SEPT. 13, 2022 — The U.S. Census Bureau announced today that real median household income in 2021 was not statistically different than 2020. The official poverty rate of 11.6% was also not statistically different between 2020 and 2021. The Supplemental Poverty Measure (SPM) rate in 2021 was 7.8%, a decrease of 1.4 percentage points from 2020. Meanwhile, the percentage of people with health insurance coverage for all or part of 2021 was 91.7% (compared to 91.4% in 2020.) An estimated 8.3% of people, or 27.2 million, did not have health insurance at any point during 2021, according to findings from the 2022 Current Population Survey Annual Social and Economic Supplement (CPS ASEC). That’s compared with an estimated 8.6% of people, or 28.3 million, who did not have health insurance at any point during 2020.
Real median household income was $70,784 in 2021, not statistically different from the 2020 estimate of $71,186. Income estimates are expressed in real or 2021 dollars to reflect changes in the cost of living. Between 2020 and 2021, inflation rose 4.7%; this is the largest annual increase in the cost-of-living adjustment since 1990. You can find more in-depth analysis in our recent Random Samplings blog.
The real median earnings of all workers (including part-time and full-time workers) increased 4.6% between 2020 and 2021, while median earnings of those who worked full-time, year-round decreased 4.1%. Between 2020 and 2021, the change in the number of total workers was not statistically significant; however, there was an increase of about 11.1 million full-time, year-round workers (from approximately 106.3 million to 117.4 million), suggesting a shift from part-time or part-year in 2020 to full-time, year-round work in 2021.
The official poverty rate in 2021 was 11.6%, with 37.9 million people in poverty. Neither the rate nor the number in poverty was significantly different from 2020. The SPM rate in 2021 was 7.8%, a decrease of 1.4 percentage points from 2020. This is the lowest SPM poverty rate since estimates were first published in 2009 and the third consecutive annual decline.
In 2021, private health insurance coverage continued to be more prevalent than public coverage, at 66.0% and 35.7%, respectively. Some people may have more than one coverage type during the calendar year. Of the subtypes of health insurance, employer-based insurance was the most common subtype of health insurance, covering 54.3% of the population for some or all of the calendar year.
These findings come from three Census Bureau reports: Income in the United States: 2021, Poverty in the United States: 2021, and Health Insurance Coverage in the United States: 2021. This is the first year that official poverty and SPM estimates are released in the same report. While the official poverty measure is based on the concept of money income, which is pretax and does not include stimulus payments and tax credits, the SPM is a post-tax and transfer poverty measure. The SPM provides an alternative way of measuring poverty in the United States and serves as an additional indicator of economic well-being. The Census Bureau has published poverty estimates using the SPM annually since 2011 in collaboration with the U.S. Bureau of Labor Statistics (BLS).
For consistency with past reports, the income estimates in the “Income in the United States: 2021” report are based on the concept of money income. Appendix C of the income report provides post-tax estimates of median household income and income inequality metrics.
All three reports are based on data from the CPS ASEC. The Current Population Survey (CPS), sponsored jointly by the Census Bureau and BLS, is conducted every month and is the primary source of labor force statistics for the U.S. population. It is used to calculate monthly unemployment rate estimates. Supplements are added in most months. The CPS ASEC — conducted in February, March and April — is designed to provide annual, national estimates of income, poverty and health insurance estimates, collecting information about job status, income and health insurance coverage during the prior calendar year. Estimates for 2020 in these reports will not match those published last year due to the implementation of the 2020 Census-based population controls. The working paper, Effects of 2020 Census-Based Population Controls on 2020 Income, Poverty, Supplemental Poverty, and Health Insurance in the United States Estimates provides details.
During collection of the 2022 CPS ASEC, in-person interviews resumed except for in geographic areas with a high risk of exposure to COVID-19. The response rate for the CPS basic household survey declined from about 76% in March 2021 to 72% in March 2022. Since the response rates remain below prepandemic levels, which were regularly above 80%, it is important to examine how respondents differ from nonrespondents, as this difference could affect estimates. For more details on how sample differences and the associated nonresponse bias impact income and official poverty estimates, refer to the Research Matters blog: “How Did the Pandemic Affect Survey Response.”.
Race data refer to people reporting a single race only. Hispanic people can be of any race.
In response to the COVID-19 pandemic, Congress passed the American Rescue Plan Act (ARPA) in 2021 to aid individuals and families. ARPA provided additional income in the form of a third stimulus payment (economic impact payment) that was sent to households starting March 2021. ARPA also changed several refundable tax credits, including expanding the Earned Income Tax Credit to filers without children and making the Child Tax Credit (CTC) and Child and Dependent Care Credit fully refundable. Given the large scale of the stimulus payment and tax credits, it is important to account for them in income and inequality estimates. Post-tax income is defined as money income net of federal and state taxes and credits, payroll taxes (FICA), the third stimulus payment, and state stimulus payments. Appendix C of the income report compares household median income and inequality measures based on post-tax income.
As defined by the Office of Management and Budget’s (OMB) Statistical Policy Directive 14 and updated for inflation using the Consumer Price Index, the weighted average poverty threshold for a family of four in 2021 was $27,740. Visit <www.census.gov/data/tables/time-series/demo/income-poverty/historical-poverty-thresholds.html> for the complete set of thresholds that vary by family size and composition.
While the official poverty measure includes only pretax money income, the SPM extends the official poverty measure by taking into account many of the government programs designed to assist low-income families and individuals that are not included in the current official poverty measure, such as the Supplemental Nutrition Assistance Program (SNAP), as well as stimulus payments and expansions to refundable tax credits enacted as part of economic relief legislation related to the COVID-19 pandemic. Of particular note, ARPA increased the value of the CTC and made it fully refundable, meaning that more families were eligible to receive it.
Additionally, the SPM deducts necessary expenses for critical goods and services from income. Deducted expenses include income and payroll taxes, child care, commuting expenses, contributions toward the cost of medical care and health insurance premiums, and child support paid to another household. The SPM permits the examination of the effects of government transfers on poverty estimates. The SPM does not replace the official poverty measure and is not used to determine eligibility for government programs.
The CPS ASEC asks people about coverage during the previous calendar year. People are considered to be insured if they were covered by any type of health insurance for part or all of the previous calendar year. People are considered uninsured if, for the entire year, they were not covered by any type of insurance. Among the findings:
Regional estimates are available for income, poverty and health insurance coverage in each respective report. There is also a table showing state-level poverty rates using three-year averages.
The CPS ASEC is subject to sampling and nonsampling errors. All comparisons made here and in each respective report have been tested and found to be statistically significant at the 90% confidence level, unless otherwise noted.
Additional information on the source of the data and accuracy of the income, poverty and health insurance estimates is available at <https://www2.census.gov/programs-surveys/cps/techdocs/cpsmar22.pdf>.