Fresh data from the U.S. Census Bureau give new insights into how American households fared economically as the nation emerged from the coronavirus pandemic in 2022.

It shows that nationwide real median household income after taxes fell 8.8% from $69,893 in 2021 to $64,240 in 2022. Both amounts are shown in 2022 dollars to reflect changes in the cost of living.

Many households were receiving some pandemic-related assistance in 2021 in the form of stimulus payments that expired in 2022, and inflation rose 7.8% over the same period — the largest annual increase in the cost-of-living adjustment since 1981, the bureau observed. 

“We saw real declines in earnings as well as household income. That’s because inflation was high and outpaced gains in earnings and income,” said Liana Fox, the bureau’s assistant division chief, economic characteristics of the Social, Economic and Housing Statistics Division.

There were also significant changes in federal tax policy in 2022 that contributed to the fall, as expanded programs like the Earned Income Credit and Child Tax Credit expired.

Those rollbacks particularly hurt lower-income households, the bureau said.

Those changes in the economic weather were captured vividly by other bureau tools that look at the nation’s poverty levels.

The official national poverty rate of 11.5% barely shifted from 2021 to 2022, and Hawaii’s official three-year-average poverty rate was 10.2% as of 2022.

However, when the bureau looked at households’ post-tax income and included non-cash government assistance such as housing, energy, child care and food subsidies, the change year-to-year was much starker.

That indicator, called the Supplemental Poverty Measure, showed the national poverty rate increased by 59% from 7.8% in 2021, to 12.4% in 2022.

That 2022 rate surpasses the pre-pandemic poverty rate of 11.8% in 2019.

“We saw SPM poverty rates increasing while we saw money income being pretty flat at the bottom end of the income distribution, which is why official poverty was flat.” the Census Bureau’s Fox said.

The SPM gives a more complete picture of household spending because it subtracts necessary expenses like medical care, child care, work expenses and child support paid to other households, Fox said.

Children living in poverty were especially impacted by that jump in the poverty level, the bureau reported.

The American Community Survey for 2022 also shows how the official statewide poverty level plays out differently depending on where you live in the Hawaiian islands. In 2022, Hawaii island’s rate was 15.1%, Honolulu was 9.7%, Maui was 8.2% and Kauai was 6.6%.

Undercounting Household Hardship

But those official federal poverty levels, including the supplemental rate, undercount the number of households experiencing financial hardship, local nonprofit organizations say. 

Organizations like Aloha United Way and the Hawaii Children’s Action Network fold federal and state census data into an analysis that includes Hawaii families earning more than the official poverty level who still struggle financially.

They use a standard methodology that weighs the local cost of living and incomes in each state, creating a Household Survival Budget for different household types and locations for basic necessities like housing, food, transportation, child care, cellphone and taxes and a 10% contingency fund.

These are known as ALICE budgets – an acronym of asset-limited, income-constrained, employed – and create a threshold to measure financial difficulty.

AUW published its own analysis of the effect of ending Covid programs in June and found that 44% of Hawaii households were struggling financially at the end of 2022. Those were households whose income fell below the ALICE thresholds ranging from $35,000 for a single adult to $105,000 for a family of four.

That 44% accounts for approximately 217,000 of the state’s 495,000 households, and the levels of financial adversity are higher on neighbor islands like Hawaii and Maui than on Oahu.

“More than 2 in 5 households across the state have been hit hard by the pandemic and are losing confidence in their ability to get by. Hawai‘i’s population as a whole is doing worse than before the pandemic,” the report said.

United Way Chief Operating Officer Suzanne Skjold said, “Those pandemic relief programs made a huge difference and in many cases were able to lift folks out of poverty.”

That could be thanks to as little as an additional $600 a month, Skjold said. “So we saw that ability to have that little extra income made a huge impact for families and we see from 2021 to 2022, the data that you’re looking at, is very much a reflection of those programs ending.”

Now many households are back in the position of making difficult daily decisions, said Deborah Zysman, executive director of Hawaii Childrens’ Action Network. “Folks are having to make choices about which bills do I pay? Which do I put off? I think that is very scary to us.”

And we’re not yet seeing the full picture of the tailing off of pandemic assistance.

Some $24 billion in federal child care support sunsets at the end of September, and for families that can afford child care, that’s their second biggest expenditure after housing. The state also has a temporary reprieve from the unwinding of three years of expanded Medicaid coverage happening elsewhere, because of the public health emergency declared after the Maui wildfires.

There is one bright spot for struggling Hawaii households coming into the new tax year, however, thanks to House Bill 954, signed into law in June.

The state threshold for the earned income tax credit will double to 40% of the federal EITC. The bill also doubles the value of the refundable excise tax credit for food and improves the tax credit for child and dependent care.

“There is national research that shows that increases in EITC eligibility are the most impactful thing that you can do to reduce child poverty,” Skjold said.

Zysman said the change to the state EITC won’t make up entirely for the change in the federal one, but it is the largest tax boost for low-income and working families here in her memory. “So I think this is a huge thing for a lot of low-income families, that they can adjust their taxes and have less taken out of their paycheck, or they can get a bigger state refund and it’s for the next five years. I think we would like to make it permanent.”

Better Understanding Our People

Another data release Thursday will be of particular significance to Native Hawaiian and Pacific Islanders.

For the 2020 Census, the bureau improved its questions on race and enabled people to write in more detailed responses about their race and added more categories.

The bureau also counted smaller population groups in American Indian, Alaskan Native and Native Hawaiian level areas, that had previously been excluded from the census.

That has provided more detailed population counts and allows the bureau to detail the number of males and females by age category for Native Hawaiians and Other Pacific Islanders. The result is “our most detailed racial and ethnic accounting of who we were as a nation,” the bureau said.

Here are few of the bureau’s findings released Thursday.

Those who identify their race as Native Hawaiian alone grew 28% between 2010 and 2020.

The census backed up the common understanding that Native Hawaiian alone or Native Hawaiians in any combination living in Hawaii dropped from 55% of the population in 2010 to 46.7% in 2020.

Honolulu, Hawaii and Maui — followed by Clark County, Nevada and San Diego County, California — are home to the most Native Hawaiians alone or in combination with another race.

Between 2010 and 2020 the share of the Marshallese population living in Hawaii fell from 33% to 18%, with much of that population moving to Arkansas.

Honolulu County is home to the largest Samoan population in the nation, with just under 37,000 people.

The visibility of diverse populations is important because it has political ramifications and significantly impacts where resources and funds are directed. Historically, Native Hawaiians and Pacific Islanders are among the ethnic groups undercounted in the decennial census, although last year the bureau said the count for 2020 had only a .25% margin of error.

But a report earlier this year by Asian Americans Advancing Justice found Asian Americans, Native Hawaiians and Pacific Islanders were not counted accurately at county or regional levels. Terry Ao Minnis, senior director of census and voting programs, wrote “an inaccurate count of AANHPI communities at local levels means that those communities are missing out on vital financial resources and political representation where it counts the most – close to home.” 

Given the challenges and debate about rebuilding on Maui, the detail and accuracy of these counts will take on even more significance.

Civil Beat’s community health coverage is supported by the Swayne Family Fund of Hawaii Community Foundation, the Cooke Foundation, Atherton Family Foundation and Papa Ola Lokahi.

“Struggling To Get By” is part of our series on “Hawaii’s Changing Economy” which is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.