Median personal income reached $28,757 in 2014, a 2.2% year-over-year increase when adjusted for inflation. This marks a steady recovery from the steep decline that started in 2008 in the midst of the Great Recession. However, 2014 median real personal income is still smaller than it was in 2000 and is 5.4% down from its high in 2007.
The changes in real personal income did not affect different age groups equally. Income earners between 55 and 64 comprise the only age group that registered rising real personal income over the past 14 years. When adjusted for inflation, their median income grew a modest 2.8% from $33,563 in 2000 to $34,498 in 2014.
During the same period, real median personal income of all other age groups declined. Young adults ages 25-34 experienced the biggest drop in real personal income. In 2014, young adults earned 11.2% less than their same-age counterparts did in 2000. In comparison, median personal income of adults ages 35-44 and 45-54 showed more modest declines of 6.7% and 7.4%, respectively.
The income changes since 2007 also vary across different age groups. Looking at the changes from 2007 to 2013, all age groups experienced a significant decline in real median income as a result of the Great Recession. However, the decline for young adults ages 25 – 34 was much steeper, with a 9.3% decrease in inflation adjusted personal income.
With gradual economic recovery underway and the employment environment improving, real median personal income finally reversed the trend in 2013 and registered additional gains of 2.2% from 2013 to 2014. However, young adults ages 25-34, the potential first-time home buyers, still showed the smallest increase of 1.33%, compared to a 2.2% increase for the 35-44 age group and a 4.9% increase for the 45-54 group.
Data Notes: The 2014 CPS ASEC included redesigned questions for income designed to improve respondent rates and contain more accurate income estimates from all sources. The split-panel design led to two estimates for personal income in 2013. One is by using the traditional questions and the other is by using the redesigned question