by Sentier Research
According to new data derived from the monthly Current Population Survey (CPS), median annual household income in September 2013 was $52,529, not statistically different than the August 2013 median of $52,330.
These findings come from a report issued today by Sentier Research, titled “Household Income Trends: September 2013,” which presents monthly trends in household income from January 2000 to September 2013.
Real median annual household income is beginning to show an uneven but upward trend when examined over the period since the August 2011 low point in our household income series. Median income in September 2013 ($52,529) was 1.0 percent higher than in September 2012 ($51,997), and 3.1 percent higher than in August 2011 ($50,940). The period since August 2011 has been marked by an uneven trend in the level of real median annual household income. While many of the month-to-month changes in median income during this period have not been statistically significant, there have been two notable decreases and one notable increase. Median income decreased by 1.7 percent between December 2011 ($52,277) and January 2012 ($51,393). There was a decrease in median income of 1.1 percent between January 2013 ($52,257) and February 2013 ($51,664), which was the first significant decline since the change recorded between December 2011 and January 2012. Median income increased by 0.7 percent between May 2013 and June 2013, which marked the first statistically significant increase in the median in well over a year. The cumulative effect of the various month-to-month changes since August 2011 resulted in the income improvements noted above. (See Figure 1.)
According to Gordon Green of Sentier Research, “Since August 2011, the low-point in our household income series, we have seen some improvement in the level of real median annual household income. While the trend in household income since August 2011 has been uneven, on balance we have seen an upward movement: by 1.0 percent since September 2012 and by 3.1 percent since August 2011. We still have a significant amount of ground to make up to get back to where we were before, but at least we now appear to be heading in the right direction.”
The September reading on the labor market from the U.S. Bureau of Labor Statistics indicates a slightly improved situation compared to August:
- The official unemployment rate in September 2013 was 7.2 percent, not significantly different from the 7.3 percent rate in August 2013.
- The median duration of unemployment was 16.3 weeks in September 2013 compared to 16.4 weeks in August 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 was 13.6 percent in September 2013 compared to 13.7 percent in August 2013
Real median annual household income in September 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 September 2013 median income of $52,529 was 4.0 percent lower than the median of $54,712 in June 2009, the end of the recent recession and beginning of the “economic recovery.”
- The September 2013 median was 5.7 percent lower than the median of $55,719 in December 2007, the beginning month of the recession that occurred more than five years ago.
- The September 2013 median was 6.8 percent lower than the median of $56,385 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 September 2013 stood at 93.2 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 (the low-point) was 90.3 compared to 93.2 in September 2013.
- The HII had increased steadily from August 2011 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 September 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 2013. 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.