Household Incomes: The Decline of the "Middle Class"

The median household is the statistical center of the Middle Class. In terms of income, this class has not fared well in recent decades. Let's take a closer look at a troubling aspect of the Census Bureau's latest annual household income data, issued last week.

We've already studied some key metrics in the annual release:

In this update we'll focus on the growing gap between the median (middle) and mean (average) household incomes across the complete time frame of the Census Bureau's annual reporting, which began in 1967, to the release last week of the annual data for 2015. Here is a snapshot the clearly illustrates the growing gap between the middle household and the average, which has been increasingly skewed higher by the more rapid income growth of higher income households.

Nominal Median-Mean

For a more realistic sense of the median-mean gap, here is the same chart adjusted for inflation based on the Bureau of Labor Statistics' Consumer Price Index-Research Series (which we discuss in more detail here). Among other things, we see that the 2015 average income has set a new high, finally topping its record high in 2000. But the median series, despite its 2015 advance, remains below its 1999 real peak.

Real Median-Mean