Why is almost everybody so grumpy about the cost of living?
A recently updated dataset confirms these inflation anxieties, as rising costs gobble up more of whatever income growth you managed to earn.
My trusty spreadsheet reviewed something economists call “real median household income” for the 50 states and the District of Columbia. Simply put, that’s how the Census Bureau each year estimates consumer buying power: what a household makes – including paychecks, investments and pensions – after the pain of the national inflation rate gets subtracted.
Before we get going, let’s acknowledge last year’s income norms.
California’s typical household income ranked No. 12 among the states in 2025 at $100,800, 15% above the nation’s $87,460.
The highest income was in Massachusetts at $118,500. Lowest? Mississippi at $57,840.
But what’s key isn’t the income level – it’s how much it has changed.
History lesson
Usually, income growth tops the inflation rate.
First, let’s set checkbook expectations by using a period before we knew what coronavirus was: 1999 through 2019. Those two decades saw a series of economic booms, busts and in-betweens.
Typical incomes in only three states lost ground to inflation during this period: Michigan, where real incomes dropped by an average of $190 per year. Mississippi households lost $160 and Georgia $60.
Typical California households did OK, with after-inflation incomes growing by an average $900 per year – 17th best among the states.
Nationally, the gains were $580 per year, with the biggest winners being households in the District of Columbia, averaging $2,280 gains per year. Then came Massachusetts, up $1,460, and Hawaii, up $1,430.
So, you see how the battle between incomes and inflation usually goes.
Losing ground
The pandemic rearranged the economics of a typical household in numerous ways.
The challenge of keeping incomes ahead of surging consumer prices was a major headache between 2019 and 2025.
Key point: The number of states where household incomes lost ground to inflation during these six years surged to 18, a sixfold increase.
The biggest declines were in the District of Columbia, off $1,330 per year, Connecticut, off $1,170, and Indiana, off $1,110.
Across California, income increases after inflation slipped to $630 per year – 21st highest among the states. Nationally, income growth fell to $360 annually.
The biggest income winners in 2019-25?
Folks in Maine, with incomes after inflation up $2,080 yearly, Colorado, up $2,080, and Montana, up $2,000.
The big shrink
This measurement isn’t perfect, but it tells a story about household cash flows and the challenges consumers face trying to outpace the ever-rising cost of living.
Compare these two eras – before and after the pandemic. Blame whomever you want, but income growth after inflation shrank for the typical Californian and for Americans in 30 other states.
For Golden Staters, real income growth slipped $260 annually between what it used to be and what’s happened since 2019. Somehow, that was the 22nd-best performance among the states. Nationally, this dip in income growth ran $220 annually.
These dips may seem like minor losses. But for people on tight budgets, it could be a game-changer. Do not forget we’re talking statistical midpoints. Imagine the fate of those who fall below these measures of typical conditions.
Just think about the biggest drops. The District of Columbia, where income growth fell by $3,610 yearly. Or Hawaii, off $2,130. Or Kansas, off $2,040.
Remember, this sad math ended before 2026 – when the inflation picture got even uglier.
PS: Who did best among the 18 states where incomes grew after inflation since 2019? Households in Georgia, up $2,020 yearly; Colorado, up $1,940; and Missouri, up $1,560.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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