The Widening Divide: How the Gap Between Median and Average Household Income Has Grown Since 1967

For decades, the typical American household’s income has told a different story than the average. In 2023, the U.S. Census Bureau reported a median household income of $80,610, while the mean household income was $114,500 — a gap of nearly $34,000. That difference is not a statistical curiosity; it is a direct measure of how unevenly income is distributed. The mean is pulled upward by a relatively small number of very high-income households, while the median reflects the exact middle of the distribution. Since 1967, the ratio of mean to median household income has climbed from about 1.15 to 1.42, a clear sign that income gains have increasingly flowed to the top.

Key Numbers

• 2023 median household income: $80,610
• 2023 mean household income: $114,500
• 2023 gap between mean and median: $33,890
• 2023 mean-to-median ratio: 1.42
• 1967 mean-to-median ratio: approximately 1.15
• Increase in ratio since 1967: about 0.27 points, or 23%
• Mean has exceeded median in every year since 1967
• Primary source: U.S. Census Bureau, Current Population Survey Annual Social and Economic Supplement

Explanation

The median household income is the income level at which half of all households earn more and half earn less. It is often called the income of the ‘typical’ household because it is not distorted by extremely high or low values. The mean household income, or average, is calculated by adding up all household incomes and dividing by the total number of households. Because the income distribution in the United States is right-skewed — a relatively small number of households have very high incomes — the mean is always higher than the median.

The gap between the mean and median is a simple but powerful indicator of income inequality. When the gap is small, incomes are relatively evenly distributed around the middle. When the gap is large, it means that high-income households are pulling the average upward, while the typical household’s income remains much lower. Over the past five decades, this gap has widened significantly, reflecting a growing concentration of income at the top of the distribution.

Economists and policymakers watch this gap closely because it affects how we understand economic progress. If only the mean is reported, it can create a misleading impression that all households are benefiting from growth. The median provides a more realistic picture of how the middle class is faring. The rising mean-to-median ratio is one of the clearest statistical signs that income gains have not been shared equally.

Definition

Median household income is the midpoint of the household income distribution: half of all households have incomes above it, and half have incomes below it. It is the most commonly used measure of the economic well-being of the ‘typical’ American household.

Mean household income is the arithmetic average: the total income of all households divided by the number of households. Because it gives equal weight to every dollar of income, it is heavily influenced by households with very high incomes.

The mean-to-median ratio is calculated by dividing mean income by median income. A ratio of 1.0 would indicate a perfectly symmetrical distribution where the average and the typical household earn the same amount. A ratio above 1.0 indicates right-skewness, and a rising ratio over time signals increasing income concentration at the top.

How the Statistic Is Calculated

The U.S. Census Bureau calculates median and mean household income from the Current Population Survey Annual Social and Economic Supplement (CPS ASEC). This nationally representative survey collects detailed income data from about 100,000 households each year. Income is measured as money income before taxes, which includes earnings, Social Security benefits, interest, dividends, rental income, and public assistance, but excludes noncash benefits such as food stamps, employer-provided health insurance, and capital gains.

A household is defined as all people who occupy a housing unit, whether related or unrelated. The income of all household members aged 15 and older is combined. The Census Bureau adjusts income figures for inflation using the CPI-U-RS research price index, allowing comparisons across years in constant dollars.

Because the survey topcodes very high incomes to protect confidentiality, the mean may be slightly understated. Even so, the mean remains well above the median, and the gap has grown over time.

Historical Data

The table below shows approximate median and mean household income in 2023 CPI-U-RS adjusted dollars for selected years from 1967 to 2023. The gap and ratio are calculated from these values.

Values are approximate for years before 2023 and are shown in constant 2023 dollars. The general pattern is clear: both median and mean incomes have risen, but the mean has risen faster, causing the gap and ratio to increase.

Trend Chart

A line chart of median and mean household income from 1967 to 2023 would show two upward-sloping lines, but with the mean line rising more steeply. The vertical distance between the two lines widens over time, especially after the late 1970s and again after the early 2000s. A second line plotting the mean-to-median ratio would show a steady climb from about 1.15 in 1967 to 1.42 in 2023, with occasional pauses or small declines during recessions.

Key visual points from the trend:

• The gap was relatively small in the late 1960s and early 1970s.
• The ratio began a sustained rise in the late 1970s and accelerated in the 1980s and 1990s.
• The ratio dipped slightly around 2020, likely due to pandemic-related income disruptions, but resumed its upward path by 2023.
• By 2023, the mean was 42% higher than the median, the largest gap in the series.

Year-over-Year Change

Between 2022 and 2023, both median and mean household income increased in real terms. The median rose from about $76,330 to $80,610 in 2023 dollars, an increase of roughly 5.6%. The mean rose from about $109,000 to $114,500, an increase of about 5.0%. Although the median grew slightly faster in percentage terms, the absolute gap widened because the mean started from a higher base. The mean-to-median ratio remained essentially unchanged at 1.42, but the dollar gap grew by about $2,000.

Year-to-year changes can be volatile, especially during recessions. For example, the ratio dipped in 2020 as pandemic-related job losses disproportionately affected lower-wage workers, temporarily compressing the distribution. However, the long-term trend has been consistently upward.

10-Year Change

From 2013 to 2023, median household income rose from about $61,000 to $80,610 in 2023 dollars, an increase of roughly 32%. Mean household income rose from about $84,000 to $114,500, an increase of about 36%. Because the mean grew faster, the mean-to-median ratio increased from about 1.38 to 1.42 over the decade. The dollar gap widened from about $23,000 to $33,890.

This decade-long pattern is consistent with the longer historical trend: income growth has been stronger at the top of the distribution than in the middle, causing the average to diverge further from the typical household’s income.

Factors Behind the Trend

Several economic and policy factors have contributed to the widening gap between mean and median household income:

• Rising income concentration at the top: The share of total income going to the top 5% and top 1% of households has increased substantially since the 1970s. High earners have seen outsized gains from executive compensation, professional services, and capital income.
• Slower wage growth for middle and lower earners: Real wages for production and nonsupervisory workers grew slowly for much of the period, while incomes at the top accelerated.
• Growth in capital income: Interest, dividends, and rental income have become a larger share of total income, and these sources are heavily concentrated among high-income households.
• Changes in household composition: The rise of single-person households and single-parent families can affect median income, but the mean-to-median ratio is primarily driven by top-end income growth.
• Tax and transfer policies: The Census measure is pre-tax and excludes noncash benefits, so it does not fully capture the redistributive effects of government policy. However, even after taxes and transfers, inequality has risen.

Why It Matters

The gap between median and mean household income is more than a statistical detail. It directly affects how we interpret economic progress. If policymakers and the public focus only on the average, they may conclude that households are doing better than they actually are. The median provides a more accurate picture of the typical household’s experience.

A rising mean-to-median ratio is a widely used indicator of increasing income inequality. It signals that economic growth is not being broadly shared and that the middle class is falling further behind the top of the distribution. This has implications for social mobility, consumer spending, housing affordability, and political discourse.

For researchers and journalists, reporting both the median and the mean — and the gap between them — is essential for honest data communication. The Census Bureau itself highlights both measures in its annual income reports precisely because they tell different stories.

Limitations of the Data

The Census Bureau’s household income data have several limitations that affect the measurement of the median-mean gap:

• Money income only: The measure excludes noncash benefits such as food assistance, housing subsidies, and employer-provided health insurance, which can be substantial for lower-income households. It also excludes capital gains, which are concentrated at the top.
• Pre-tax income: The data do not account for federal, state, and local taxes, which reduce income inequality somewhat.
• Topcoding: To protect confidentiality, very high incomes are capped at a topcode value. This understates the mean and therefore understates the true gap.
• Survey underreporting: High-income households are more likely to underreport income, further understating the mean.
• Household size not adjusted: The data are not adjusted for household size, so changes in average household size over time can affect comparisons.

Despite these limitations, the trend is robust: the mean-to-median ratio has risen substantially since 1967, and the gap would likely be even larger if all income sources were fully captured.

Methodology

The primary source for median and mean household income is the U.S. Census Bureau’s Income and Poverty in the United States report, based on the Current Population Survey Annual Social and Economic Supplement (CPS ASEC). The survey is conducted annually, with income data collected for the previous calendar year. The 2023 data were released in September 2024.

The Census Bureau uses a complex sample design to ensure national representativeness. Income values are adjusted for inflation using the CPI-U-RS research series, which provides a consistent price index for historical comparisons. The mean-to-median ratio is calculated by dividing the mean household income by the median household income for each year.

Researchers at the Federal Reserve Bank of St. Louis and other institutions have used these data to document the growing divergence between the mean and median. The FRED blog, for example, has shown that the ratio of mean to median family income has increased steadily since the 1970s, confirming the trend using a related Census measure.

Source & Data Date

Primary source: U.S. Census Bureau, Current Population Survey Annual Social and Economic Supplement (CPS ASEC), Income and Poverty in the United States: 2023, released September 10, 2024. Additional context from the Federal Reserve Bank of St. Louis FRED Blog and Advisor Perspectives’ analysis of Census household income data through 2023. All dollar figures are in 2023 CPI-U-RS adjusted dollars unless otherwise noted.