The official tally is in and it is brutal: Americans suffered the biggest drop in household income in 2022 in a dozen years.
Real median household income was $74,580 in 2022, a drop of 2.3 percent from the prior year, the Census Bureau said Tuesday.
This is the biggest drop in household income since 2010, when it household income fell 2.6 percent. That means it is worse than the pandemic decline of 2.2 percent. It is the fourth worst year in records going back to 1985.
The declines were driven by high inflation. The measure of inflation that is used to calculate real income rose 7.8 percent, the worst inflation since 1981.
The real median earnings of all workers—including part-time and full-time workers—declined 2.2 percent between 2021 and 2022. Median earnings of those who worked full-time, year-round fell 1.3 percent in 2022.
The figures are even worse once taxes are figured into the equation. Real median post-tax household income in 2022 fell 8.8 percent in 2022.
Income inequality also got worse in 2022 once taxes are calculated. Pre-tax, income inequality—as measured by an gauge of income distribution called the Gini index—declined for the first time since 2007. After taxes, however, the index increased 3.2 percent. An increase in the Gini index signals increasing income inequality.
The official poverty rate in 2022 was 11.5 percent, with 37.9 million people in poverty. This was unchanged from the prior year.
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