The 2002 median household money income in the United States was $42,409, representing a 1.1 percent real decline from its 2001 level of $42,900.¹ By type of residence, the decline in median household money income was experienced mainly by households in metropolitan areas. Both family and nonfamily households also experienced declines in money income. In contrast, both men and women who were full-time, year-round workers in 2002 experienced increases in their median earnings. Income inequality as measured by money income did not change.

Traditionally, income data in Census Bureau reports have been based on the amount of money people or households receive during a calendar year. This income concept is limited and does not provide a completely satisfactory measure of economic well-being. For example, it does not include the effect of taxes and, therefore, does not reflect the effect of tax law changes on economic well-being. Similarly, this concept excludes the effect of noncash benefits (such as employer-provided group health insurance, food stamps, school lunches, and housing assistance), which certainly enhance economic well-being.

This report features four alternative income measures that deduct payroll, federal, and state income taxes and includes the value of various noncash benefits — food stamps, school lunches, housing subsidies, health programs, and return on home equity. Of these four alternative income definitions, only one showed a real decline in median household income between 2001 and 2002 — money income less taxes declined 0.8 percent from $37,376 to $37,066. The other three were unchanged.

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¹ All income values are in 2002 dollars. Changes in real income refer to comparisons after adjusting for inflation. The percentage changes in prices between earlier years and 2002 were computed by dividing the annual average Consumer Price Index for 2002 by the annual average for earlier years. The CPI-U values for 1947 to 2002 are available on the Internet at: www.census.gov/hhes/income/income02/cpiurs.html; click on “Annual Average Consumer Price Index (CPI-U-RS): 1947 to 2002.” Inflation between 2001 and 2002 was 1.6 percent.