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Some charts from the Census data released this week on US incomes in 2016 showing impressive gains for Americans - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

The Census Bureau released its annual report this week on “Income and Poverty in the United States” with lots of new, updated data on household and family incomes, and household demographics, through 2016. Below are four charts based on the new Census data on household income through 2016.

1. Median and Average Household Income, and Average Household Size. The chart above shows: a) average annual household income in 2016 dollars (dark blue line), b) median household income in 2016 dollars (light blue line), and c) average household size (brown line), all from 1967 to 2016.

Median household income last year of $59,030 was an increase of 3.2% from 2015 and brought median income for US households to the highest level ever, above the previous record level of $58,665 in 1999. The income gain last year was the fourth consecutive annual increase in real median household income starting in 2013, following five consecutive declines from 2008 to 2012 due to the effects of the Great Recession. The last period of four consecutive gains in annual median household income was during the last 1990s at the end of the longest economic expansion in US history (120 months from March 1991 to March 2001).

Although it doesn’t get as much attention as median income because it’s influenced by outliers on the high end, average household income also increased to a new record level last year of $83,143, which was an increase of 3.6% from 2015.

Also notable is the fact that average size of US households has been falling steadily for the last 70 years (or more) and fell to an all-time low last year of 2.53 persons, down from an average of 3.28 persons per household in 1967, and down by more than one full person since the 3.56 average in 1947 (not shown above).

Income adjusted for household size is calculated and presented below, but it should be obvious that it’s not really fair to compare median household incomes over time because the size of US households keeps declining. While median household income has been flat or declining in recent years (and below the 1999 level until last year), it’s important to note that the gains over longer periods of time are quite impressive. The typical US household in 2016 had an annual income of $14,144 more (in 2016 dollars) than the typical household in 1967 – that’s almost $1,200 in additional income every month. And when you consider that the cost of most manufactured goods and many services including clothing, footwear, appliances, electronics, TVs, household furnishings, sporting goods, airline travel, telephone service, computers and automobiles have become cheaper and more affordable over time (relative to increases in overall consumer prices and incomes), along with the increased availability of services that are now almost free (GPS, music, cameras, Craigslist listings, Wikipedia information, Facebook, Twitter, blogs, etc.), that $14,000 annual increase in real household income translates into a much higher standard of living for the average American.


2. Average and Median Income per Household Member. The chart above displays average and median household income adjusted for household size. Both the average and median income per person in the US reached all-time highs in 2016 of $32,863 (in 2016 dollars) for average income per person and $23,337 for median income per household member last year of $23,335. Compared to 1967, the average household income per US household member has more than doubled from $15,300 to $32,862, while the median household income per person has increased by 70.5% from $13,687 to $23,336.


3. Married 2-Earner Households. The chart above shows annual median income from 1949 to 2016 for families headed by married couples with both spouses working. Income for a typical family in this group reached an all-time high last year of $106,000, and the median family income for this group of Americans has been above $100,000 for the last three years. Since 1949, the real median income for married couples with two earners has more than tripled and since 1963 income has doubled.


4. The Disappearing Middle Class. This chart represents what might be one of the most important findings in the new Census data and confirms a trend I’ve highlighted many times before. Yes, the “middle-class is disappearing” as we hear all the time, but it’s because middle-income households in the US are gradually moving up to higher income groups, and not down into lower income groups. In 1967, only 8.1% of US households (fewer than 1 in 12) earned $100,000 or more (in 2016 dollars). Last year, more than 1 in 4 US household (27.7%) were in that high-income category, a new record high. In other words, over the last half-century, the share of US households earning incomes of $100,000 or more (in 2016 dollars) has more than tripled! At the same time, the share of middle-income households earning $35,000 to $100,000 (in 2016 dollars) has decreased over time, from more than half of US households in 1967 (53.2%) to less than half (only 42.2%) in 2016. Likewise, the share of low-income households earning $35,000 or less (in 2016 dollars) has decreased from more than one-third of households in 1967 (38.7%) to below one-third of US households last year (32.1%), a new record low.

Bottom Line: Here are some of the key takeaways from the new Census report on US incomes through 2016:

  • The 3.2% gain in real median US household income last year brought median income to more than $59,000, the highest level ever recorded.
  • The income gain in 2016 was the fourth annual increase and the first period of four consecutive increases in median household income since the late 1990s.
  • Compared to 1967, the typical US household today has $14,000 more annual income (in 2016 dollars) or $1,200 more per month, to spend on goods and services, many of which have become much more affordable today than in the 1960s (or weren’t even available then).
  • Adjusted for household size, which has been falling, real median household income per household member last year of $23,335 was the highest in history.
  • Real median income for married couples with both spouses working reached a new all-time record high last year of $106,000.
  • The share of US households with incomes of $100,000 or more (in 2016 dollars) reached a new record high of 27.7% last year, which is more than triple the share of households in 1967 with that level of income. At the same time, the share of US low-income households (incomes of $35,000 or below) fell to an all-time low of 32.1%
  • America’s middle-class is disappearing but into higher, not lower, income categories


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