US Census Inflation and Wages 2024: How Americans Are Affected

According to the US Census data, the average household income in the United States has been steadily increasing over the past few years.

The median household income rose to $67,149 in 2024, a significant jump from $63,465 in 2022.

However, this increase in income has not necessarily translated to a better standard of living for many Americans, as inflation has been on the rise.

As a result, the purchasing power of Americans has actually decreased, making it harder for them to afford basic necessities like housing, food, and healthcare.

Comparing to recent years, nearly all measures of real pay have grown since Q4 2019, with stronger growth if pay measures are adjusted by PCE.

Looking at the data, we can see that the picture is more mixed if looking at growth starting in Q4 2020 or Q4 2021. This shows that the recovery from the pandemic has been a gradual process.

The calculator shows annualized growth in real pay between any two quarters selected, starting in Q2 2006. This means that we can see how real pay has changed over time, and how it compares to previous years.

In 2023, American household incomes rebounded ahead of the election year, with the typical family locking in a 4% bump in earnings. This is the first time since 2019 that households have enjoyed a significant earnings increase.

The median household income jumped to $80,610 in 2023, roughly on par with Americans' 2019 earnings level on an inflation-adjusted basis. This shows that households have largely recovered from the pandemic.

Wages have been pacing ahead of inflation since May 2023, providing more buying power for budget-pinched consumers. This is a positive sign for the economy and for American households.

For another approach, see: Us Stock Futures Move Higher Ahead of Ppi Inflation Data.

American household incomes have made a significant rebound, with the typical family enjoying a 4% bump in earnings in 2023. This is the first time since 2019 that households have seen a significant earnings increase.

Median household income jumped to $80,610 in 2023, roughly on par with Americans' 2019 earnings level on an inflation-adjusted basis. This is a significant improvement from 2022, when inflation peaked at 9.1%.

The income gains also come as inflation eased last year, thanks to a series of rate hikes from the Federal Reserve aimed at cooling the economy. Wages have been pacing ahead of inflation since May 2023, providing more buying power for budget-pinched consumers.

However, not everyone has seen their wages increase, and many households are still struggling to make ends meet. Nearly 66% of Americans experienced increased wages at some point, but only a third of workers from the survey who had a pay increase reported that their income kept up with, or exceeded, increases in their household expenses due to inflation.

Some groups are more vulnerable to feeling the effects of inflation, such as people working in retail and the food service industry. Despite recent gains, the real income of the bottom 90% of Americans has largely stagnated since the early 1970s.

Here's a breakdown of the median household income increases by racial groups in 2023:

The data suggests that while the typical American household regained its 2019 purchasing power in 2023, it essentially experienced no rise in living standards over that time. This is a sharp difference from the preceding four years, when inflation-adjusted median incomes rose 14% from 2015 through 2019.

Nearly 66% of Americans experienced increased wages at some point, but about 38% said they got a pay raise, and 16% got a better-paying job.

People working in retail and the food service industry are especially vulnerable to feeling the effects of inflation, experts say. They often have to spend more on housing and groceries, which have gone up in price.

Only a third of workers who had a pay increase reported that their income kept up with, or exceeded, increases in their household expenses due to inflation.

Here's a breakdown of the types of wage increases people experienced:

The real income of the bottom 90% of Americans – those making less than $216,056 a year in 2023 – has largely stagnated since the early 1970s.

Comparing pay trends over different business cycles can be a useful way to understand how pay has changed in recent years.

Actual real pay from 2000 to present is currently above the prior business cycle trend if inflation is measured using the PCE.

Notably, pay was above trend in 2019, right before the pandemic, for all measures.

Comparing growth in real pay during the current business cycle to date with growth rates in the prior three business cycles can provide additional insights.

Data from the prior three business cycles show varying growth rates in real pay, but the current business cycle has its own unique trends.

The Economic Studies show that, in the Q1 2024 update, ECI reflected ECI for all civilians, and starting in Q2 2024, the figures use ECI for all private workers.

In Q1 2025, Average Hourly Earnings for production and nonsupervisory workers was added as a pay indicator to the first three interactive figures.

Here's an interesting read: Tbill Rates 2024

Economic realities can differ significantly depending on the industry you're in. For example, oil and gas workers saw their real earnings dip in the first half of 2014, but rebound in the second half of that year. Inflation was historically low, while oil prices fell dramatically from the end of 2014 into 2015, remaining at or under $60 a barrel until early 2018.

Different industries experience different economic realities, and it's not just about the overall inflation rate. For instance, in the first half of 2014, oil and gas workers saw their real earnings dip, but then rebound in the second half of that year.

Some workers, like those in the retail and food service industry, are especially vulnerable to feeling the effects of inflation. They may have had wages increase, but their spending basket is weighted toward things that have gone up more in price.

The economy can be thought of as a complex machine, with different components experiencing different pressures. Gauges can show whether the machine is chugging along or about to burst, but what's happening to the individual components inside the machine can be difficult to see.

Oil and gas workers saw their real earnings dip in the first half of 2014, rebound in the second half of that year, fall throughout 2015, and then bounce back strongly in 2016. This is just one example of how different industries can experience different economic realities.

Here's a breakdown of how real earnings for different industries can vary:

American household incomes have made a significant rebound, hitting pre-pandemic levels in 2023 with a 4% bump in earnings. This is the first time since 2019 that households have enjoyed a significant earnings increase.

The median household income jumped to $80,610 in 2023, roughly on par with Americans' 2019 earnings level on an inflation-adjusted basis. Inflation eased last year, thanks to a series of rate hikes from the Federal Reserve aimed at cooling the economy.

Wages have been pacing ahead of inflation since May 2023, providing more buying power for budget-pinched consumers.

American households have made significant financial gains in recent years, with median household income jumping to $80,610 in 2023, roughly on par with 2019 earnings levels on an inflation-adjusted basis.

The rapid growth of household incomes is a testament to the strength of the recovery from the economic crises caused by the pandemic, driven by policy choices such as large fiscal relief and recovery packages.

Nominal earnings might look impressive, but they don't tell the whole story. The Department of Labor's inflation calculation, known as the Consumer Price Index for All Urban Consumers, is based on prices for goods and services in 75 urban areas surveyed from 6,000 housing units and 22,000 retailers.

In December 2021, prices were 7% higher than at the end of 2020 among the categories the labor department tracks. Inflation estimates are also available at the state level and for certain metropolitan areas. News outlets often report on inflation, but they don't always cover the interaction between inflation and earnings.

Each month, the labor department publishes a measure of wages adjusted for inflation, called real earnings. This number shows how far today's dollars would have gone four decades ago. For production and nonsupervisory employees, average real earnings were $9.66 an hour in December 2021, which means the average $26.61 an hour those workers take home would have had the same purchasing power as $9.66 in the early 1980s.