September 14, 2018

...AND RICHER...:

America's Record Middle-Class Earnings Exposes the 'Imaginary Hobgoblin' of Income Inequality: Americans are, by and large, more prosperous than they've ever been without being noticeably less equal. (Mark J. Perry  , 9/14/18, FEE)

Median household income last year of $61,372 was an increase of 1.8% from 2016 and brought median income for US households to the highest level ever, above the previous record level last year of $60,309. The income gain last year was the fifth consecutive annual increase in real median household income starting in 2013, following five consecutive declines from 2008 to 2012 due to the effects of the Great Recession. The last period of four consecutive gains in annual median household income was during the late 1990s at the end of the longest economic expansion in US history (120 months from March 1991 to March 2001).

That $12,000 annual increase in real household income translates into a much higher standard of living for the average American.

Although it doesn't get as much attention as median income because it's influenced by outliers on the high-end, average household income also increased to a new record level last year of $86,220, which was an increase of 1.5% from 2016 and the seventh consecutive annual increase starting in 2011.

Also notable is the fact that the average size of US households has been falling steadily for the last 70 years (or more) and was 2.54 persons in 2017, up slightly from 2.53 persons in 2016, a record low. The 2.54 average members per household last year was down by 0.50 persons from the 2.94 average in 1975 and down by more than one full person since the 3.56 average persons per household in 1947 (not shown above).

Income adjusted for household size is calculated and presented below, but it should be obvious that a comparison of median household incomes over time is distorted because the average size of US households has been declining. It's almost important to note that the typical US household in 2017 had an annual income of $12,464 more (in 2017 dollars) than the typical household in 1975--that's more than $1,000 in additional income every month for the typical household today compared to 42 years ago.

And when you consider that the cost of most manufactured goods and many services including clothing, footwear, appliances, electronics, TVs, household furnishings, sporting goods, airline travel, telephone service, computers, and automobiles have become cheaper and more affordable over time (relative to increases in overall consumer prices and incomes), along with the increased availability of services that are now almost free (GPS, music, cameras, Craigslist listings, Wikipedia information, Facebook, Twitter, blogs, etc.), that $12,000 annual increase in real household income since 1975 translates into a much higher standard of living for the average American today compared to a generation ago. [...]

The top chart above shows the shares of total income earned by the top 20% and top 5% of US households from 1993 to 2017. In 1993, 48.9% of total income went to the top quintile of US households, and 24 years later in 2017, the share of income going to the top 20% of households has increased to only 51.5%. Likewise, in 1993 the share of total income going to the top 5% of US households was 21.0%, and that share had increased to only 22.3% last year. Interestingly, the 22.3% share of income earned by the top 5% of households last year was lower than the share that group earned in 2016 (22.6%) and 2001 (22.4%), and the same as in 2006, 2011, and 2012. Over the last two decades, the income shares of the top 20% and top 5% have been remarkably stable at about 49-51.5% and 21-22.6% respectively, and there has been no statistical evidence of significant "rising income inequality" according to these measures.


Posted by at September 14, 2018 5:50 PM

  

« HOW BIG A SLOB ARE YOU?: | Main | »