US incomes rose last year, but poverty rates changed little, census data shows

(Reuters) – U.S. household incomes adjusted for inflation rose but poverty rates showed only little change last year, the U.S. Census Bureau said on Tuesday, painting a mixed picture for American households as the economy returned to pre-coronavirus pandemic growth levels, job growth surged and inflation fell.

Real median household income rose to $80,610 in 2023, up 4.0% from 2022, returning to the peak reached in 2019, while overall worker earnings were higher than before the pandemic, providing a boost to households after years of workers’ wages being outpaced by high inflation.

But the report also showed the country’s headline poverty rate, adjusted for government support such as food aid and tax breaks as well as household spending, rose to 12.9% from 12.4% in 2022. The so-called official poverty rate fell to 11.1% from 11.5%.

However, the Census noted that the income adjustments used to determine whether a person is living in poverty were larger for the supplementary measure than for the official measure in 2023. If the official increase in the threshold were applied to the supplementary rate, the rate would fall to 12.0% from 12.4% the previous year.

In 2023, the official rate threshold increased by 4.1% to $30,900 for a household of two adults and two children.

The additional child poverty rate, also adjusted for those under age 18, rose to 13.7% in 2023 from 12.4% the previous year. The increase in additional child poverty rates was influenced by the end of additional government benefits related to the pandemic. For example, additional food assistance programs related to the pandemic ended last March in most U.S. states, and school meal assistance also decreased.

The 2023 income and poverty data comes two months before the U.S. presidential election. The shadow cast by the surge in inflation after the pandemic struck in early 2020 and how much that has hurt voters’ pockets as government support programs meant to prop up household incomes expired remains a key issue.

The economy continued to grow stronger than expected last year, returning to its pre-pandemic path, while the unemployment rate stood at 3.4% in January 2023, lower than just before the health shock hit. Although it rose to 3.7% last December, that was still the lowest level in more than 50 years.

More employees

Over the course of 2023, average job growth was about 250,000 new nonfarm jobs per month, well above the average of 183,000 in the decade before the pandemic.

That’s reflected in the report’s findings. There were 2.1 million more full-time, year-round workers in 2023, and worker earnings were the main driver of household income, said Liana Fox, deputy director of the Economic Characteristics, Social, Economic and Housing Statistics Division. “We’re seeing people working more.”

The worst inflation in more than 40 years has hit both households and the U.S. Federal Reserve. The central bank raised interest rates to above 5% in the middle of last year and has kept them there since, aiming to slow the pace of price growth back to a normal annual trend of about 2%.

Inflation, the central bank’s preferred measure, fell from a peak of 7.1% year-on-year in June 2022 to 5.5% in early 2023, then more than halved to 2.6% by December last year. It now stands at 2.5%.

Household incomes rose across all income groups, according to the Census report.

Median household income increased by 5.4% for white households and by 5.7% for non-Hispanic white households between 2022 and 2023. The bureau reported that the median income of black, Asian and Hispanic households did not change significantly.

However, the ratio of women’s to men’s earnings fell for the first time since 2003, as women’s earnings growth was outpaced by men’s earnings growth. Real median earnings for men who worked full time, year-round, rose 3.0%, compared with 1.5% for women with the same work patterns. That may be due in part to an increase in the number of Hispanic women in the labor force last year, census officials said, because they tend to earn less.

The report also found that 92.0% of Americans would be covered by health insurance for at least part of 2023, about the same as last year.