Household income is an economic measure of one household's total income. This measure can be aggregated across households for a geographic unit such as county, city, region or country. It is commonly used by the United States government and private institutions to describe a household's economic status or to track economic trends in the US. Household income is often defined as gross (pre-tax) wage income, excluding benefits and transfers from government welfare programs.
A key aggregate is median income, which gives the household income where, within the statistical area, half of households have an income above that value, and the other half of households have an income which falls below. The U.S. Census Bureau reports two median household income estimates based on data from two surveys: the Current Population Survey (CPS) Annual Social and Economic Supplement and the American Community Survey (ACS). The CPS ASEC is the recommended source for national-level estimates, whereas the ACS gives estimates for many geographic levels. For calendar year 2024, the Current Population Survey Annual Social and Economic Supplement estimated real median household income at $83,730, not statistically different from the 2023 estimate of $82,690. Estimates for previous years are given in terms of real income, which have been adjusted for changes to the price of goods and services.
The distribution of U.S. household income has become more unequal since around 1980, with the income share received by the top 1% trending upward from around 10% or less over the 1953–1981 period to over 20% by 2007. Since the end of the Great Recession, income inequality in the US has gone down slightly, and at an accelerated pace since 2019.
Definition A household's income can be calculated in various ways but the US Census as of 2009 measured it in the following manner: the income of every resident of that house that is over the age of 15, including pre-tax wages and salaries, along with any pre-tax personal business, investment, or other recurring sources of income, as well as any kind of governmental entitlement such as unemployment insurance, social security, disability payments or child support payments received.
The residents of the household do not have to be related to the head of the household for their earnings to be considered part of the household's income. As households tend to share a similar economic context, the use of household income remains among the most widely accepted measures of income. That the size of a household is not commonly taken into account in such measures may distort any analysis of fluctuations within or among the household income categories, and may render direct comparisons between quintiles difficult or even impossible. The US Census does not include noncash benefits such as health benefits.
Recent trends
The Census Bureau reported no statistically significant change in real median household income between 2023 and 2024.
Changes in median income reflect several trends: the aging of the population, changing patterns in work and schooling, and the evolving makeup of the American family, as well as long- and short-term trends in the economy itself. For instance, the retirement of the Baby Boom generation should push down overall median income, as more persons enter lower-income retirement. However, analysis of different working age groups indicate a similar pattern of stagnating median income as well.
Journalist Annie Lowrey wrote in September 2014: "The root causes [of wage stagnation] include technological change, the decline of labor unions, and globalization, economists think, though they disagree sharply on how much to weight each factor. But foreign-produced goods became sharply cheaper, meaning imports climbed and production moved overseas. And computers took over for humans in many manufacturing, clerical, and administrative tasks, eroding middle-class jobs growth and suppressing wages."
Measured relative to GDP, total compensation and its component wages and salaries have been declining since 1970. This indicates a shift in income from labor (persons who derive income from hourly wages and salaries) to capital (persons who derive income via ownership of businesses, land and assets). This trend is common across the developed world, due in part to globalization. Wages and salaries have fallen from approximately 51% GDP in 1970 to 43% GDP in 2013. Total compensation has fallen from approximately 58% GDP in 1970 to 53% GDP in 2013.
However, as indicated by the charts below, household income has still increased significantly since the late 1970s and early 80s in real terms, partly due to higher individual median wages, and partly due to increased employment of women.
According to the CBO, between 1979 and 2011, gross median household income, adjusted for inflation, rose from $59,400 to $75,200, or 26.5%. However, once adjusted for household size and looking at taxes from an after-tax perspective, real median household income grew 46%, representing significant growth. In 2023, annual real median household income grew for the first time since 2019 (before the COVID pandemic) and reached a new high of $80,610.
The following table summarizes real median household income at key recent milestones:
Variable 1999 Previous Record 2007 Pre-Crisis Peak 2012 Post-Crisis Trough 2019 Previous Record 2023 New Record Real median household incomeFRED-Real Median Household Income-Retrieved September 12, 2024 $67,650 $68,610 $63,350 $78,250 $80,610
Uses Use of individual household income: The government and organizations may look at one particular household's income to decide if a person is eligible for certain programs, such as nutrition assistance or need-based financial aid, among many others.
Use at the aggregate level: Summaries of household incomes across groups of people – often the entire country – are also studied as part of economic trends like standard of living and distribution of income and wealth. Household income as an economic measure can be represented as a median, a mean, a distribution, and other ways. Household income can be studied across time, region, education level, race/ethnicity, and many other dimensions. As an indicator of economic trends, it may be studied along with related economic measures such as disposable income, debt, household net worth (which includes debt and investments, durable goods like cars and houses), wealth, and employment statistics.
Median inflation-adjusted ("real") household income Median inflation-adjusted ("real") household income generally increases and decreases with the business cycle, declining in each year during the periods 1979 through 1983, 1990 through 1993, 2000 through 2004 and 2008 through 2012, while rising in each of the intervening years. Extreme poverty in the United States, meaning households living on less than $2 per person per day before government benefits, more than doubled in absolute terms from 636,000 to 1.46 million households (including 2.8 million children) between 1996 and 2011, with most of this increase occurring between late 2008 and early 2011. A 2012 study by the Urban Institute found that 75% of adults in "deep poverty" had not worked in the previous year.
CBO income growth study
The nonpartisan Congressional Budget Office conducted a study analyzing household income throughout the income distribution, by combining the Census and IRS income data sources. Unlike the Census measure of household income, the CBO showed income before and after taxes, and by also taking into account household size. Also, the CBO definition of income is much broader, and includes in kind transfers as well as all monetary transfers from the government. The Census' official definition of money income excludes food stamps and the EITC, for example, while CBO includes it.
Between 1979 and 2011, gross median household income, adjusted for inflation, rose from $59,400 to $75,200, or 26.5%. This compares with the Census' growth of 10%. However, once adjusted for household size and looking at taxes from an after-tax perspective, real median household income grew 46%, representing significant growth.
While median gross household income showed much stronger growth than depicted by the Census, inequality was shown to still have increased. The top 10% saw gross household income grow by 78%, versus 26.5% for the median. The bottom 10%, using the same measure, saw higher growth than the median (40%).
Since 1980, U.S. gross domestic product (GDP) per capita has increased 67%, while median household income has only increased by 15%. Median household income is a politically sensitive indicator. Voters can be critical of their government if they perceive that their cost of living is rising faster than their income.
The early 2000s recession began with the bursting of the dot-com bubble and affected most advanced economies including the European Union, Japan and the United States. An economic recession will normally cause household incomes to decrease, often by as much as 10%.
The Great Recession began with the bursting of the 2000s United States housing bubble, which led to the subprime mortgage crisis. This in turn triggered the 2008 financial crisis. In constant price, 2011 American median household income was 1.13% lower than what it was in 1989. This corresponds to a 0.05% annual decrease over a 22-year period. In the meantime, GDP per capita has increased by 33.8% or 1.33% annually.
A study on US Census income data claims that when using the national accounting methodology, U.S. gross median household income was $57,739 in 2010 (table 3).
In 2015, the US median household income spiked 5.2 per cent, reaching $56,000, making it the first annual hike in median household income since the start of the Great Recession.
Mean household income Another common measurement of personal income is the mean household income. Unlike the median household income, which divides all households in two halves, the mean income is the average income earned by American households. In the case of mean income, the income of all households is divided by the number of all households. The mean income is more affected by the relatively unequal distribution of income which tilts towards the top. As a result, the mean income in the United States is higher than the median income, with the top earning households boosting it. Overall, the mean household income in the United States, according to the US Census Bureau 2014 Annual Social and Economic Supplement, was $72,641.
The U.S. Census Bureau provides the following breakdown by self-identified ethnic groups as of March 2018:
+ Mean household income by ethnicity Ethnic category Mean household income Asian alone $119,816 White alone $93,948 Hispanic or Latino $70,945 Black $59,363
Mean vs. median household income
Aggregate income distribution
The aggregate income measures the combined income earned by all persons in a particular income group. In 2018, the total personal income earned in the United States was $17.6 trillion. In 2008, all households in the United States earned roughly $12,442.2 billion. One half, 49.98%, of all income in the US was earned by households with an income over $100,000, the top twenty percent. Over one quarter, 28.5%, of all income was earned by the top 8%, those households earning more than $150,000 a year. The top 3.65%, with incomes over $200,000, earned 17.5%. Households with annual incomes from $50,000 to $75,000, 18.2% of households, earned 16.5% of all income. Households with annual incomes from $50,000 to $95,000, 28.1% of households, earned 28.8% of all income. The bottom 10.3% earned 1.06% of all income.
Demography Racial and ethnic groups