Spokane’s median household income tops U.S. for first time. What’s happening?

The year 2024 may be ancient history to some, but to followers of economic data, it’s like yesterday.

The federal government just released its calculations of personal income and the area’s gross domestic product, measures that are key to tracking economic progress. One variant in particular, per capita personal income, is widely followed, as rising incomes of the average resident indicate a growing economy.

These data, based on administrative records, follow the release of the American Community Survey from the U.S. Census. Among its hundreds of measures is median household income. This, too, gives a sense of the “middle.” Since averages can be influenced by very high results, most economist regard medians as more “representative.” Yet, both are used to assess economic progress, in part, because they capture slightly different forms of income.

The two data releases for 2024 put Spokane County in a good light.

Per capita personal income rose to about $58,600, or by 4.9%, besting the annual average over the prior decade of 4.2%. Yet, the increase was less than in the U.S. overall, where it climbed 6.6%. Consequently, the ratio of average income here to average income in the U.S. didn’t budge much: local income continues to be 82-83% of the nationwide value.

But the release of the estimate for median household income was a bit shocking. In one year it jumped from $73,583 to $86,206, as seen in Spokane Trends. That’s a 17% increase. And for the first time, at least in this century, it marks a year in which that household income estimate tops the overall U.S. numbers. And by a lot – nearly $5,000.

Spokane has long suffered an image of being a relatively poor community, relative to the rest of the U.S. The 2024 estimates offer, for the first time, evidence to the contrary. And the difference of estimates is statistically valid.

A time to celebrate? Yes. But the nagging question for economists is why the growth in per capita personal income is so much lower than that of median household income.

Part of the answer lies in the unit of measure. A household usually consists of more than one person, whereas the personal income number examines the income of one individual. In a community with a high percentage of young people who are not in the work force and consequently not receiving much income, the difference will be very apparent. In a community where many households have single adults with dependents, this will be the case as well.

One possible explanation for the differential growth rate between the two measures is that in 2024 more households had more members working than in 2023. But such structural factors don’t change too quickly, so household workers’ composition likely doesn’t explain much.

A related explanation is that the population grew faster than total income, subduing any increase in per capita personal income. That is true for the 2023-2024 comparison, but the difference in total versus per capita growth rates is less than 1%.

Another possible factor lies in the composition of income in the two measures. The median household income measures what Census labels “money income,” thereby excluding a variety of economic flows that are a part of Department of Commerce’s definition, such as Medicaid, Medicare, capital gains, employer health insurance, among others. A look at these components in the data tables shows that the first two flows, known as “transfer payments,” increased faster than overall personal income. So we can’t link a slower rate of personal income growth to this key component of income. The other two components unique to personal income are relatively small, and don’t move the comparison needle.

Perhaps the best explanation for the differential of growth rates between household and average per person income lies in an improvement of the bottom 50% of the income distribution. So if, over time, incomes in the lower 50% of the income distribution increase faster than income in the upper 50%, the median will move up more than if all quintiles moved up by roughly the same percentage.

A look at the income distribution indicator in Spokane Trends, based on Census estimates, in fact, shows something like this between 2023 and 2024. The bottom two quintiles took nearly 1% more of total income in the county in 2024 than in 2023. And the top two quintiles claimed about 1% less.

Why might this have happened? We don’t have data on the distribution of hourly wages at the county level. But my strong hunch is that the wages at the lower end of the scale rose faster here than those at the upper end. And why would that have occurred? Two factors – supply and demand for labor in those industries with relatively low wages acted to push up a market rate. And that market pressure was aided by a relatively high floor, or the minimum wage. Further, the upper end of the wage spectrum here isn’t as far above the average as it might be in places like Seattle.

For whatever the reasons, Spokane can and should celebrate the income parity with the U.S. it reached for the first time in 2024.

Patrick Jones is the executive director of the Institute for Public Policy and Economic Analysis at Eastern Washington University.