All you need to know about the average American income (and more); important stats and facts organized by age, gender, state — you name it! It’s all here.
At this moment in time, people across the globe rely on their income, since it enables them to pay for food, utilities, hobbies, taxes, goods, and services. This article will focus on the average American income, which is a concept that describes the amount of money earned by an individual, family, or household.
Understanding how the income system works is essential to ensuring that people are making enough money to afford a good quality of life. It is also a key factor when it comes down to budgeting, understanding your own financial needs, as well as negotiating a new salary. As such, the purpose of our article on the average American income is to provide relevant information, backed by statistical data, on an array of subjects, including (but not limited to) the average income for men, women, by state, and by age. Do keep in mind the fact that we will also cover how income is generally distributed in the United States, and will briefly discuss the factors which are thought to actively influence the average income in the USA. This way, our readers will freshen up their knowledge on what the income is in the US, while also understanding more about the standards of living, and how much it actually costs to live in the United States. Therefore, this guide is also suitable for those who are considering the idea of moving to the US and want to know whether doing so is affordable.
The U.S. Census Bureau releases a report every year in September, highlighting the average incomes in the US for the past 12 months. It is important to keep in mind the fact that the Census Bureau generally offers two main averages: the mean income and the median income. The difference between the two is crucial since the mean income takes all US-based income and divides it based on the people who have reported their earnings (your standard average). The issue here is that like in most of the world’s countries, there is huge income inequality, meaning that people who earn a lot of money tend to drive the averages up. On the other hand, the US median income represents the point at which 50% of people make more, and 50% of people make less — it’s better suited for determining a country-wide average.
It is also important to keep in mind that at this time, the US Census Bureau releases an income report for 3 categories. Here is some extra information on these 3 categories, to put things into perspective:
The US average income per individual, which is generally referred to as income per capita (calculated for all people above the age of 15).
The average family income, which represents the average for a family of at least two people who live within the same household (tied by family links).
The household average income, which represents the money received by all people who currently live within the same household, regardless of their personal relations. This represents the data via which the Census Bureau calculates the median household income.
The Census also offers relevant data regarding each of the categories outlined above. As such, the numbers can be based on age, education, type of housing, race, and gender, as will be outlined later in the article. Before anything else, it must be pointed out that the following statistics are based on official numbers released by the US Census Bureau, alongside other official institutions.
An interesting aspect worth noting here is that this represents a record high, considering the fact that the income has always been lower. For instance, the previous record put the average household income at $60,000 annually, and this was before the economic crisis, back in 1999. Over the last couple of years, the numbers have fluctuated quite a bit before hitting this threshold, as determined by statistics concerning the average American salary.
Source: US Census Bureau
Around the world, the average income varies depending on the age and experience of people. Here are the average salaries for each age bracket in 2017, according to the US Bureau of Labour:
Source: Bureau of Labour
The average American salary statistics clearly illustrate the gender pay gap that is still present in the United States. It is important to keep in mind that the situation has improved over the last couple of years, yet the nation-wide averages indicate that the problem is still persistent in some markets. An important aspect worth noting is that women and men often work in different industries, some of which are better paid — this indirectly affects the gender pay gap in the US. Similarly, studies indicate that there are differences in terms of income by race as well.
Source: CNN Money
The exact earnings tend to depend on a multitude of factors, including age, experience, profession, educational attainment, industry, and more.
Source: US Bureau of Labour Statistics
Here is the median income reported by the US Bureau of Labor Statistics, depending on age, for the year of 2019:
Source: US Bureau of Labour Statistics
Below, you will see more about the average household income (median) for each US state, for 2017, based on data compiled by the US Census Bureau:
The following chart, based on the data provided by Statista, helps paint a better picture of how income is distributed in the United States according to the percentage of households holding specific income brackets:
The US has been dealing with an income inequality problem for years, given that the highest earners tend to have a considerably larger income when compared to most individuals. Therefore, in practice, you can expect significant differences for all income categories, including the average retirement income, average white-collar income, and average blue-collar income.
There are numerous factors that have either a direct or indirect impact on the average income of Americans throughout the United States. For this article, we will mention the main factors that influence the income at the individual’s level, rather than macroeconomic factors that influence the national income grid, according to statistics on the average American income.
As you might expect, some jobs pay more, whereas some pay less. For instance, information technology (IT) employment generally offers higher salaries when compared to other popular domains. As such, the median pay for an IT worker is estimated at $75,000–100,000, whereas the median pay for a person working in the educational market is $50,000–75,000. Therefore, there are industry averages for each niche of work, whereas the exact numbers on the average salary in the US in this case, are dependent on factors that we will mention later on.
During the last couple of years, with the increasing popularity of remote jobs, the geographic location has become less important in determining a person’s income. Despite this aspect, people living in expensive areas, such as Sam Francisco or New York, can generally expect a higher income, since it is mandatory when ensuring that employees can sustain their lifestyle. Therefore, the average wage in the US is considerably lower when compared to these high-income areas. Higher prices lead to higher salaries according to economic laws, yet a higher salary in a high-income location will not generally buy you a better quality-of-life, given the expensive prices for all products and services. To put things into perspective, the median salary for a US-based tech worker is averaged at $100,000, whereas in India, the median income for the same employee would be under $25,000 annually. This helps us get a better understanding of the average income in the USA compared to the rest of the world.
Experience and skill are some of the best-known factors that influence national income averages. With this in mind, entry-level salaries are generally considerably lower when compared to those given to people that have been doing specific work for multiple years. Despite this aspect, pay increases flatten out following 15 years of experience, unless employees manage to be promoted to managerial positions. When analyzing the average wage in the US, in the IT market, employees with 20+ years of experience made roughly $140,000 per year in 2017, whereas those with less than 5 years of experience made less than $80,000.
Source: Puppet Salary
Before anything else, it is important to point out the fact that the numbers that we are about to mention refer strictly to the income of one individual, thus completely disregarding the income of their family or the income of the household. As such, numbers released by the US Bureau of Labour Statistics, show that in the final fiscal quarter of the year of 2018, the average salary in America for your standard full-time employee was approximated at $46,800. It is important to mention that this is an increase of at least 5% when compared to the previous year, thus illustrating that Americans are currently earning higher salaries. It is certainly interesting to compare this to the cost of living. As such, studies are currently being carried out to determine whether the latest increase in the US average income has led to higher prices as well.
|Year||Real Household Income (Median)|
Source: The Balance
In the US, the average income tends to vary significantly, depending on the demographic. Certain demographics, determine the highest earners (age brackets for instance), whereas the state where you live also plays an important role in the expected household income. This illustrates that the US is currently dealing with massive income inequality; more standardization is required to ensure that fewer people find themselves below the federal poverty line.
Salaries should depend more on what you bring to the table, rather than age, state, gender, or experience. After all, a young innovative mind can be considerably more productive and efficient when compared to a person who has more experience working in the same domain.
Anyhow, the average American income is expected to continue fluctuating during the next couple of years, similarly to the cost of living and the overall quality of life.
In 2017, the US median family income was estimated at $73,891 by the US Census Bureau. Keep in mind that this is the median income, meaning that it is not your usual mathematical average since that would considerably push the numbers up due to the incredibly large amounts of money earned by the richest US citizens. As such, we should note that the US median income represents the point where 50% of people start earning more and 50% start earning less — hence why it is used as a solid point of reference. Do keep in mind that the average family income represents the amount earned by families consisting of at least two people that live in the same household at the same time.
Over the last 3 years, this average income has increased by roughly 8.17%.
The answer to this question is quite complicated, given the complex taxation framework that operates in the United States. Based on this aspect, the taxation system works via tax brackets — in 2019, the tax brackets implemented by the federal government were between 10% and 37% of the total income, subject to change based on the individuals’ incomes. Because of this, it is yet again important for us to apply the median formulas to help determine a credible average paid in taxes.
What’s more, research efforts have estimated that in 2018 Americans paid roughly $10,480 in taxes, which sums up to 14% of the average household income.
Firstly, it is important for us to agree on what a good salary actually represents since there are numerous conflicting opinions on this matter. First off, good is above average and should be able to afford people enough money to cover living expenses, food, transportation expenses, utilities, apparel, and credit payments, while living a little wiggle room for savings and for occasional purchases. Therefore, a good salary is certainly higher when compared to the average salary in America.
Similarly, a good salary depends on the area where you live. For instance, for those living in the San Francisco area, $100,000 per year might be considered average. On the other hand, a $50,000 yearly salary is good enough for people living in more rural areas. Therefore, we can use this information to state that a good salary in the urban area ranges from $70,000–150,000, whereas a good salary in rural areas ranges from $50,000–$80,000. Of course, the median household income also varies considerably.