In its annual report Income and Poverty in the United States, the Census Bureau presents historical income and earnings statistics that are adjusted for inflation. The current method for adjusting the income and earnings series from the Current Population Survey’s Annual Social and Economic Supplement (CPS ASEC) uses derivations of the Consumer Price Index for All Urban Consumers (CPI-U), including the CPI-U Research Series (R-CPI-U-RS), produced by the U.S. Bureau of Labor Statistics. It should be noted that the Historical Income Tables present historical income and earnings estimates in both adjusted (constant) and unadjusted (current) dollars, allowing data users to apply their own preferred inflation method. For more information on how income is inflation adjusted using the current method, refer to Current versus Constant Dollars.
In 2019, the Office of Management and Budget (OMB) convened an Interagency Technical Working Group on Consumer Inflation Measures (ITWG) to evaluate the strengths, weaknesses, and best practices for the application of the primary consumer inflation measures produced by Federal statistical agencies. In a report issued to the OMB in 2021, the ITWG offered guidance to government agencies in deciding which inflation measure was most appropriate for their purposes.
Following this guidance, the Census Bureau is considering the use of chain type price indices, when possible, to inflation adjust its historical median income series. Specifically, Census is considering using the Chained Consumer Price Index for all Urban Consumers (C-CPI-U) from 2000 onward, the Personal Consumption Expenditures Price Index (PCEPI) for the period 1959-1999, and the Consumer Price Index for All Urban Consumers (CPI-U) for the pre-1959 period.
The annual Income and Poverty in the United States reports for 2019 and 2020 each include an appendix that presents historical median income estimates that are adjusted for inflation using (1) the current method, (2) the C-CPI-U and the PCEPI prior to 2000, and (3) a potential compromise using the C-CPI-U and the current method prior to 2000:
Along with the report appendices, the following working paper discusses the motivation for this potential change, summarizes the relative merits of the alternative inflation indices, and documents implications for the CPS ASEC’s historical estimates of income and earnings:
To solicit feedback from data users and key stakeholders, Census has given a series of public presentations. Details of and slides from these presentations are provided below.
The Census Bureau welcomes the comments and advice of data users. If you have comments, please email: firstname.lastname@example.org.