market from the U.S. Bureau of Labor Statistics indicates an improved situation compared to June:
- The official unemployment rate in July 2013 was 7.4 percent, down from the 7.6 percent rate in June 2013.
- The median duration of unemployment declined significantly, from 16.3 weeks in June 2013 to 15.7 weeks in July 2013.
- 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 declined from 14.3 percent in June 2013 to 14.0 percent in July 2013.
- Real median annual household income in July 2013 can be put into broader perspective by comparisons with previous levels of household income dating back to the start of the last decade:
- The July 2013 median income of $52,113 was 4.5 percent lower than the median of $54,565 in June 2009, the end of the recent recession and beginning of the “economic recovery.”
- The July 2013 median was 6.2 percent lower than the median of $55,569 in December 2007, the beginning month of the recession that occurred more than five years ago.
- The July 2013 median was 7.3 percent lower than the median of $56,233 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 July 2013 stood at 92.7 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 December 2011 was 92.7, the same level as in July 2013, which is why we designate this time period as one of income stagnation.
- A series of monthly increases in the HII were noted during the last half of 2011, however, that brief upward movement was not sustained. The HII had increased steadily from August 2011 (the low point) to December 2011: 90.3 in August, 91.0 in September, 91.6 in October, 91.8 in November, and 92.7 in December.
Income amounts in this report are before-tax money income and have been adjusted for inflation; income amounts are expressed in July 2013 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 calendar years 2012 and 2013. The U.S. Census Bureau issued its official estimates of income and poverty for calendar year 2011 in a report released on September 12, 2012.
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.
source: Household Income Trends: July 2013 (12 pages as .pdf)- an Excel spreadsheet containing the plotting points for all of the time series charts is available for purchase.