Income and Wealth in Context
- Farm household income compared with U.S. household income
- Composition of farm operator household off-farm income
- Farm household wealth and income
Since the 1980s, ERS has reported an income measure for farm operator households comparable to the U.S. Census Bureau's Current Population Survey measure for all U.S. households. (The income measure is generally net money income from farm and off-farm sources, except that farm depreciation is included as an expense. See glossary for more details.) Farm household income is reported for households of the principal operators of family farms (the 98 percent of farms where the majority of the business is owned by the operator and individuals related to the operator by blood, marriage, or adoption). Median total farm household income has exceeded the median U.S. household income in every year since 1998. However, the gap between median farm and U.S. household income has varied over time. In 2018, median farm operator household income exceeded median U.S. household income by 15 percent ($72,481 compared with $63,179).
For more on comparisons between all U.S households and farm households, including historic data on mean and median farm operator household income and ratios of farm household to U.S. household income, see the Farm Household Income and Characteristics data product.
Farm Business Income Compared with U.S. Self-Employed Households
While the median income of farm households has outpaced that of all U.S. households in recent years, operating a farm business carries considerable risk. Farm profits are subject to significant fluctuations, and the income volatility of farm households is greater than that of all U.S. households. Therefore, it is useful to compare incomes of "farm business" households (households that report farming as their primary occupation, plus larger commercial farms) with all self-employed households in the U.S., using estimates from the U.S. Census Bureau's Current Population Survey. Median farm business household income has remained below the income of self-employed households since 1996, with the exception of one year (2014). However, the gap between median farm and self-employed households has varied during this period. Over the past 20 years, farm business households have seen an increase in their median incomes after adjusting for inflation. In 1996, the median income of farm business households was $37,661 (in 2018 dollars), compared to $75,131 for self-employed households. By 2018, the median income of farm business households had increased to $56,160, compared with $86,401 for self-employed households.
Since the majority of farm operator households consistently incur a net loss from farming activities, most farm operator households depend on nonfarm income to cover at least some portion of their living expenses. Of the total off-farm income earned by all farm operator households, the majority (55 percent) comes from wages and salaries of household members (operators, spouses, and others), followed by transfers (e.g., Social Security) (18 percent), and earnings from nonfarm businesses (15 percent).
Farm operator households have more wealth than the average U.S. household because significant capital assets, like farmland and equipment, are generally necessary to operate a successful farm business. In 2018, the typical U.S. farm household had $862,000 in wealth. Households operating commercial farms had $2.8 million in total wealth at the median, substantially more than the households of residence or intermediate farms.
ERS divides farm households into four groups based on income and wealth relative to estimated medians of U.S. household income and wealth. The median income (or wealth) is the level at which 50 percent of households have greater income (or wealth), and 50 percent have less. High income is considered as having income above the U.S. median income, and a similar measure of high wealth is constructed using U.S. median wealth.
Farm and other U.S. households differ in the pattern of wealth compared to income. In 2018, 3.2 percent of all farm households had wealth levels that were lower than the estimated U.S. median household level, and 96.8 percent had wealth levels higher than the U.S. median, in contrast to 50 percent in each group among all U.S. households. Among the high-wealth farm households, 40.4 percent had income below the median among all U.S. households.