The Census Bureau reported the largest annual increase since the stat has been tracked.

By Manuel Gutierrez, Consulting Economist to NKBA

 

The U.S. Census Bureau recently released its annual household income report for 2019. The median income, the point at which half the U.S. households fall above and half below, was $68,703, a full $5,524 higher than the previous year’s $63,179. On a constant basis, after removing the effects of inflation, the figure was still a remarkable $4,379 above that of 2018. Both numbers are the largest annual increases since this variable has been measured.

To put it into perspective, the average annual increase in median income was previously just under $1,100 and the largest annual gain was $2,859 in 2016. The other measure of household income besides median is average income. This figure will always be higher than median because it averages in incomes of the super wealthy. For 2019, it came in at $98,088.

Returning to the macro picture, the record jump in median household income for 2019 was attributable to a very strong economy and unemployment hovering near record levels, ending the year at 3.5%. Clearly, with current unemployment at 8.4% and many individuals accepting pay cuts just to rejoin the workforce, median household income at the end of 2020 will likely fall far short of 2019 levels.

On a geographic basis, the highest income was attained in the Northeast. The median income there in 2019 was $76,221, or 6.3% above the prior year. This was followed by the West, with median income of $75,769 or 6.6% above 2018 levels. The other two regions posted median incomes that were lower, with the South trailing badly. Its median income came in at $61,884, 10% below the national figure. (See bottom table for details).

The chart just below breaks out income by age bracket. It shows that highest median incomes are for the 35-44 and 45-54 groups, which are typically the peak earning years. Median income declines for older households partly because a proportion of them take retirement even before they reach age 60.

As has been well-documented, there are large discrepancies in income among various racial or ethnic groups. Households that are classified as Asian posted the highest median income for 2019, at $97,150. Their income was a whopping 41% higher than the national median of $68,703.

Households headed by Whites are 11% higher than the national average, at $76,057. Hispanics, at $56,113, are approximately 18% below that average.

Rounding out the racial/ethnic breakout are Blacks, whose median household incomes are at $46,703, nearly a third below the overall U.S. median.