Median household income numbers offer a good measure of how American families are faring economically — and for the first time in years, many U.S. households saw a drop in earnings, based on recently released official statistics.
In 2020, U.S. national median household income fell by 2.9% compared to the previous year, from $69,560 to $67.521. The U.S. Census Bureau reported that this was the first “statistically significant” drop since 2011. (Here is a list of states where income inequality has gotten worse since 2010.)
Unlike average income, the median income number captures the true “middle.” The government has no official definition of what constitutes a middle-class income, but a common measure, established by Pew Research Center), considers a household to be “middle class” if its income resides anywhere between two-thirds and twice the median household income, depending on factors like size of household and local costs of living. (These, though, are cities where the middle class can no longer afford housing.)
Last year’s decline in median household incomes came thanks to the pandemic, which decimated jobs in the retail and hospitality industries. More than 9.4 million jobs were lost last year, and as of September 2021, the U.S. remains nearly 4.4 million jobs shy of full recovery.
This year-over-year decline affected various regions of the U.S. differently. The Midwest was hit the hardest, with a 3.2% decline from 2020, while median incomes in the Northeast were not significantly impacted. The South and the West each experienced a 2.3% drop.
To determine the income it takes for a family to be considered middle class in every state, 24/7 Wall St. reviewed data on U.S. household income quintiles from the U.S. Census Bureau’s 2019 American Community Survey. The lower and upper boundaries of the three middle income quintiles for the U.S. as a whole were adjusted for state-level cost of living using regional price parity (RPP) data for 2019 from the Bureau of Economic Analysis.
The RPP-adjusted boundaries were defined as the range of income that could be considered middle class in a given state. Data on median family income, the share of income held by the middle class, and the share of income held by the wealthiest 5% of households came from U.S. Census Bureau’s 2019 American Community Survey.