U.S. Household Income and Poverty Report (2023)

(Reuters) – U.S. inflation-adjusted household income increased, but poverty rates showed modest changes last year, as reported by the U.S. Census Bureau on Tuesday. This offers a mixed snapshot of American households’ conditions as the economy regained pre-coronavirus pandemic growth levels, job growth boomed, and inflation eased.

Income Growth

Real median household income rose to $80,610 in 2023, up 4.0% from 2022, returning to the 2019 peak. Overall earnings for workers were also higher than pre-pandemic levels, boosting households after years of wages being outpaced by high inflation.

Poverty Rates

The main gauge of the nation’s poverty rate, adjusted for government support and household expenses, rose to 12.9% from 12.4% in 2022. The official poverty rate declined from 11.5% to 11.1%. The Census noted that adjustments for the supplemental poverty measure in 2023 were larger than for the official measure, which could have reduced the supplemental rate to 12.0%.

Official Poverty Threshold

In 2023, the threshold for the official poverty rate increased by 4.1% to $30,900 for a household of two adults and two children. The supplemental child poverty rate for those under 18 rose to 13.7% from 12.4%, influenced by the end of extra pandemic-related benefits.

Economic Context

The data comes two months before the U.S. presidential election, highlighting a surge in inflation following the pandemic’s onset. The economy showed stronger-than-expected growth, with the unemployment rate at 3.4% by January 2023, though it rose to 3.7% by December, still the lowest in over 50 years.

Employment Growth

Employment growth averaged about 250,000 new nonfarm payroll jobs per month in 2023, surpassing the pre-pandemic average of 183,000. Full-time year-round workers increased by 2.1 million in 2023, with worker earnings being the main driver of household incomes, according to Liana Fox, an assistant chief at the Census Bureau.

Inflation Trends

The worst inflation in over 40 years pressured households and the Federal Reserve, which raised interest rates to over 5%. Inflation decreased from a high of 7.1% in June 2022 to 5.5% at the start of 2023, ultimately dropping to 2.5% by year-end.

Income Distribution

Real median household income rose by 5.4% for white households and 5.7% for non-Hispanic white households between 2022 and 2023. There were no significant changes in median incomes for Black, Asian, and Hispanic households. However, the female-to-male earnings ratio fell for the first time since 2003, with men’s earnings increasing 3.0% compared to 1.5% for women, partly due to a rise in Hispanic women in the workforce.

Health Insurance Coverage

Lastly, the report indicated that 92.0% of Americans had health insurance coverage for at least part of 2023, remaining roughly unchanged from the previous year.