Uptick in Median Household Income is Long-Awaited but More Work Remains to Restore Previous Living Standards

Sept. 9, 2016

For the first time since the economic recovery began, the Tar Heel household at the mid-point, or median, of the income distribution brought in more income than the previous year.  But that growth has not been sufficient to bring North Carolina households to the same level of income as the nation nor to where they were a decade before.

In 2015 the median household income in North Carolina brought in $47,830, which is $1,216 more income than it did in 2014. That is significant for a household struggling to afford the basics because it is worth about a month of child care costs for a family of four. This level still falls short by more than $4,400 of what a family of four needs to make ends meet on a thrifty budget without public assistance, according to the NC Living Income Standard.

While this income boost for the median household has been long-awaited and is welcome news, it is worth noting that household incomes have yet to fully recover from the sizeable declines in the aftermath of the Great Recession. Since the Great Recession began in 2007, median household income has dropped by more than $3,200, or 6.8 percent, adjusting for inflation. A 10-year lookback shows the median household had $1,600 less in income in 2015 than in 2005 (see the chart below). In other words, North Carolinians have experienced a decade of decline in middle-class living standards.

The distribution of North Carolina households across income groups did not shift all that much between 2014 and 2015.  In fact, the share of households with incomes at the very top—in both the $100,000 to $149,000 and $200,000-and-above groups—grew whereas there was a meaningful decline in the share of households with incomes below $10,000 during that period. The share of households across the remaining distributions remained unchanged.  In other words, economic growth is not being shared in a way that disrupts the very stubborn and decades-long trend of income inequality in the state. That will continue to be the case until wages for the ordinary worker rise and/or public policies ensure average households can broadly reap the benefits of economic growth.

Lastly, there were only nine states in the nation that had a lower median household income than North Carolina did in 2015. As such, North Carolina’s median household income continued to trail the nation’s median, by more than $7,900 that year.