U.S. inflation-adjusted household income increased but poverty rates showed only modest changes last year, the U.S. Census Bureau reported on Tuesday, offering a mixed snapshot of how American households fared as the economy returned to pre-coronavirus pandemic growth levels, job growth boomed and inflation eased.
Real median household income rose to $80,610 in 2023, up 4.0% from 2022, back to the peak reached in 2019, while earnings for workers as a whole were higher than before the pandemic, a boost to households after multiple years in which workers’ wages were outpaced by high inflation.
But the report also showed a main gauge of the nation’s poverty rate, adjusted for government support such as food assistance, tax credits, and household expenses, rose to 12.9% from 12.4% in 2022. The so-called official poverty rate declined to 11.1% from 11.5%.
However, the Census noted that the adjustments to income levels used to determine whether a person lived in poverty were larger for the supplemental measure than for the official measure in 2023. Had the official threshold increase been applied for the supplemental rate, that rate would have declined to 12.0% from 12.4% the prior year.
In 2023, the threshold for the official rate increased by 4.1% to $30,900 for a two-adult, two-child household.
The supplemental child poverty rate, also adjusted and referring to those under the age of 18, rose to 13.7% in 2023 from 12.4% the previous year. The rise in the supplemental child poverty rates was impacted by the end of extra pandemic-related government benefits. For example, extra pandemic-related food assistance programs ended in March of last year in a majority of U.S. states, and school meal aid also narrowed.
The income and poverty data for 2023 comes two months before the U.S. presidential election. The shadow cast by a surge in inflation following the onset of the pandemic in early 2020, and how much that has squeezed the pocketbooks of voters once government support programs designed to shore up household incomes expired, remains a key issue.
Last year saw the economy continue to post stronger-than-expected growth as it returned to its pre-pandemic path while the unemployment rate by January 2023 was 3.4%, lower than just before the health shock struck. While it ticked up to 3.7% by last December, that was still the lowest level in over 50 years.
MORE WORKERS
Employment growth averaged around 250,000 new nonfarm payroll jobs a month for 2023, well above the 183,000 average over the decade preceding the pandemic.
This was echoed in the findings of the report. There were 2.1 million more full-time, year-round workers in 2023, and worker earnings were the main driver of household incomes, said Liana Fox, assistant chief of the Economic Characteristics, Social, Economic, and Housing Statistics Division. “We’re seeing people are working more.”
The worst inflation in more than 40 years has vexed both households and the U.S. Federal Reserve. The central bank ratcheted up interest rates to more than 5% by the middle of last year and has kept them there since, in a bid to reduce the pace of price increases back to the normal annualized trend of around 2%.
Inflation, by the central bank’s preferred measure, had fallen from a high of 7.1% on an annual basis in June 2022 to 5.5% at the beginning of 2023, before more than halving to 2.6% by last December. Inflation currently remains at 2.5%.
Household income rose throughout the income distribution, the Census said in the report.
Real median household income rose by 5.4% for white households and 5.7% for non-Hispanic white households between 2022 and 2023. There was no significant change in median incomes for Black, Asian, and Hispanic households, the Bureau said.
However, the female to male earnings ratio fell for the first time since 2003, as women’s earnings growth was outpaced by men’s. Real median earnings for men who worked full-time, year-round increased by 3.0%, compared to 1.5% for women with the same working patterns. This could be partly due to a rise in the number of Hispanic women in the workforce last year, Census officials said, as they tend to earn less.
The report also showed that 92.0% of Americans were covered by health insurance for at least part of 2023, roughly unchanged from the previous year.
(Source: ReutersReuters)
