In studies of voters, politicians, and elections, it’s common to hear a mention of the “median voter,” the voter who is in the center of the distribution. In this admittedly simplified model, if a politician can attract everyone from their side, plus the median voter, then that politician has a majority. Similarly, the household with the median income is at the 50th percentile of the income distribution. If you want to know whether a majority of households are feeling better or worse about their economic situation, median household income is one plausible starting point.
Here’s median household income, measured two ways. The red line shows “nominal” income, which you can think of as the value of income in current dollars at that time. The blue line adjusts for inflation. Thus, the two numbers are identical in for 2022, because both measures are both using current dollars in that year.
The data is from an annual report of the US Census Bureau. The most recent version is Income in the United States: 2023, written by Gloria Guzman and Melissa Kollar, and published earlier this month.
The story for the short-run past period since the pandemic and through the annual data for 2022 is clear enough. Nominal wages are rising for the median household (red line rising), but the wages aren’t keeping up with inflation, so the real wage (blue line) is falling. Real wages peaked in the 2019 data, before the pandemic hit in early 2020.
For a longer-run perspective on median household income, here’s a figure from the Census Bureau Report, which shows income for the median US household as well as for various racial/ethnic groups.
Here, I’ll just point out that over the 55 years from 1967 to 2022, the median household income rose by a little less than 50%. Remember, income gains for the top 1% or 10% or 20% will affect the average level of income, but it doesn’t affect the median household at the 50th percentile of the income distribution. Over the last half-century or so, the median household has seen income gains of less than 1% per year.