Median household income

The median household income is commonly used to generate data about geographic areas and divides households into two equal segments with the first half of households earning less than the median household income and the other half earning more.^[1] The median income is considered by many statisticians to be a better indicator than the average household income as it is not dramatically affected by unusually high or low values."^[2] The U.S. Census Bureau uses the following definitions of median and mean income:

Household income is not to be confused with family or personal income. Household income is often the combination of two income earners pooling the resources and should therefore not be confused with an individual's earnings. Even though the term family income may sometimes be used as a synonym for household income, the U.S. Census Bureau defines the two differently. While household income takes all households into account, family income only takes households with two or more persons related through blood, marriage or adoption into account.

International statistics

Median household income for selected countries is shown in the table below. The data for each country has been converted to U.S. dollars using purchasing power parity (PPP) (obtained from the Organisation for Economic Co-operation and Development).^[4]

This is what each equivalent adult in a household in the middle of the income distribution earns in a year.

Data are in United States dollars at current prices and current PPPs for the reference year.

Rank	Country	2007[5]
1	Luxembourg	34,407
2	United States	31,111
3	Norway	31,011
4	Iceland	28,166
5	Australia	26,915
6	Switzerland	26,844
7	Canada	25,363
8	United Kingdom	25,168
9	Ireland	24,677
10	Austria	24,114
11	Netherlands	24,024
12	Sweden	22,889
13	Denmark	22,461
14	Belgium	21,532
15	Germany	21,241
16	Finland	20,875
17	New Zealand	20,679
18	France	19,615
19	Japan	19,432
20	South Korea	19,179
21	Slovenia	18,860
22	Spain	18,391
23	Italy	16,866
24	Greece	15,758
25	Israel	14,055
26	Czech Republic	12,596
27	Portugal	12,515
28	Estonia	9,836
29	Poland	9,113
30	Slovak Republic	9,071
31	Hungary	8,531
32	Chile	7,851
33	Turkey	5,940
34	Mexico	4,689
—	OECD	19,229

Median household income and the US economy

Since 1980, U.S. gross domestic product (GDP) per capita has increased 67%,^[6] while median household income has only increased by 15%. An economic recession will normally cause household incomes to decrease, often by as much as 10% (Figure 1).

Median household income is a politically sensitive indicator. Voters can be critical of their government if they perceive that their cost of living is rising faster than their income. Figure 1 shows how American incomes have changed since 1970. The last recession was the early 2000s recession and was started with the bursting of the dot-com bubble. It affected most advanced economies including the European Union, Japan and the United States.

The current crisis began with the bursting of the U.S. housing bubble, which caused a problem in the dangerously exposed sub prime-mortgage market. This in turn has triggered a global financial crisis. In constant price, 2010 American median household income is only 0.75% higher than what it was in 1989. This corresponds to a 0.04% annual increase over a 21-year period.^[7] In the mean time, GDP per capita has increased by 32.5% or 1.35% annually.^[8]

A comparison between median household income and GDP per capita for developed countries is shown in the chart below. There is only a weak correlation (R=0.16) between GDP per capita and median household income.^[9]

See also

• Mean household income
• Income distribution
• Income quintiles
• Household income in the United States
• International Ranking of Household Income
• Median
• Median household income in Australia and New Zealand
• Median income per household member
• Places in the United States with notable demographic characteristics
• Poverty in the United States

References

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