Wednesday, March 9, 2016

Inflation-adjusted median incomes in Colorado have moved little over the past decade

Now that median household income data is available for 2014, let's take a new look at how incomes are doing in Colorado.

There are numerous measures of median incomes, but two of the easiest to find and most widely used  are the 5-year estimates from the American Community Survey (ACS) and the data from the Annual Social and Economic Supplement (CPS ASEC) from the Census Bureau.

Let's begin with the ACS data.

Using 5-year estimates in current dollars from the ACS, we get the following values for median household income:

According to the ACS, the 5-year estimate for median household income in 2014 was $59,448. That was up 1.7 percent from the year before:

Overall, however, we can see that over the past four years, the median income has been rather stable.

If we adjust for inflation, however, we find that the median incomes have been declining slightly:

There are numerous implications to this, of course. If median incomes are basically flat, but home prices are increasing at a rate of five to ten percent, this will certainly impact the affordability of housing. We'll look at this in future posts.

Other Census Data 

Using the 1-year median income measure from the Annual Social and Economic Supplement (CPS ASEC), we get the following:

Here we find a bit more volatility in the numbers, although, like the ACS data, they tend to hover around $60,000.

Measured in terms of year-over-year changes, we find that 2014 saw an decrease of 3.8 percent in its median income, which followed a very large increase for 2013 over 2012:

Overall, we can conclude that median income hasn't really moved much since 2007 when it peaked toward the end of the last economic expansion. In 2013, median incomes hit a new peak, but then fell below 2007 levels again in 2014.

The picture sours a bit more when we adjust these values for inflation. In 2014 dollars:

In this case, it's more clear that Colorado's median income has not returned to where it was in 2007. More or less, Colorado's median income is today where it was a decade ago.

Regardless of which measure we use here, it's likely safe to say that the median income in Colorado is somewhere around $60,000. Since the end of the last recession in 2009, nominal incomes have increased somewhat, although it is unclear if, once we adjust for inflation, whether or not households have made much headway relative to where we were at the peak of the last economic expansion.

*To adjust for inflation, I've used the Denver-Boulder-Greeley CPI. All graphs in this article are for Colorado statewide.