Household income in the United States
Encyclopedia : H : HO : HOU : Household income in the United States
The median household income in 2003 according to the US Census Bureau was determined to be $43,389 a year with the median income per household member being $23,535. In the year 2005, there were approximately 113,146,000 households in the United States. 15.73% of households had an annual incomes exceeding $100,000 while 12.7% fell below the federal poverty threshold. While the aggregate income distribution tends to tilt towards the top with the top 6.37%, who earn roughly one third of all income, it is important to note that the percentage of all income earned by households in the upper ranks of the middle class exceeded the total percentage of all middle class households. Households with moderately high middle class incomes ranging from $50,000 to $100,000 a year, represented 29.2% of all households, yet earned a far greater share of the total income, roughly forty percent, of all income. The 2005 economic survey also found that households in the top two income quintiles, with an annual household income exceeding $55,331 had a mean of two income earners, while those in the lower quintiles had only a mean of one income earner per household. Due to high unemployment among those in the lowest quintile the mean number of income earners for this particular group was determined to be zero. Overall the United States followed the trend of other industrialized countries with a relatively large population of wealthy households outnumbering the poor, a large and quite powerful section of households with incomes with moderately high middle class income and an even large number of households with modestly low incomes.
Contents
Income distribution
The following table illustrates the number and percentage of households according to the income groups designated by the US Census Bureau. Households with annual income of less than $25,000, constituted 28.22% of all households, households with incomes between $25,000 and $50,000 represented 23.25% of the population, followed by households with incomes ranging from $50,000 to $100,000 who were the largest income group with 29.2%, while households with six figure incomes, roughly half of whom also had net worths exceeding one million, represented the smallest income group, constituting 15.82% of all households.
| Income range | Number of households (in thousands) | Percent | Cumulative percentages | ||
|---|---|---|---|---|---|
| Under ,500 | 2,566 | 2.26 | less than k 28.22% | less than k 54.98% | less than 0k 84.18% |
| ,500 to ,999 | 1,389 | 1.22 | |||
| ,000 to ,499 | 2,490 | 2.20 | |||
| ,500 to ,999 | 3,360 | 2.96 | |||
| ,000 to ,499 | 4,013 | 3.54 | |||
| ,500 to ,999 | 3,543 | 3.13 | |||
| ,000 to ,499 | 3,760 | 3.32 | |||
| ,500 to ,999 | 3,438 | 3.03 | |||
| ,000 to ,499 | 4,061 | 3.58 | |||
| ,500 to ,999 | 3,375 | 2.98 | |||
| ,000 to ,000 | |||||
| ,000 to ,499 | 3,938 | 3.48 | k-k 23.25% | ||
| ,500 to ,999 | 2,889 | 2.55 | |||
| ,000 to ,499 | 3,921 | 3.46 | |||
| ,500 to ,999 | 2,727 | 2.41 | |||
| ,000 to ,499 | 3,360 | 2.96 | |||
| ,500 to ,999 | 2,633 | 2.32 | |||
| ,000 to ,499 | 3,378 | 2.98 | |||
| ,500 to ,999 | 2,294 | 2.02 | |||
| ,000 to ,499 | 2,700 | 2.38 | |||
| ,500 to ,999 | 2,371 | 2.09 | |||
| ,000 to ,000 | |||||
| ,000 to ,499 | 3,071 | 2.71 | k-k 18.27% | k-0k 29.2% | |
| ,500 to ,999 | 2,006 | 1.77 | |||
| ,000 to ,499 | 2,420 | 2.13 | |||
| ,500 to ,999 | 1,786 | 1.57 | |||
| ,000 to ,499 | 2,566 | 2.26 | |||
| ,500 to ,999 | 1,774 | 1.56 | |||
| ,000 to ,499 | 2,101 | 1.85 | |||
| ,500 to ,999 | 1,637 | 1.44 | |||
| ,000 to ,499 | 1,978 | 1.74 | |||
| ,500 to ,999 | 1,413 | 1.24 | |||
| ,000 to 0,000 | |||||
| ,000 to ,499 | 1,802 | 1.59 | k-0k 10.93% | ||
| ,500 to ,999 | 1,264 | 1.11 | |||
| ,000 to ,499 | 1,673 | 1.47 | |||
| ,500 to ,999 | 1,219 | 1.07 | |||
| ,000 to ,499 | 1,418 | 1.25 | |||
| ,500 to ,999 | 984 | 0.86 | |||
| ,000 to ,499 | 1,282 | 1.13 | |||
| ,500 to ,999 | 917 | 0.81 | |||
| ,000 to ,499 | 1,023 | 0.90 | |||
| ,500 to ,999 | 846 | 0.74 | |||
| 0,000 or more | |||||
| 0,000 to 9,999 | 11,194 | 9.89 | 0k or more 15.82% | ||
| 0,000 to 9,999 | 3,595 | 3.17 | |||
| 0,000 to 9,999 | 1,325 | 1.17 | |||
| 0,000 and above | 1,699 | 1.50 | |||
SOURCE: US Census Bureau, 2005
Quintiles
Households in the United States are often divided into quintiles according to their income. The 2005 Current Population Survey conducted by the US Census Bureau determined the following lower limits, and average numbers of income earner per household for each of the American income quintiles, all of which include roughly 22,629,000 households, as well as the top five percent. In 2005 the lower treshold for the highest fith, the top quintile, was $88,030, the treshold for the fourth quintile was $55,331, while the bottom quintile consisted of those housholds who an annual income of less than $18,500.
| Data | All households | Lowest fifth | Second fifth | Middle fifth | Fourth fifth | Highest fifth | Top 5% |
|---|---|---|---|---|---|---|---|
| Population (in 1000s) | 113,146 | 22,629 | 22,629 | 22,629 | 22,629 | 22,629 | 5,695 |
| Lower limit | (X) | (X) | ,500 | ,738 | ,331 | ,030 | 7,176 |
| Mean number of income earners | 1 | 0 | 1 | 1 | 2 | 2 | 2 |
SOURCE: US Census Bureau, 2004
Type of household
There is a strong correlation between the type of household and manner of living arrangement and household income, with families, especially those with two income earners outearning non-family households. As one would expect, homeowners also outearned renters. Yet nearly half of all households in the lowest quintile were homeowners. The vast of households in the top quintile majority, 88.35%, were family households. Married couple families with a mean of two income earners constituted 80.8% of all households in this quintile. In the lowest quintile, on the other hand, family households constitued a less than half, 41.3%, of the total number of households. The percentage of non-family households, however, was reached it peak in the lowest quintile with 55.57%, whereas non-family household only compromised 34.9% of all households in the second lowest quitnile and only 6.31% in the top quintile. Overall over a third of non-family households in the United States, 36.9%, had annual household incomes of less than $25,000 and were thereby part of the bottom quintile. This supports common beleive that families, espcially those with two incomes, have far higher annual incomes than non-family households, the majority of whom fall into the lowest two quintiles. Families headed by males with no wife present also had significantly higher incomes than similar households headed by females. While 37.93% of families with a male householder and no wife present had incomes exceeding $55,331 only 21.27% of family households headed by a female had incomes in the top two quintiles.
| Data | All households | Lowest fifth | Second fifth | Middle fifth | Fourth fifth | Highest fifth | Top 5% |
|---|---|---|---|---|---|---|---|
| Population (in 1000s) | 113,146 | 22,629 | 22,629 | 22,629 | 22,629 | 22,629 | 5,695 |
| Lower limit | (X) | (X) | ,500 | ,738 | ,331 | ,030 | 7,176 |
| Mean number of income earners | 1 | 0 | 1 | 1 | 2 | 2 | 2 |
| Tenure | |||||||
| Owner occupied | 62.4% | 49.0% | 58.8% | 68.9% | 80.5% | 90.0% | 92.8% |
| Renter occupied | 29.2% | 48.3% | 39.7% | 29.9% | 18.7% | 9.6% | 6.9% |
| Type of household (of any race) | |||||||
| Family households | 68.06% | 41.06% | 59.97% | 70.04% | 80.87% | 88.35% | 90.61% |
| Married couple families | 51.35% | 19.03% | 38.89% | 51.00% | 67.05% | 80.08% | 85.59% |
| Single-male family | 4.32% | 3.08% | 4.64% | 5.69% | 4.89% | 3.30% | 2.47% |
| Single-female family | 12.38% | 18.94% | 16.43% | 13.35% | 8.93% | 4.24% | 2.54% |
| Non-family households | 31.93% | 58.92% | 40.02% | 29.96% | 19.12% | 11.64% | 9.36% |
SOURCE: US Census Bureau, 2004
Racial income distribution
Despite great advances made to lift minorities up of poverty and many African Americans and Latino Americans joining the middle class, there is still an uneven racial distribution among the income quintiles. While Whites who were not of Hispanic dissent made up roughly 75.1% of all persons in 2000, 87.93% of all households in the top 5% were headed by a person who identified as White alone, while only 4.75% of all household were headed by someone who identified him or herself as Hispanic or Latino of any race, versus 12.5% of persons identifying themselves as Hispanic or Latino in the general population. Overall 86.01% of all housholds in the top two quintiles with middle class, upper middle class and upper class incomes of over $55,331 were headed by a head of household who identified him or herself as White alone, while only 7.21% being Hispanic and 7.37% being African American or Black. Overall households headed by Hispanics and African Americans or Blacks were underrepresented in the top two quintiles and overrepresented in the bottom two quintiles while households headed by persons who identified as being Asian alone were overrepresented among the top two quintiles. In the top five percent the percentage of Asians was nearly twice as high as the percentage of Asians among the general population. European-Americans were relatively even distributed throughout the quintiles only being underrepresented in the lowest quintile and slightly overrepresented in the top quintile and top five percent.| Race | All households | Lowest fifth | Second fifth | Middle fifth | Fourth fifth | Highest fifth | Top 5% | |
|---|---|---|---|---|---|---|---|---|
| White alone | Number in 1000s | 92,702 | 16,940 | 18,424 | 18,978 | 19,215 | 19,721 | 5,695 |
| Percentage | 81.93% | 74.87% | 81.42% | 83.87% | 84.92% | 87.16% | 87.93% | |
| Asian alone | Number in 1000s | 4,140 | 624 | 593 | 786 | 871 | 1,265 | 366 |
| Percentage | 3.65% | 2.76% | 2.26% | 3.47% | 3.84% | 5.59% | 6.46% | |
| African American or Black | Number in 1000s | 13,792 | 4,474 | 3,339 | 2,637 | 2,053 | 1,287 | 236 |
| Percentage | 12.19% | 19.77% | 14.75% | 11.65% | 9.07% | 5.69% | 1.04% | |
| Hispanic or Latino (of any race) | Number in 1000s | 12,818 | 3,023 | 3,130 | 2,763 | 1,931 | 1,334 | 269 |
| Percentage | 11.33% | 13.56% | 13.83% | 12.20% | 8.53% | 5.89% | 1.19% | |
SOURCE: US Census Bureau, 2004
Education and gender
Household as well as per capita incomes in the United States rise significantly as the educational attainment increases. In 2005 garduates with an MBA (Master's in Business administration) who accepted job offers are expected to earn a salary base of $88,626, they are also expected to receive "An average signing bonus of $17,428." According to the US Census Bureau persons with doctorates in the United States had an average income of roughly $81,400. Year-round full-time workers with a Professional degrees had an average income of $109,600 while those with a Master's degree had an average income of $62,300. Overall "Average earnings ranged from $18,900 for high school dropouts to $25,900 for high school graduates, $45,400 for college graduates and $99,300 for workers with professional degrees (M.D., J.D., D.D.S., or D.V.M.). Considering how education significantly enhances the earnings potential of persons, it should come as no surprise that individuals with graduate degrees have an average per capita income exceeding the median household income of married couple families, which currently stands at $63,813. Higher educational attainment did not, however, help close the income gap between females and males as the life-time earnings for a male with a professionals degree were roughly forty percent (39.59%) higher than those of a female with a professionals degree. The life-time earnings gap between males and females was the closest for those individuals holding Associate degrees with male life-time earnings being 27.77% higher than those of females. While educational attainment did not help reduce the income inequality between men and women, it did increase the earnings potential of individuals of both sexes, greatly enabling many households with (a) graduate degree householder(s) to enter the top household income quintile.Age of householder
Household income in the United States varies substantially depending on the age of the person who heads the household. Overall the median household income increased with the age of householder until retirement age when household income started to decline. The highest median household income was found among households headed by working baby-boomers. Households headed by persons between the ages of 45 and 54 had a median household income of $61,111, mean income of $77,634. The median income per member of household for this particular group was $27,924. The highest median income per member of household was among those between the ages of 54 and 64 with $30,544. The group with the second highest median household income, were households headed by persons between the ages 35 and 44 with a median income of $56,785, followed by those in the age group between 55 and 64 with $50,400. Not suprisingly the lowest income group was compromised of those household headed by individuals younger than 24, followed by those headed by persons over the age of 75. Overall households headed by persons above the age of seventy-five had a median household income of $20,467 with the mean household income being $29,487 and the median income per member of household being $18,645. These figures support the general assumption that median household income as well as the median income per person in the household peeked among those households headed by middle aged persons, increasing the the age of householder and the size of the household until age 64. With retirement income replacing salaries and the size of the household declining, the median household income decreases as well for those with a householder of retirement age.Aggregate income distribution
The aggregate income measures the combined income earned by all persons in a particular income group. Overall households in the United States earned roughly $4,286,391 million in 2005 (4.3 trillion). Roughly one third, 32.5%, of all income in the US was earned by those households with income over $150,000, approximately the top five percent with one fifth, 20.58%, of all income being earned by the top 2.67%, those households earning more than $200,000 a year. Overall the aggregate income distributing tilts towards the top, yet it should be mentioned that households with middle class annual incomes ranging from $50,000 to $75,000 earned roughly one fourth, 25.11% of all income. This number is roughly equal to the percentage of all households constituted by this group, meaning this particular income group's share of income is roughly equal to their representation in the general population. Both groups do, however, contrast starkly to the bottom 6.37% which earn only 0.27% of all income.
| Income range | Aggregate income earned (in millions) | Percent of total income earned | Cumulative percentages and income earned | ||
|---|---|---|---|---|---|
| Under ,500 | 81 | 0.0018 | less than k 1,253 million 6.7688% | less than k ,069,674 million 24.88% | less than 0k ,893,114 million 62.42% |
| ,500 to ,999 | 2,874 | 0.067 | |||
| ,000 to ,499 | 8,708 | 0.20 | |||
| ,500 to ,999 | 18,716 | 0.43 | |||
| ,000 to ,499 | 30,242 | 0.70 | |||
| ,500 to ,999 | 34,301 | 0.80 | |||
| ,000 to ,499 | 40,328 | 0.94 | |||
| ,500 to ,999 | 44,678 | 1.04 | |||
| ,000 to ,499 | 55,824 | 1.30 | |||
| ,500 to ,999 | 55,600 | 1.29 | |||
| ,000 to ,000 | |||||
| ,000 to ,499 | 69,178 | 1.61 | k-k 8,421 million 18.12% | ||
| ,500 to ,999 | 58,908 | 1.37 | |||
| ,000 to ,499 | 81,449 | 1.90 | |||
| ,500 to ,999 | 65,293 | 1.52 | |||
| ,000 to ,499 | 83,893 | 1.95 | |||
| ,500 to ,999 | 74,668 | 1.74 | |||
| ,000 to ,499 | 97,646 | 2.27 | |||
| ,500 to ,999 | 73,625 | 1.71 | |||
| ,000 to ,499 | 89,809 | 2.09 | |||
| ,500 to ,999 | 83,952 | 1.96 | |||
| ,000 to ,000 | |||||
| ,000 to ,499 | 113,005 | 2.63 | k-k 7,710 million 22.54% | k-0k ,823,440 million 42.54% | |
| ,500 to ,999 | 81,358 | 1.90 | |||
| ,000 to ,499 | 101,200 | 2.36 | |||
| ,500 to ,999 | 81,626 | 1.90 | |||
| ,000 to ,499 | 119,072 | 2.77 | |||
| ,500 to ,999 | 87,370 | 2.04 | |||
| ,000 to ,499 | 105,379 | 2.45 | |||
| ,500 to ,999 | 89,751 | 2.09 | |||
| ,000 to ,499 | 109,018 | 2.54 | |||
| ,500 to ,999 | 79,931 | 1.86 | |||
| ,000 to 0,000 | |||||
| ,000 to ,499 | 107,601 | 2.51 | k-0k 5,730 million 20.0% | ||
| ,500 to ,999 | 80,260 | 1.87 | |||
| ,000 to ,499 | 106,167 | 2.47 | |||
| ,500 to ,999 | 81,849 | 1.91 | |||
| ,000 to ,499 | 99,775 | 2.33 | |||
| ,500 to ,999 | 72,565 | 1.69 | |||
| ,000 to ,499 | 94,592 | 2.21 | |||
| ,500 to ,999 | 67,759 | 1.58 | |||
| ,000 to ,499 | 77,043 | 1.80 | |||
| ,500 to ,999 | 68,119 | 1.60 | |||
| 0,000 to 9,999 | (NA) | (NA} | (NA) | (NA) | |
| 0,000 or more | |||||
| 0,000 to 9,999 | 510,975 | 11.92 | 0k or more ,393,178 million 32.58% | ||
| 0,000 to 9,999 | 245,865 | 5.73 | |||
| 0,000 and above | 636,338 | 14.85 | |||
SOURCE: US Census Bureau, 2005
Income by state
The median household income by state ranged from $32,589 or 26.7% below national median, in West Virginia to $57,352 or 29% above national median, in New Hampshire. Connecticut which is often referred to as the nation's wealthiest state came in at number four with a median household income of $55,970. California which is had the highest median home price in the nation in the nation and is home the twelve consecutive most expensive cities in the US where home prices have far outpaced income only ranked number thirteen with a median household income of a mere $49,894. While California's median home price was not near enough to afford the average California home or even a starter home, West Virginia, which had the nation's lowest median household income also had the nation's lowest median home price. Norteastern states, more specifically those located in New England, and western states had the highest median household income. Of the top fifteen states, all were located in the Northeast and West, with the sole exception of Minnesota which ranked fifth. Southern States had the by far lowest median houshold income with nine out of the countries fifteen poorest states being located in the South. It should be noted, however, that all three New York, Pennsylvania and the District of Columbia fell below the national median. Overall, median household income tended to be the highest in nation's most urbanized northeastern, north mid-western and western States, while rural and mostly southern states had the lowest median household income.
| State | Rank | Median household income | +/- national average |
|---|---|---|---|
| New Hampshire | 1 | 57,352
| |
| New Jersey | 2 | 56,772
| |
| Maryland | 3 | 56,763
| |
| Connecticut | 4 | 55,970
| |
| Minnesota | 5 | 55,914
| |
| Alaska | 6 | 54,627
| |
| Virginia | 7 | 53,275
| |
| Hawaii | 8 | 53,123
| |
| Massachusetts | 9 | 52,354
| |
| Colorado | 10 | 51,022
| |
| Utah | 11 | 50,614
| |
| Delaware | 12 | 50,152
| |
| California | 13 | 49,894
| |
| Washington | 14 | 48,688
| |
| Wisconsin | 15 | 47,220
| |
| Nevada | 16 | 46,984
| |
| Rhode Island | 17 | 46,199
| |
| Illinois | 18 | 45,787
| |
| Vermont | 19 | 45,692
| |
| Nebraska | 20 | 44,623
| |
| Michigan | 21 | 44,476
| |
| United States national average (,473) | |||
| Pennsylvania | 22 | 44,286 | |
| New York | 23 | 44,228 | |
| Ohio | 24 | 44,160 | |
| Missouri | 25 | 43,988 | |
| Kansas | 26 | 43,725 | |
| Wyoming | 27 | 43,641 | |
| Georgia | 29 | 43,217 | |
| Iowa | 30 | 43,042 | |
| District of Columbia | 31 | 43,003 | |
| Indiana | 31 | 43,003 | |
| Oregon | 32 | 42,617 | |
| Arizona | 33 | 42,590 | |
| Idaho | 34 | 42,519 | |
| Texas | 35 | 41,275 | |
| South Dakota | 36 | 40,518 | |
| Florida | 37 | 40,171 | |
| North Dakota | 38 | 39,594 | |
| Maine | 39 | 39,395 | |
| South Carolina | 40 | 39,326 | |
| North Carolina | 41 | 39,000 | |
| Tennessee | 42 | 38,550 | |
| Oklahoma | 43 | 38,281 | |
| Alabama | 44 | 38,111 | |
| New Mexico | 45 | 37,587 | |
| Kentucky | 46 | 37,396 | |
| Louisiana | 47 | 35,523 | |
| Montana | 48 | 35,201 | |
| Arkansas | 49 | 33,948 | |
| Mississippi | 50 | 33,659 | |
| West Virginia | 51 | 32,589 | |
SOURCE: US Census Bureau, 2004
Median income
The median income divides households in the US evenly in the middle with half of all household earning more than the median income and half of all households earning less then the median household income. In 2004 the median household income in the United States was $43,389. According to the US Census Bureau, the median is "considerably lower than the average, and provides a more accurate representation." Considering other racial and geographical inequities in regards to household income, it should come as no surprise that the median household income varies with race, size of household and geography. The state with the highest median household income in the United States was New Hampshire with $57,352, followed by New Jersey, Maryland and Connecticut, making the Northeastern United States the wealthiest area by income in the entire country. In terms of region the median household income was as follows: "Northeast ($47,994), West ($47,680) and South ($40,773)." Median household income in the Mid-West declined by 2.8% to $44,657. The exception was the Midwest, where income declined 2.8 percent, to $44,657/ While median household income has tendency to increase up to four persons per household, it declines thereon after. This indicated that while four person households have larger incomes than those with one, two or three members, household with seem to earn progressively less as their size increases beyond four persons. According to the US Census Bureau 2004 Community Survey, two-person households had a median income of $39,755, with $48,957 for three-person households, $54,338 for four-person households, $50,905 for five-person households, $45,435 for six-person households, with seven-or-more-person households having the second lowest median income of only $42,471.. In terms of race, Asian-Americans households had the highest median household income of $57,518, European-American households ranked second with $48,977, Hispanic or Latino households ranked third with $34,241. African American or Black households had the lowest median household income of all races with $30,134.Mean income
Another common measurement of income is mean household income. Unlike the median household income which is the divides all households in two halves with half of all households earning more than the median income of $43,318 and half earning less, the mean income is the average income earned by American households. In the case of mean income, the income of all households is divided by the number of all households. The mean income is usually more affected by the relatively unequal distribution of income which tilts towards the top. As a result the mean tends to be higher as the median income with the top earning households boosting it. Overall the mean household income in the United States according to the US Census Bureau 2004 Economic Survey was $60,528, $17,210 or 39.73% higher than the median household income.
"Median income is the amount which divides the income distribution into two equal groups, half having income above that amount, and half having income below that amount. Mean income (average) is the amount obtained by dividing the total aggregate income of a group by the number of units in that group. The means and medians for households and families are based on all households and families. Means and medians for people are based on people 15 years old and over with income."
-US Census Bureau, Frequently Asked Question, published by First Gov.
The mean household income for households headed by persons identifying as White alone was $65,317, $40,685 for those headed by persons identifying as African American or Black, $45,871 for those headed by persons identifying as Hispanic or Latino, and $76,747 for those households headed by persons identifying as Asian alone. Approximately one third, or 36.5%, of all households earned more than the mean income, while 63.5% earned less than the mean.
See also
- Income quintiles
- Income distribution
- Economy of the United States
- Social structure of the United States
- Poverty in the United States
- Income
- Six figure income
US related articles
References
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