For the fourth consecutive year, real median income increased for U.S. households—by 3.5 percent between 1997 and 1998.¹ Calendar year 1998 is the first year that the real median income of households surpassed the peak reached in 1989, the year before the most recent recessionary period (which lasted from July 1990 to March 1991).

The 1998 income year proved to be economically fruitful for many households. All types of households experienced significant gains in real median income, regardless of whether they were family households (composed of married-couple families or families maintained by a man or woman with no spouse present) or nonfamily households (composed of unrelated individuals living together or individuals living alone). For the first time since 1975 (when regional estimates of household income became available in tabulated form from the Current Population Survey or CPS), all four regions of the country experienced annual increases in median household income. Furthermore, households inside central cities, in suburbs, and outside metropolitan areas all experienced significant gains in median income.

The CPS demographic supplement conducted in March of each year is one of the best known and most widely used of all continuing federal household surveys. For 50 years, analysts, researchers, and policy makers have used the CPS to examine annual changes in income and earnings and to compare them with historical trends. Television, radio, and newspapers frequently draw upon this source for statistics on Americans’ jobs, income, poverty status, health insurance coverage, marital status, migration, and other characteristics.

The estimates in this report are based on interviewing a sample of the population. Respondents provide answers to the survey questions to the best of their ability. As with all surveys, the estimates differ from the actual values.

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¹ Changes in real income refer to comparisons after adjusting for inflation. The percentage changes in prices between earlier years and 1998 were computed by dividing the annual average Consumer Price Index (CPI-U) for 1998 by the annual average for earlier years. See Table B–1 in Appendix B for values of the CPI-U from 1947 to 1998.

(Table A presents the confidence intervals for estimates discussed in the text. Data users should consider the uncertainty when using these estimates.)

• The real median income of households in the United States rose by 3.5 percent between 1997 and 1998, from $37,581 to $38,885. This is the fourth consecutive year that household income increased (see Tables A, 1, and Appendix Table B-2). Real median household income is now at the highest level recorded since the Census Bureau started compiling these estimates in 1967.
• 1998 is the first year that real median household income surpassed its 1989 pre-recessionary peak. In 1998, median household income was 2.6 percent higher than the 1989 level of $37,884 (in 1998 dollars) (see Table A).
• For the first time since 1995, all types of households--family and nonfamily alike--experienced annual growth in real median income (see Table A and Table 1).
• For the first time since 1975 (when median household income data by regions became available from the CPS), all four regions experienced significant annual gains in real terms (see Tables A and 1).
• Metropolitan households and nonmetropolitan households experienced growth in real median household income between 1997 and 1998 (see Table A).
• Real median earnings rose between 1997 and 1998 for both men and women who worked full-time, year-round (see Table A). The female-to-male earnings ratio in 1998 was 0.73,² not statistically different from its all-time high, reached in 1996.
• Household income inequality remained unchanged. The Gini index of inequality has not experienced a year-to-year increase since 1993 (see Appendix B, Table B-3). Analysis of the aggregate shares of income also indicates that household income inequality was unchanged between 1997 and 1998.
• Real median household income rose significantly in 16 states based on comparisons of 2-year moving averages (1996-1997 and 1997-1998). Six of these states (Arizona, Colorado, New Mexico, Utah, Washington, and Wyoming) were in the West, four (Alabama, Florida, Georgia, and Oklahoma) were in the South, another four (Indiana, Minnesota, Missouri, and Ohio) were in the Midwest, and two (Pennsylvania and Vermont) were in the Northeast. This comparison also shows that median household income declined for Alaska. Median household income did not change significantly for any of the remaining states or the District of Columbia (see Table D).
• Real median income grew by 3.4 percent between 1997 and 1998 using the most comprehensive definition of income (which takes taxes and receipt of noncash benefits into account). This change is not statistically different from the 3.5 percent increase for the official measure.
• The more comprehensive income definition shows less income inequality than pre-tax (official) money income suggests. Government transfers have a much greater effect than taxes on redistributing income.

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² The 90-percent confidence interval for the 1998 female-to-male earnings ratio is ± .01. Table A shows confidence intervals for other statistics shown in this report.