By Nikki Johnson, Regional Economist
The U.S. Census Bureau recently released its 2023 estimates of median household income, providing valuable insight into how households across the country have fared in the aftermath of the pandemic and the subsequent economic disruptions. Both nationally and in Hampton Roads, inflation-adjusted median household incomes increased for the first time since the pandemic. The latest increase reflects the easing of inflation and historically tight labor market conditions.
Figure 1 shows inflation-adjusted median household income in Hampton Roads from 2005 to 2023. During the Great Recession and Sequestration, median household income steadily declined, falling by 8.5% between 2008 and 2013. It took five years for the region’s median income to surpass pre-recession levels of 2008. In 2020, the pandemic-induced economic downturn was followed by a historic rise in inflation in 2021 and 2022, which eroded gains in workers’ earnings. Inflation-adjusted median household income in the region fell by 5.4% between 2019 and 2022. However, the latest estimates for 2023 show improvement: for the first time since the pandemic, incomes rose to $79,325, marking a 2.2% increase from the previous year.
The overall trend in median household income in Hampton Roads mirrors that of both the nation and the Commonwealth. As illustrated in Figure 2, all three areas experienced a decline in inflation-adjusted median household income between 2019 and 2022, followed by a rebound in 2023. Nationally, inflation-adjusted median household income rose by 4.0% in 2023, reaching $80,610, while Virginia saw a more modest increase of 0.6%, bringing the state’s median income to $89,931. Hampton Roads’ 2.2% increase in 2023 was below the national average but more than double the rate of growth in Virginia. Despite this rebound, inflation-adjusted median household incomes in Hampton Roads, Virginia, and the United States remain below pre-pandemic levels. In Hampton Roads, the 2023 median household income was 3.2% lower than in 2019, compared to 0.5% in Virginia and 0.7% nationally.
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Data source: U.S. Census Bureau ACS 1-Year and CPS ASEC, HRPDC. Adjusted for inflation using the Chained Consumer Price Index for all Urban Consumers (C-CPI-U). Due to low response rates, Census Bureau ACS 1-Year estimates for 2020 are experimental and therefore excluded from the analysis.
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The income gains in 2023 reflect two key factors: the easing of inflation and a tight labor market. Inflation dropped significantly, from a 40-year high of nearly 8.9% in June 2022 to 2.5% as of August 2024. Meanwhile, a historically tight labor market helped push wages higher, although these gains were previously offset by rising inflation. Despite the improvements, incomes in Hampton Roads, Virginia, and the U.S. have not yet fully recovered to pre-pandemic levels. As inflation continues to fall and labor market conditions begin to cool, the path to full recovery in median household incomes remains ongoing.
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