Analyzing earnings can be a useful tool in gauging economic inequality. Formally, earnings or wages are one form of income. More broadly, income is any money that a person earns from work, selling products or services, or any other streams such as  Social Security payments, pensions, child support, public assistance, annuities, money derived from rental properties, interest and dividends, etc. Earnings, however, come directly from wages and salaries from an employer or revenue from selling goods and products. Measuring median earnings reflects money made by a single individual, as opposed to other commonly used metrics such as household income, which measures the combined earnings of every individual in a household. The Census Bureau defines a household as any group of individuals living together, whether they are related or not.

While household income is a helpful measure for understanding eligibility for certain government programs, earnings is a more relevant measure for understanding job quality among residents in an area and employment outcomes like wage growth and equity. Focusing on individual earnings can further emphasize differences in earnings across industries, genders, and other identities. Because earnings tend to be the most liquid form of income, they can also be a measure of spending power. 

Written by Rediet Retta