Americans’ Incomes Decline for Second Year in a Row Amid Soaring Inflation

Americans’ Incomes Decline for Second Year in a Row Amid Soaring Inflation
President Joe Biden and Vice President Kamala Harris walk to the Rose Garden of the White House, in Washington, on May 9, 2022. (Angerer/Getty Images)
Naveen Athrappully
The real median 2021 household income of Americans, recorded at $70,784, was down for a second year in a row, while poverty crept up as the country battles inflation at a 40-year high, according to numbers released on Sept. 13 by the U.S. Census Bureau in its annual report on the nation’s financial well-being.

Compared to 2020 when the real median household income was $71,186, the latest report shows a decrease of 0.56 percent. Without adjusting for inflation, the median income for 2020 was $67,521, a decrease of 2.9 percent from the 2019 median of $69,560. Meanwhile, the official poverty rate last year was 11.6 percent, with 37.9 mil­lion people in poverty. This is an increase of more than 1 percent from 2020’s 37.5 million. In 2019, there were 34 million in poverty, an inflation-unadjusted rate of 10.5 percent.

The percentage of U.S. citizens with health insurance coverage for all or part of 2021 was 91.7 percent, an increase from 91.4 percent in the prior year.

High inflation keeps the economy from breaking through the pre-pandemic levels. The 12-month Consumer Price index (CPI), a measure of annual inflation, has consistently remained at or above 7.5 percent every single month this year. It hit a four-decade high of 9.1 percent in June and was at 8.5 percent in July. When Joe Biden took over the presidency in January 2021, the 12-month CPI was 1.4 percent.

“Median incomes were highest in the West ($79,430) and the Northeast ($77,472), followed by the Midwest ($71,129) and the South ($63,368) in 2021,” said the report.

Rising Income Inequality

The Gini index—an indicator of how far apart incomes are from one another—showed that income inequality increased by 1.2 percent between 2020 and 2021. This is the first time since 2011 that the index went up annually, from 0.488 to 0.494, indicating that the income disparity grew larger.

In the 10th percentile, 10 percent of households had an income decline of 4.4 percent, from $16,386 in 2020 to $15,660 in 2021. And 10 percent of households in the 90th percentile had a slight increase, from $211,438 in 2020 to $211,956 in 2021.

“The ratio of the 90th- to 10th-percentile increased from 12.90 in 2020 to 13.53 in 2021. That means income at the top of the income distribution was 13.53 times higher than income at the bottom, a 4.9 increase increase from 2020,” the Census report stated.

Inequality increased by 4.0 percent between the middle and bottom of the income distribution, while it remained the same between the top and middle.

“Among the race groups, Asian households had the highest median income ($101,418) in 2021, followed by non-Hispanic white ($77,999), and Hispanic ($57,981) people. Black households had the lowest median income ($48,297),” said the report. There were 15.8 million whites, 9.1 million Hispanics, 8.6 million blacks, 1.9 million Asians, and almost 1 million Native Americans living in poverty in 2021.

Almost 21 million females and 17 million males were living in poverty, according to the Census report. The poverty levels for those aged under 18 went down annually, from 16.0 percent to 15.3, while for those who were 65 and above, it went up from 8.9 percent to 10.3. The poverty level remained the same for ages between 18 and 65.

When it came to educational attainment, 5.4 million Americans without a high school diploma were living under the poverty line. More than 8 million finished high school, but didn’t complete college and were living in poverty. For those with a bachelor’s degree, it was 3.5 million.

“Consistent with the findings for all full-time, year-round workers, median earnings among men ($61,180) and women ($51,226) who worked full-time, year-round decreased by 4.7 percent and 4.0 percent, respectively, between 2020 and 2021.”

Related Topics