from Sentier Research
Real Median Income has been on an almost imperceptible growth path for two years. According to new data derived from the monthly Current Population Survey (CPS), median annual household income in January 2014 was $52,511, not statistically different than the December 2013 median of $52,423.
Real median annual household income has shown some improvement over the past two and a half years since the low point in our household income series that occurred in August 2011. Median income in January 2014 ($52,511) was not significantly different than January 2013 ($52,307), but was 2.6 percent higher than in August 2011 ($51,186). 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 below.)
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 of 2.6 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 have shown some improvement since the low point.
Highlights
The January reading on the labor market from the U.S. Bureau of Labor Statistics indicates a generally improved situation compared to December:
- The official unemployment rate in January 2014 was 6.6 percent, about the same level as in December 2013 (6.7 percent).
- The median duration of unemployment was 16.0 weeks in January 2014, significantly lower than 17.1 weeks in December 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 12.7 percent in January 2014, down from 13.1 percent in December 2013.
Real median annual household income in January 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 January 2014 median income of $52,511 was 4.4 percent lower than the median of $54,943 in June 2009, the end of the recent recession and beginning of the “economic recovery.”
- The January 2014 median was 6.1 percent lower than the median of $55,947 in December 2007, the beginning month of the recession that occurred about six years ago.
- The January 2014 median was 7.3 percent lower than the median of $56,622 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 January 2014 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 August 2011 was 90.4 compared to 92.7 in January 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 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.
