Note
Income data in this report for 1985 are the first estimates based entirely on households selected from the 1980 census-based sample design. Estimates by type of residence categories such as metropolitan, nonmetropolitan, farm, and nonfarm, which were omitted from the 1984 report because of the mixed 1970 and 1980 census sampling frame used for the March 1985 CPS, have been resumed in this report. The residence categories reflect metropolitan areas defined as of June 1984. In addition, the March 1986 CPS income supplement was revised to allow for the coding of larger earnings amounts on the questionnaire. A description of this change and its effect on income estimates is in the section discussing the revised earnings question.
Income of Households
Median household income in 1985 was $23,620, an increase of 5.4 percent over the 1984 median of $22,420, according to results of the March 1986 Current Population Survey (CPS) conducted by the Bureau of the Census. After adjusting for the increase in consumer prices between 1984 and 1985, real median household income increased by about 1.7 percent.1 The 1985 median income was $24,910 for White households, $14,820 for Black households, and $17,470 for Hispanic households. White and Black households showed an increase in real income between 1984 and 1985, but the observed change for Hispanic households was not statistically significant.
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1 Changes in real income refer to comparisons after adjusting for inflation. The percent change in prices between 1984 and 1985 was computed by dividing the annual average Consumer Price Index (CPI) for 1985 by the annual average value of the CPI for 1984. See table A-1 of appendix A for CPI's from 1947 to 1985.
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Income Data and Sampling Design:
- The 1985 income data was derived from households selected using the 1980 census-based sample design. This means that for the 1985 report, the data was collected based on the structure and methodology of the 1980 census, ensuring a consistent and structured approach to data collection.
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Residence Categories:
- The report segments income estimates based on different residence categories such as metropolitan, nonmetropolitan, farm, and nonfarm. It's noted that the 1984 report had some omissions due to mixed sampling frames from the 1970 and 1980 censuses. However, in 1985, estimates by these residence categories were resumed, providing a more detailed and comprehensive view of income patterns across different areas.
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Metropolitan Areas:
- The residence categories are defined based on metropolitan areas as of June 1984. Metropolitan areas generally refer to densely populated regions that include a city and its surrounding suburbs, interconnected economically and socially.
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Revision in March 1986 CPS Income Supplement:
- The March 1986 Current Population Survey (CPS) income supplement underwent a revision. This revision allowed for the coding of larger earnings amounts on the questionnaire, which means that the survey could capture and analyze higher income levels more effectively. The report provides details on how this change influenced income estimates, emphasizing transparency and accuracy in data representation.
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Median Household Income:
- The median household income for 1985 stood at $23,620, marking a 5.4% increase from the 1984 median of $22,420. When adjusting for inflation (increase in consumer prices), the real median household income grew by approximately 1.7%. Adjusting for inflation provides a clearer picture of the actual purchasing power and value of incomes over time.
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Income Disparities Among Racial and Ethnic Groups:
- The article highlights disparities in median incomes among different racial and ethnic groups in 1985. Specifically, the median income was $24,910 for White households, $14,820 for Black households, and $17,470 for Hispanic households. While both White and Black households experienced an increase in real income from 1984 to 1985, the change for Hispanic households wasn't statistically significant. Such disparities underscore the importance of understanding and addressing socio-economic inequalities.
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Changes in Real Income and Consumer Price Index (CPI):
- The concept of changes in real income refers to income adjustments made after factoring in inflation. Inflation affects the purchasing power of money, so adjusting for it gives a more accurate comparison of income values across different time periods.
- The article references the Consumer Price Index (CPI) to compute the percent change in prices between 1984 and 1985. The CPI is a measure that examines the average change over time in the prices paid by consumers for a basket of goods and services. By comparing the annual average CPI values for 1985 and 1984, one can determine the rate of inflation over that period.
In summary, the article delves into income data from 1985, providing insights into household incomes across various residence categories and highlighting disparities among racial and ethnic groups. The inclusion of adjustments for inflation and explanations regarding sampling methodologies ensures a comprehensive understanding of the presented data.
