from Sentier Research
New data from the monthly Current Population Survey (CPS), indicate that median annual household income in March 2018 was $61,227, nearly the same as the median for February. Median household incomes for both February and March of this year were higher than for any other month since January 2000, but only 1.8 percent above the median for that month of $60,124.
Following the “great recession” defined as lasting from December 2007 to June 2009, median household income fell to its low point in June 2011 ($54,339). The March 2018 median of $61,227 is 12.7 percent higher than the June 2011 median. The March 2018 median is 2.0 percent higher than that for March 2017.
Median annual household income has displayed a somewhat erratic pattern over the past several years. More broadly, there has been a general upward trend in median household income since the post-recession low point reached in June 2011. This upward trend was initially marked by monthly movements, both up and down. Many monthly changes were not statistically significant. By the summer of 2014 however, that uneven trend became dominated by a series of significant monthly increases. (See Figure 1)
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Median annual household income in March 2018 ($61,227) was 2.0 percent higher than March 2017 ($60,024), and, as noted, 12.7 percent higher than in June 2011 ($54,339). This general upward trend since June 2011 reflects, in part, the low level of inflation as measured by the CPI for all items used in this series, as opposed to the CPI less food and energy. Energy prices have recently been fluctuating, which has had an effect on the CPI for all items. The CPI for all items declined by 0.1 percent between February 2018 and March 2018, but increased by 0.2 percent
The March reading on the labor market from the U.S. Bureau of Labor Statistics shows, for the most part, a slight improvement compared to February. The official unemployment rate in March 2018 was 4.1 percent, the same as the February 2018 rate. The median duration of unemployment was 9.1 weeks in March 2018, slightly lower than February 2018 (9.3 weeks). 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 8.0 percent in March 2018, slightly lower than the February 2018 reading (8.2 percent).
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 stood at 101.8 in March 2018, higher than December 2007 (98.8) when the “great recession” began, and even higher than June 2009 (97.0), when the “economic recovery” subsequently began. The Sentier HII was 90.4 in June 2011, the low point in our household income series. The trend in the Sentier HII, plotted against the various labor market variables discussed above.
Other economic factors, such as average weekly earnings, have also had an effect on household income levels. (Average weekly earnings are affected by changes in average hourly earnings and average hours worked per week.) Average weekly earnings in June 2011, the low point in our household income series, were $875.80 (in March 2018 dollars). By March 2018, average weekly earnings had increased to $925.29. (All figures are seasonally adjusted from the U.S. Bureau of Labor Statistics based on the Current Employment Statistics survey).
Notes:
Income amounts in this report reflect before-tax money income. Values have been adjusted for inflation and are expressed in March 2018 dollars. Seasonal adjustments have been applied unless otherwise noted.
The Nation’s official estimates of household income and poverty are released once a year by the U.S. Census Bureau. Official data derived from the 2017 Current Population Survey Annual Social and Economic Supplement (CPS ASEC) that relate to annual income received during calendar year 2016 were released by the U.S. Census Bureau on September 12, 2017. These are the most recent statistics on annual income that are currently available from the U.S. Census Bureau. While the U.S. Census Bureau provides the most accurate measures of both the level and change in household income, the new series presented in this report provides an interim measure that tracks income changes on a monthly basis, an attribute that is especially important during periods of economic instability, such as those we have experienced. As demonstrated in this and our previous reports, the new monthly series has the ability to track household income changes during the specific months of important economic events, such as the recession and the economic recovery, that do not coincide neatly with calendar year boundaries.
This study is based on data collected in the Current Population Survey (CPS), the same household survey used to derive the official monthly unemployment rate. Data have been compiled from each monthly survey taken since January 2000 (as of March 2018, 219 surveys in total). Each of these surveys collected data for a nationally representative sample of more than 50,000 interviewed households and their respective members (approximately 135,000 per month). The survey collects the detailed information needed to determine the employment characteristics of all civilians age 16 years old and over and to compute the official unemployment rate. It also collects key demographic and social characteristics for all household members, including children.
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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