As measured by income data available from the Current Population Survey’s (CPS) Annual Social and Economic Supplement (ASEC), between 2001 and 2003 median household income in the United States (U.S.) declined 1.3 percent. That statistic compares a “snapshot” of households in 2001 with another “snapshot” of a different group of households in 2003. It is not a picture of what happened to the same households over that time period. Medians, like those from the CPS-ASEC, can conceal fluctuations in the income of households. To address this issue, this report uses the longitudinal data available from the Survey of Income and Program Participation (SIPP) to examine changes in the income of the same households between 2001 and 2003.¹ (The Text Box—Household Income—provides definitions of the key terms.)

Income quintiles were constructed for 2001 and 2003 using data collected in the SIPP (Text Box: Constructing Income Quintiles). Longitudinal data make it possible to identify and analyze factors that may contribute to an increase or a decrease in household income (Text Box: What Makes the SIPP a Longitudinal Survey?).²

_______________
¹ The data in this report were collected from February 2001 through January 2004 from households interviewed in all nine waves of the 2001 Longitudinal Panel of the SIPP.  The population represented (population universe) is the civilian noninstitutionalized population living in the United States. See the “Source of Data” section for more details.

² This report is an update of a previous U.S. Census Bureau, Current Population Report, P70-95: “Dynamics of Economic Well-Being: Movements in the U.S. Income Distribution, 1996–1999,” July 2004. This report focuses on household income rather than family or individual income. Several notable studies that have similarly used household income to investigate mobility are D’Ambrosio, D. (2001), “Household Characteristics and the Distribution of Income in Italy,” Review of Income and Wealth, Series 47, No.1, pp: 43–64, and Jarvis, S. and S.P. Jenkins (1997), “Low Income Dynamics in 1990s Britain,” Fiscal Studies, Vol.18, No.2, pp. 123–42.