The Census Bureau reported that the inflation-adjusted median income of U.S. households rebounded in 2023 to roughly its 2019 level, reaching $80,610. This increase of 4% from 2022 restored most Americans’ purchasing power. The proportion of Americans living in poverty also decreased slightly, from 11.5% in 2022 to 11.1% in 2023. However, the ratio of women’s median earnings to men’s widened for the first time in more than two decades, with men’s income rising more than women’s last year. Despite these improvements, it was noted that while household income recovered to 2019 levels, there was essentially no rise in living standards over that time.
The presidential campaign could potentially focus on these statistics, with Vice President Kamala Harris possibly using them to highlight Americans’ financial health recovery post-inflation peak in 2022. Economists are predicting a decline in inflation from 2.9% in July to 2.6% in August, prompting the Federal Reserve to consider cutting interest rates. Former President Donald Trump may argue that household income grew faster during his first three years in office than in the first three years under the Biden-Harris administration. The data presented reveals a stark difference between the two periods, with median incomes rising substantially from 2015 to 2019 compared to the years that followed.
The income growth in 2023 is attributed to solid job creation, leading to a decrease in the unemployment rate to 3.4% in April. The proportion of prime-age workers (25-to-54-year-olds) with jobs reached its highest level in 23 years, averaging 80.7% in 2023. Median household income varied across racial groups, with whites experiencing a 5.4% increase to $84,630, Black Americans seeing a 2.8% rise to $56,490, and Hispanics remaining unchanged at $65,540. Asian incomes also remained largely unchanged at $112,800. While the overall poverty rate declined, an alternative measure showed an increase in the proportion of children in poverty from 12.4% to 13.7%, partially due to the expiration of the pandemic-era child tax credit in 2022.
Economists emphasize the importance of income transfers to reduce poverty in the short run, as seen with the child tax credit expansion that significantly decreased child poverty rates in 2021. However, the bump in child poverty in 2023 highlights the impact of policy changes and the need for ongoing support for vulnerable populations. The Census also reported that 92% of Americans had health care coverage in 2023, with the proportion of uninsured children slightly increasing to 5.8%. These figures provide insight into the state of American households and the disparities that exist across different demographic groups.
