Average Family Income Grew 15% From 2018 to 2021 -- but Most of It Went to the Wealthy

Many people aim to grow their income over time. Sometimes that happens naturally due to cost-of-living raises on the part of employers, and sometimes it happens for other reasons, like upward professional mobility. 

During 2018-2021, U.S. families experienced a host of income-related shake-ups -- both positive and negative. In the spring of 2020, unemployment reached a record high following the COVID-19 outbreak. In 2021, workers had to grapple with rampant inflation. And in between, there was federal relief in the form of enhanced tax credits and stimulus payments that hit Americans' bank accounts.

You may or may not therefore find it surprising to learn that average, or mean, family income grew 15% between 2018 and 2021, according to data from the Federal Reserve. But the median U.S. income only grew 3%. And that tells us that gains in income were most enjoyed by higher earners. 

A gap in income growth

Median U.S. income rose from $67,900 in 2018 to $70,300 in 2021. By contrast, mean income rose from $123,400 in 2018 to $141,900 in 2021. So all told, the greatest gains in income happened more so for higher earners than low and moderate ones.

But even that 3% rise in median income may be a bit deceiving. The aforementioned data comes from a variety of sources, some of which may have included pandemic-era benefits that households received in 2021 only. 

The enhanced Child Tax Credit, for example, resulted in a large uptick in income for moderate and lower earners in 2021. But that credit also expired at the end of 2021. As such, it's conceivable that once data on 2022 income is released, the result will be an increase of median income from 2018 that's less than 3% -- if there even is an increase in income among low and moderate earners. 

It's also worth noting that the above income growth percentages are adjusted for inflation, which was notably high during the tail end of the period of 2018 to 2021. Without making adjustments for inflation, during those three years, median income grew 20% while mean income increased 33%.

How to boost your income

Low- and moderate-earners trailed behind their higher-earning counterparts during the aforementioned three-year period. If your income hasn't increased much in recent years, it may be time for some action. After all, a nice boost to your earnings could make it possible to meet your most pressing financial goals, whether it's buying a home, paying off credit card debt, or setting money aside for retirement.

An uptick in skills could lead to a better-paying job within your field. So if you're able to take courses on the side, it might pay off. It's also a good idea to see if your company offers a mentorship program where you can shadow different people and learn from them. 

And if your company doesn't offer such a program, try to create your own. Reach out to people within your professional network for advice. If you know someone who's in a role you want, ask to sit down with them and understand what it might take for you to land something similar.

Joining the gig economy might also help you boost your income. If you're able to find a side job that works for your schedule, whether it's driving for a ride-hailing service a few nights a week or taking a weekend shift serving at a local restaurant, you might enjoy a consistent rise in your income -- and buy yourself more freedom to spend money on the things that are important to you.

It's not all that shocking to see that higher earners got ahead income-wise between 2018 and 2021 more so than those earning less. But if you fall into the latter category, know that you don't have to settle for virtually stagnant wages -- not when we (at least currently) have a thriving labor market and a gig economy that's booming.