Family Incomes Doing Well

Families in the Richmond region saw the rate of their inflation-adjusted incomes having the second fastest growth among all 383 metro areas in the nation.

Median household income rose 5.3 percent in the Richmond metro area in 2017 compared with 2016, according to data released in mid-September by the U.S. Census Bureau.

That growth rate is much faster than the 2.6 percent for the nation over the same period.

Household incomes in the San Diego area grew the most across the U.S. in 2017 – up 5.4 percent. Hartford, Conn., had the biggest decline, with household income falling 3.6 percent.

Such a high ranking for the Richmond region is impressive.

Yet an analysis of the underlying data shows some positive trends and raises some concerns.

On the positive side, among ethnic groups, black households registered the largest inflation-adjusted percentage increase in household income in 2017 (growth rate of 8 percent in the Richmond area compared with 2 percent in the nation).

The median income of black households in Richmond stood at $47,663 in 2017, while Asian households had the highest median income of $92,886.

Also, more than 14,000 additional households in Richmond were making an estimated income of $60,000 or more in 2017 when compared to the prior year.

More than 8,000 more households in the area had an estimated income of at least $150,000 when compared to the prior year.

As of 2017, the Richmond area’s median household income was $67,633 compared with $60,336 for the nation.

On the negative side, the Richmond metro area had 5,318 fewer households in 2017 when compared to 2016.

Even more concerning was the loss of more than 10,000 one-person households, many of whom are young adults.

If the loss of these one-person households is a result of them getting married and forming two-person households, then we would expect the census data to show about a  5,000 gain over the same period in two-persons households.

But the number of two-person households in the Richmond area actually fell by more than 1,000 in 2017.

Based on this analysis, it appears that the loss of low-income, younger households contributed to the fast growth in median income for the area.

The median household income is the benchmark where half of the region’s households earn more than this amount. When low-income households move out, this benchmark will go up even if everyone earns the same income as in previous year.

The preferred driver would be a gain in the number of households and income increases across age cohorts.

The GINI Index, a gauge of economic inequality measuring income distribution, declined from 46.5 in 2016 to 45.3 in 2017 in the Richmond area. That points to decreased income inequality.

The national index remained constant at 48.2 over this period. An index value of 0 indicates perfect equality where there is equal distribution of income.

Viewing income from this level of detail shows the need to go deeper than the average in assessing the overall health of households in the Richmond metro area.

Remember the adage: “With one foot in a bucket of ice water and one foot in a bucket of boiling water, you are, on the average, comfortable.

(This column first ran on October 1, 2018 in the Richmond Times Dispatch.)

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About Christine Chmura

Christine Chmura is president and chief economist at Chmura Economics & Analytics. She can be reached at (804) 649-3640 or at chris@chmuraecon.com.
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