Has Median Household Income Kept Up With Inflation?

Last week I did a short post showing the official median household income data for 2021 as a whole and by state.  I started doing posts like that in 2017, and since inflation is the topic on everyone’s mind I decided to run some numbers. 

According to the official CPI inflation numbers used by the government, total inflation from December 2017 to December 2021 is 13.09%. 

Inflation

 

So I decided to take the 2017 median household income data and multiply it by 13.09%, then compare it to the 2021 data.  This would show which states respective median household incomes have been keeping up with inflation over that 4 year period and which have not. 

So let’s get to the results!

 

2021 Vs. Inflation-Adjusted 2017

Here is the map for the 2017 median household income data that I did about 4 years ago. (click for a larger version)

*Note: I mistakenly forgot to put the word “household” in the title, but the data are for households and not individuals

 

In hindsight those green hues I used back then are a bit too bright. Sorry for zapping your eyes, haha. 

Back to the matter at hand, I simply took those numbers and added 13.09%.  So this is what each states median household income “should” be in 2021 if it kept up with inflation exactly during that four year time period. (click for a larger version)

Inflation

 

And as a reminder, here’s the actual 2021 median household income by state from my post last week. 

 

Inflation

 

Given those two sets of numbers I just did some simple maths and made another map of the differences.  And here’s the result: 

 

Inflation

 

This was a hard map to title.  So any state in a shade of blue has seen it’s median household income rise faster than inflation from 2017 – 2021.  Any state in red has seen it’s median household income lag behind inflation for the same period. 

The dollar amount in each state shows the amount that it either beat or lagged behind it’s 2017 inflation adjusted number (again, that’s the 2017 median household income + 13.09%)

It turns out that in 12 states and the District of Columbia the median household income did not keep up with inflation from 2017 – 2021, and in 38 states it did. 

As for the U.S. aggregate, the median household income in 2017 was $61,372.  If you add 13.09% inflation (from 2017-2021) onto that you get $69,406.  The actual median household income in 2021 however was slightly higher at $70,704.

 

Trends?

The first thing I noticed from the final map is that the richer states with big massive urban centers such as those in the brunch belt have been mostly losers.  And most mountain states such as Idaho, Utah, and Oregon have been big winners.  Midwestern states except for North Dakota have also been big winners. 

A lot of this can be explained by the flight from urban areas to more remote and low cost of living locales during covid.  It wasn’t just a small trend that made news headlines, it really happened.  If you really want to geek out on data and maps about this, Bloomberg went above and beyond in this article.

In other cases some bribery has probably had an effect – Vermont and Maine were both paying handsome amounts of money to people if they moved there.  And consider that people who can work remotely mostly have higher paying white collar jobs.  

As mentioned mountain states with beautiful scenery saw population gains during covid.  If you can suddenly work wherever you want many would choose the mountains over an urban jungle.  These folks are smart in my book 🙂 

Six states exceeded their 2017 inflation-adjusted median household income by more than $10,000 – Oregon, Idaho, Utah, Kansas, Nebraska, and Vermont.  South Dakota missed by on $27.  There are many articles out there explaining some of these big gains, but any specific info from readers are welcome in the comments.

 

Is Inflation Winning?

So there you have it readers.  Simple analysis of the official government income data suggests that even though inflation is high, median household incomes for the country as a whole and in many states are keeping up with it and quite a few are surpassing it handsomely.  Of course that doesn’t discount the 12 states and Washington D.C. where incomes have not kept up and where people are surely feeling the pinch. 

Comments are welcome but keep them civil as I realize anything that goes against the grain these days tends to send a certain part of the population off into a rage and elicits bullying behavior.  I’m just reporting the data here and have no point to prove.  And if you see any flaws in my simple math please let me know as I did these maps pretty quickly.

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Dave @ Accidental FIRE

I reached financial independence and semi-retired in my mid-40's through hard work, smart living, and investing. This blog chronicles my journey and explores many aspects of personal finance including the psychological and behavioral factors that drive our habits.

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18 Responses

  1. Kate says:

    Really enjoyed that Dave – wish was one for uk counties/ areas…
    Love your maps.

    • Dave @ Accidental FIRE says:

      Thanks Kate, country level data us really hard as so many do not have consistent income collection data. I appreciate the comment!

  2. Thanks again for pointing to data which illustrates the nuance that is rarely discussed in the mainstream clickbait world.
    I lost track of how many times I explained to former coworkers that our 2% salary increase was not a raise, but just keeping pace with inflation(this was years ago). They usually looked at me like I had something growing out of my forehead. Wish I had a smooth graphical representation to point at like you keep putting out. Good stuff.

    • Dave @ Accidental FIRE says:

      Nuance….. it’s a word that is virtually ignored these days. Everyone wants to make every issue black and white, and the truth is always way different than that

  3. Joe says:

    Hmmm… interesting. I guess many well off people moved to Oregon. But I don’t see it in the Portland area. Maybe they moved to the suburb or rural areas.

    • Dave @ Accidental FIRE says:

      Oregon is a big state as you know and I think many people are choosing to move there but to steer clear of Portland, Bend has exploded with outdoor enthusiasts who have money, including a few friends of mine t

  4. Wow Washington and Colorado beating out CA? I must say I see some very expensive homes in Denver, that are not that big or nice. I guess people really want to leave CA. Also, Kansas has that large of a change?

    That’s quite the change overall for just a few years, the wildfires out West are also having some life long Californians thinking of moving to the South.

    • Dave @ Accidental FIRE says:

      Yes folks really do want out of Cali and the numbers show it. Midwest states like Kansas have seen a boom from wfh – low COL and you can keep your east coast job

  5. when you use the context of overall inflation for 4 years 14% doesn’t seem too awful. i’m betting once this year’s data are in the bank it will be over 20% for 4-5 year data but it’s good to see incomes keeping up (mostly). for my money the only way to really keep pace long term is to continue investing.

    • Dave @ Accidental FIRE says:

      I only chose 4 years only because I had the maps for that period. I also think things will get worse before they get better, but hopefully not too much.

  6. Jim says:

    Great post Dave, it will be interesting to see what the future holds for these big urban areas who are seeing population declines. Will other parts of the country become epicenters for commerce and populations in the future and will the New York and LA’s start losing the ‘economical might’ they’ve enjoyed for the last many years? Unfortunately, that will all come down to state management. So we’ll see!

    • Dave @ Accidental FIRE says:

      Great comment, and yes so much of this is based on decisions at the state level. We are still a republic after all.

  7. Gordo says:

    Super interesting post. I live in NH and am stunned that we are number two in the nation for median income right now. But we definitely have beautiful mountain scenery (and no income tax)….

  8. Very interesting! Also interesting to see that over a longer period, wages haven’t fallen that far behind inflation by and large. I think over the past two years we’ve seen wages increase as ‘usual’ but inflation stagnated, so now we’re just seeing more of a return to baseline that just feels like wages aren’t keeping up

    • Dave @ Accidental FIRE says:

      I like that explanation and I think it has lots of truth, both wages and inflation are like sine or cosine waves and they get ahead or fall behind each other dynamically. Thanks for the comment!

  9. Mr. Tako says:

    It’s fascinating how incomes can very so much from state to state. In my case I actually moved *from* one of the states with the fastest growing median income. It seemed like a good thing at the time. 😉 I wonder if my income won’t keep pace in the future!

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