The Average Income of an American Family

The median income for the American family has fallen, the Census Bureau said in 2009. The median is a better measure than the average. This is because the extremely high incomes of the wealthy skew the average higher, giving a false impression. The median is also a better measure because it lines up every American's income and chooses the one exactly in the middle. In other words, given the extremes in American earnings, averages would not be a good measure of income. Furthermore, the Census Bureau does not measure “family” income but a closely connected measure, “household” income.

Family in living room
U.S. family.
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Features

Portrait of an overloaded father carrying his daughter whilst grocery shopping
Family grocery shopping.
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From 2007 to 2008, median household income fell from $52,673 to $52,029, according to the Census Bureau. In 1999, the median household income was $50,046. This means there has been a substantial loss of American income, because without controlling for inflation or other cost-of-living increases, the overall median household-income figure has fallen.

The per-capita income of the U.S. was $21,587 as of 2008. This figure is arrived at by taking the value of the entire U.S. economy and dividing it by the number of U.S. citizens.

Geography

"Mix of modern and old buildings in Baltimore, MD"
Maryland has the highest median income.
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The Census Bureau reported that median income was geographically significant, according to 2008 figures. The American South, as usual, was the poorest part of the country. The highest median income was in Maryland, at $70,545, while the lowest was in Mississippi, at $37,790. Five states increased their median household income since the last census: Louisiana, Texas, New York, New Jersey and Kansas. Five saw median incomes lowered: Arizona, Indiana, Michigan, California and Florida. The far West and the Northeast are normally above the median, while the majority of states, the entire South, the Midwest and the upper West (not including Washington) are under the median.

Volatility

Boy (7-9) holding coin in money jar, smiling, close-up
Saving money.
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The median household income figure remained just over $52,000 as of 2008. But what increased substantially is income volatility. This puts the basic median figure in some general doubt. The Economic Policy Institute has determined that between 10 and 15 percent of Americans have seen a major income disruption of 50 percent or more since 2007. Incomes, having fallen slightly, are also subject to wide swings over time.

Significance

Fired businessman gathering his belongings
Unemployment rates have risen.
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Not only has U.S. median income dropped. It is also more volatile. This suggests a strong instability built into the U.S. economy, as well as real fallout from the 2007 banking crisis and persistent unemployment. Possible reasons can be continuing competition with low-wage countries, increasing immigration, falling property values and omnipresent debt.

Effects

US Flag, Capitol Building and Money
American economy.
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The economic effect is often called economic adaptation. If the fall in median income becomes a permanent feature of the U.S. economic landscape, Americans will be forced to change their consuming habits. Cheaper products will be preferred to luxury goods. Savings might go up as people “hoard” their money in expectation of worse times ahead.