Inflation-adjusted median income of U.S. households recovered last year to roughly the 2019 level, overcoming the biggest price increase to restore the purchasing power of most Americans in four decades.
The share of Americans living in poverty also fell slightly last year, from 11.5% in 2022 to 11.1%. However, the ratio of median income for women to men increased for the first time in more than two decades, as men’s incomes rose more than women’s in 2023.
The latest data came on Tuesday in a Annual Report from the Census Bureau, which said inflation-adjusted median household income rose 4% to $80,610 in 2023, up from $77,450 in 2022. That was the first increase since 2019 and was essentially unchanged from the previous year’s figure of $81,210, officials said. (Median income is the point where half the population is above and half is below, and is less skewed by extreme incomes than the average.)
“We are back to the pre-COVID peak we experienced,” said Liana foxDeputy Division Chief in the Social, Economic, and Housing Statistics Division of the Census Bureau.
The numbers could become a talking point in the presidential campaign if Vice President Kamala Harris were to cite them as evidence that Americans’ financial health has largely recovered after inflation peaked at 9.1% in 2022. Economists forecast the government will report a drop in inflation on Wednesday to 2.6% in August from 2.9% in July. The Federal Reserve, whose inflation target is 2%, is expected to begin cutting interest rates next week.
Former President Donald Trump might counter that household incomes grew much faster during his first three years in office than during the first three years of the Biden-Harris administration. However, incomes fell during his term after the pandemic hit in 2020.
The data showed that while the typical American household regained its 2019 purchasing power in 2023, it experienced virtually no increase in living standards during that time. That’s a stark contrast from the previous four years, when inflation-adjusted median incomes rose 14% from 2015 to 2019.
The data are based on pretax income, including Social Security and other benefit programs, but exclude non-cash benefits such as food stamps and Medicaid.
The increase in income reflects solid job creation last year, helping to push the unemployment rate down to a half-century low of 3.4% in April 2023. The share of Americans in the so-called prime age group of 25-54 year olds with a job averaged 80.7% last year, the highest level in 23 years. Economists often focus on prime-age workers because they exclude younger people, who are often still in school, and older workers, who are more likely to retire or reduce their hours.
By race, median household income rose 5.4% for whites to $84,630, 2.8% for blacks to $56,490, and remained unchanged for Hispanics at $65,540. Incomes for Asians also remained largely unchanged at $112,800.
While the overall poverty rate declined from 2022 to 2023, the share of children living in poverty using an alternative measure of income rose from 12.4% to 13.7%. The increase in child poverty comes two years after it fell to just 5.2%, when the expansion of the child tax credit during the pandemic provided greater benefits to families. But the tax credit expired in 2022.
“If you want to reduce poverty in the short term, you have to send income to poor families,” said Steven Durlauf, an economist at the University of Chicago.
The census also calculated that 92% of Americans would have health insurance in 2023, largely unchanged from the previous year, although the share of uninsured children increased by half a percentage point to 5.8%.