America facts of the day

A longer-term perspective shows that the median American family income has declined about 12.4 per cent since the peak in 2004…

There is also this:

For a brief time, the Midwest was the best-off region but median incomes there have fallen by a staggering 23 per cent since 2001…

Median net worth is down forty percent from its peak (“we’re not as wealthy as we thought we were”), yet the top three percent has done quite well.  And in case you are thrilled about the recent economic recovery:

The most striking finding is that the median American family earned 5 per cent less in 2013 than in 2010 after inflation even though the average American family took home 4 per cent more.

None of this is especially new, but these are the latest numbers and it is remarkable how much they confirm some of the more pessimistic readings of recent American history.

From Matthew C. Klein at FTAlphaville, there is more here.

Comments

Studies like this blow up the idea that there are even "Americans" anymore. It's useful to a degree, but not much different than walking into a Wal-Mart and declaring everyone Wal-Martians, or going into Home Depot and declaring everyone Home Depoans. Also, what is the median American family these days? I'm not even sure the "American family" exists.

"what is the median American family these days?" Quite.

Claiming accuracy for the figures concerning an ill-defined concept is intellectual self-abuse.

@both of you: huh?

Surely family income = household income, a very clearly defined concept that has nothing to do with cultural cohesion.

"Median" is just a simple way of characterizing a *distribution*.

This is shockingly innumerate, even for you.

CD and Dan both miss the obvious point which is that households vary. If we wanted to discuss income, why should we use the household figure instead of per capita, since households are not static and simply make any measurement less accurate?

http://www.federalreserve.gov/econresdata/scf/scfindex.htm -- in case you don't want to go through the FT link. Further discussion of data and rationales there.

This is a survey that asks questions about "Changes in U.S. Family Finances from 2010 to 2013." If that is the question you're asking, you *need* to measure families or households.

And FWIW, "income" is *defined* as what households get. And because households play a key role in allocation of goods and services among members, it's not a silly idea to try to study them.

@Thomas, that is a useful point that is definitely worth debating. Can you point out where I "missed" that point in 8 and dearieme's comments?

If I was wrong forgive me, but from, "Surely family income = household income, a very clearly defined concept", I inferred a sense of confidence about household income and structure that didn't seem justified.

One methodological solution is to pick out representative types of families: e.g., married parents with children under 18.

from H11AR at the census bureau site: http://www.census.gov/hhes/www/income/data/historical/household/index.html there are stats by household size.

2012 income in constant dollars / 2004 income. First number is median, second is mean.

What I mostly see here is (1) there's more change in the median than the mean (as others have noted, and which is unusual from a data standpoint), and (2) the particularly strong decline in the income of 3 person households -- prototypically these are families with one child.

Median Mean
All Households 0.947 0.970
Households with One Person 0.957 0.976
Households with Two People 0.990 0.995
Households with Three People 0.918 0.949
Households with Four People 0.978 0.974
Households with Five People 0.945 0.987
Households with Six People 0.974 0.978
Households with Seven or More People 0.940 0.969

Extremely well put. Culture per se is getting diluted everywhere as the world morphs into a big melting pot. One can hope for a continuation of one's own culture but, objectively, it is the Eastern cultures that will compete to become the world's "pre-eminent" cultures in the medium to long term.

Also, the notion of one's "country" is ever weaker with each passing day. "Americans" hold documentation that makes them beholden to pay taxes to a Federal government even if they settle outside the US. That is the main aspect of their "Americanness". For the Federal government, in turn, is increasingly "rogue", in my opinion doing less and less of the will of the people who fund it - who, absent the brainwashing from the mainstream media, would never in good conscience vote for the aberrant geopolitics of, well, really, since and including Vietnam - a constant state of war that squandered the country's treasure. It's like being part of a club where you pay your dues, but little is done for your well-being, the club uses the funds to pay hoodlums to break the windows of another club.

One has to look in admiration at China to see a government that really works for its citizens - extracting technology, treasure and real security (as opposed to a Hollywoodian sense of military supremacy which has been a major culprit in driving us ever closer to bankruptcy) to increase the well-being of vast numbers of its citizens. No, China holds no allegiance to academic notions of "free trade", for example. It unapologetically bars entry to whatevers it deems undesirable, requires majority control for joint ventures coming into the country and essentially giving away technology and IP, buys foreign equities with its sovereign fund, while heavily controlling ownership of its own shares to foreigners. (Cue here the arguments of lack of "liberty" - what a joke. While I agree that residents of the US have more "liberty" as a concept, it is vastly exaggerated. The Consitution has been ripped to pieces and is weakened daily. First amendment, second amendment, a militarized police that crushes any real dissent and pervasive domestic surveillance. We're only "free" while playing within narrow constraints. Even the thoughts of a critical mass of our citizenry are shaped by what's become a honed machine of disinformation. One member of the Bush administration who dared to say the Iraq war would cost US$50 billion was fired for his comment. Two trillion dollars later and only a catastrophic and ridiculous result reached, we're on to the next issue.

But back to the free trade issue... I got an Economics degree from one of the most selective US universities (though I think my degree was largely useless in terms of understanding anything, and only the math abd a subsequent degree in Accounting really helped me do well), so I know the basic party line. One of the most significant results of "free trade" mantra which has been taught to undergraduate students for decades now (which admittedly served the country well for a few decades) at this stage is and empowered cadre of domestic corporations which have largely taken control of policy. Those corporations have come to control a Congress that works primarily for them (undermining and exporting labor under the guise of all kinds of "competitiveness" arguments) - and now, as the cherry on top, they are moving to less taxing shores, though not giving up their contracts with US lobbyists.

All in all, great for the "world", and if one is a humanist perhaps it's all for the greater good - as we willingly squander what used to be a nation with actual "citizens" to improve the lot of the entire world. Now, if Americans really had a vote, would that be the policy?

I feel like this was parody, but it was so well executed I can't be sure.

I especially like the part where we should look to China to see an example of a government that really works for its citizens!

Well, I agree the part about personal liberty is a whopper, but there is something in what he says - China has used (and continues to use) its leverage as a big market very much to its own advantage as part of a conscious strategy. In the US, although we've been a bigger market up until now, we haven't to anywhere near the same degree. You could argue (as most economists have, at least until recently) that that actually hurts its citizens, and we benefit from free trade (really, granting China fairly open access to our market) in access to cheap Chinese goods, but (1) I think people (really, economists - most people have always been skeptical) are rethinking the net benefits of free trade/globalization - especially when it's not truly multilateral free trade and (2) to be a little paternalistic, I think access to ever cheaper and bigger flat screen TVs in the near term isn't really that much of a benefit in exchange for giving up domestic manufacturing jobs. (Sorry, I'm sure the economists here will probably point out how I'm missing basic concepts of econ 101, but the reality is, I think a lot smarter people than me are starting to rethink this, and in any case, most people have realized for a long time that China is playing games that we don't). Even the Ciscos of the world (who knew getting access was a rigged game, but thought it was worth playing) are starting to finally complain out loud, so you know it's bad.

This may well be a hyperbolic argument. But it's hard to argue against the evidence - or at least concede an "appearance" - of American decline. This blog post above is aimed at both economic decline and rising inequality. As I reach middle age, it does seem like the egalitarianism of even 20 years ago is much impaired. It's worked out well for some people - I for one can't complain about my personal situation, and I do cherish the freedoms and the well-being provided by this country. But I think that's little thanks to the Federal government, especially in the past couple of decades, and am disappointed by a perception that goverment policies benefit the interests of the few at the expense of society as a whole. In terms of economic policy, for one, society as whole suffers (in my humble opinion - I know this is a _value_ issue) as income and wealth is increasingly concentrated. As hard as it is to swallow, it is arguable that modern policies of the Chinese goverment have benefitted a much higher proportion of their population than ours. At least on some narrow but very important aspects, on a _relative_ basis, their lot has improved, while the lives and prospects of our citizens have suffered, in both economic and non-economic aspects (the surveillance state being a major one). I'm aware that corruption is rampant and life is still hard for much of their population. But I'm addressing the _change_ here.

My desire would be to live in a more equal society - at least equal in terms of opportunity, and that more _of the people's_ resources would be dedicated to enhancing domestic prosperity, rather than foreign adventures, for one, and in general a ridiculous amount of "defense" expenditures that are a sacred cow. I'm not advocating a larger transfer system either, but a system that is less tilted toward the wealthy. I won't get into some of the more complex arguments of educational access, etc. But take tax, for example, an important dimension: taxation of carried interest, the mortgage interest deduction, and the payroll tax on low-income workers are some tax policies skewed toward the wealthy which could be re-evaluated to level the playing field. Perhaps the system could be even less progressive, if it were more evenly applied, and less onerous on labor vs. capital. It so goes that you tax what you want to have less of, and un-tax what you want to have more of. In addition to tax, monetary policy has made capital substitution even more attractive, and financial engineering one of the main concerns of top management.

But our system is deeply captured, rent-seeking (and getting!) is rampant (take the _absurd_ repeal of Glass Steagall finagled by the banks). Again, I realize the Chinese reference is inadequate in any broad sense. But, having been an expat in more than a handful of countries, and traveled extensively (and been involved at many levels of organizations), being back in the US often makes me feel that as bad as conditions and governments are abroad, at least that's often an open fact. Nowhere, though, is the _distance_ between reality of goverment effectiveness and stewardship and the perception of average worse than it is here.

"modern policies of the Chinese goverment have benefitted a much higher proportion of their population than ours."

I share a lot of your concerns about inequality and US policies. But looking to China for guidance is misguided. Yes, mass quantities of Chinese have seen dramatic improvements in their standard of living. But that's because China was starting from an abysmal economic hellhole created by decades of Great Leap Forwards and Cultural Revolutions. Any sort of semi-rational, semi-market driven economic scheme would have produced spectacular economic gains, compared to where they were.

To think that China has some secret elixir of economic success is as misguided as thinking, as a lot of people did in the 1980s, that Japan had some secret elixir of economic success. In reality, what the Asian economies (the successful ones that is) have experienced is the predictable outcome of moving away from massive unemployment and underemployment (i.e. better use of labor) while investing in infrastructure and industrial capacity (i.e. increase capital). More L, more K, and more efficient usage of both ==> more output and more national income.

But when those Asian economies approach full employment, and their capital starts experiencing diminishing marginal returns, the spectacular growth rates slow down to standard levels.

China's income levels are still well below those of the US, Japan, South Korea, etc. so it still has some years of strong growth ahead. But this is all due to the decades-long process of moving from economic basket case to a developed economy. Japan did it after WW II and China's doing it after moving away from orthodox Communism. But just as America discovered it didn't have the secret to continued spectacular economic growth, and then the Japanese discovered that they didn't have it either, the Chinese will eventually discover the same.

Is it yet the Greatest Depression?

Even if every personal income had increased over the last 10 years, "median family income" might still have declined because of shrinking family sizes.

Florian, this chart from the SCF chart book: https://twitter.com/Claudia_Sahm/status/507836094042238976 (sorry I could not figure out a better way to link to it) shows that the income declines were broad based across different family structures.

Your twitter chart suggests that a shift in family mix from 2004 was not the driving change, but what about since 2010 (the years in the MR post above)? There it looks like only single person households <55 have had declines since 2010. No?

The first quote in the post is since 2004. Clearly there's a lot going on here but stagnant real incomes are showing up for lots of family types. Also the chart is from the SCF chart book: http://www.federalreserve.gov/econresdata/scf/files/BulletinCharts.pdf

Thanks for the link.

Yet, shrinking family sizes would still have a compounding effect.
A (for instance) 1% decrease in income for each family class might lead to a 5% national decrease when it coincides with shrinking family sizes.

My point is this:
By measuring "median income per family", there is an added uncerainty as to the reason (economic stagnation? greater income inequality? smaller family sizes?).
Whereas for instance "average personal income" would be a clear measurement for economic growth.

Fine, but I was only pointing out that the decline in median income is not only family composition shifts. The measure of income you use has to depend on the question being asked. Btw nothing is clear of measurement error.

Nevertheless, the decrease in income could be easily driven by people moving from one group to another and/or by changes in family structure within those groups.

but the decline shows up in every family subgroup too ... something broader than family structure seems to be important too,

Yes, that was obviously the point you were making. However it is certainly possible for the income of every subgroup to go down, but overall income to go up, and vice versa. For example, if high income groups go down because more people are joining that group from another lower-income group, and in reality every family's income has gone up but in each subgroup it goes down. So it is not really clear that your graph adds anything.

@Cliff--does your hypothetical situation bare any resemblence to any trends we've actually seen IRL? Social-mobility, ICYMI, is way down. What's going on isn't hard to figure out, especially if you find yourself near the bottom of the social ladder. From a bit higher up it may be harder to make out, but I'll give you a hint: it's not because low-income people are moving into high income groups. Check out the increasing number of jobs vs. the flat numbers for hours and wages and you'll start to get a feel for what's happening.

It was one hypothetical situation among many. It could be the opposite, maybe lots of people are moving from higher groups into lower as families split up, etc. Maybe the families are growing bigger or smaller. Is that accounted for in your measure of "social mobility"?

A few thoughts...

1. This is all pre-tax income. Based on my understanding of tax incidence in this country, median income Americans are probably net beneficiaries of government, and moreso now than in 2004. Consumption inequality?

2. For couples with kids, the median is above $70K. For couples without kids, it's almost $70K. So yeah, definitely a median drop here (but an uptick recently), but at a pretty healthy level. Concern level: pretty low.

3. Single, under-55 no kids has taken a huge gut punch- they don't look any better off than 25 years ago! (Again, this is pre-tax income, though.) Still above $30K though (take that China!). Concern level: moderate.

4. Single with kids looks to have fallen off in just the past few years. Concern level: moderate.

5. Interestingly, the bottom rung (Single, over 55, no kids) has been spared the stagnation. Funny. Boomers again? Concern level: suspicious of Boomers, as always.

There's an old liberal bromide about society being judged by how it treats it poorest members. Eh. I think median is a step forward, but the "lowest median subgroup" in the present case seems to be doing ok, which should make paleoliberals happy (they're probably over-represented in single, over 55, no kids anyway.)

"There’s an old liberal bromide about society being judged by how it treats it poorest members."

As opposed to the old conservative bromide about being judged by how much we cut tax rates on the top earners?

No, the lowest subgroup -- female householder with kids -- is not doing ok. It is doing worse, with a median income of ~$25k.

Concern level? Poorest members? Eh, screw 'em. Probably liberals. Amirite?

Claudia, your chart only considers a superficial descriptor of family composition. A much more useful statistic for arguments which are being made (that income has declined) is number of wage earners per household. I'm not familiar with the change over time but I know that the fact is high-income households have more earners than low-income households. Can you address this?

Her chart breaks out couples with children. That's the Big One. And it shows a decline in this century, which is pretty bad.

Thanks, that's a good way to break out the data.

Wouldn't that require a stunningly fast rate of demographic/family change?

Hey, no fair bringing reality into this! We're trying to prove that everything is just peachy, no matter what is actually going on.

You got it.

They are not trying to prove anything, they are questioning whether this data proves what it is asserted to. Should we assume the data is great just because it comports with your world view, and not based on its substance?

@Cliff,

I'm seeing a bit of both.
You aren't?

You think that's about my world view comporting?

Clearly the median family is lazy, not taking advantage of the opportunities offered by the knowledge economy and globalization. But good to see the average family has been a little smarter about things (I hear they drive Uber to make ends meet).

This made my morning, +1!

+1

But driving for Uber is no longer working after rate cuts:

http://uberpeople.net/threads/driving-in-la-since-the-latest-pay-cut.2388/

http://uberpeople.net/threads/ubers-epic-blunder.2880/

No. You are suggesting agency on the part of individuals.

The economy magically produces growth. No one is sure how it happens. Our job is to spread the growth around to the citizenry, who wait patiently for the gift from Uncle.

In the old days, we used to hand stuff out fairly, but now rich people have hijacked the system and are taking most of the magic growth for themselves.

Median Americans- you don't have to do anything differently. Just hang in there and vote for the right people, and we experts will rejigger the system to spread the magic growth around more fairly.

No. There can't be any growth for anyone, even rich people, because the libtards have stifled innovation and hijacked the political system, exchanging votes for handouts.

Back in the day, poverty was sky-high, so we fixed it. It has never risen since we started giving any idiot free money indefinitely, without work requirements or drug tests. Hell, we even decided to steal from rich people to give kids and old people free stuff.

Average Americans, you're the only ones keeping this thing afloat. Keep showing up to work to pay for all goodies, even though it doesn't benefit you.

Pretty sure I won that round of "Ideological Turing Test".

You turned a stupid joke into a pissing contest, as usual.

So let's give socialism a try. Otherwise, things are only going to get worse as technology progresses.

Yes, it's better for things to get worse as technology doesn't progress.

Technological progress trickles down in the long-run.

How do you know that technological progress trickles down in the long run? Do you have a crystal ball?

We don't know for sure, just like we don't know for sure if the sun will rise tomorrow.

The sun has been rising every day for quite a while now. Rapid technological change has only been happening for a couple hundred years. In the scheme of history, a couple hundred years isn't very long. A reversion to the mean bet may be wiser than a continuation of the trend bet.

As Robin Hanson likes to point out, for most of history most people lived at a subsistence level and that is the way to bet people will live for most of the future. Right now we are at an unusual point in history where many people share the wealth. We should try to make this period last as long as we can, not try to speed its demise.

I'm not against technological progress but I am ambivalent about it since it may be good or it may be bad, on net. Since we don't know whether more technological progress will be good or bad for most people, we shouldn't be afraid of policy that might discourage innovation. Socialism now would be one in the hand instead of two in the bush.

Yeah, who knows if technology will be good or bad. It's not like technology has lifted billions out of poverty or doubled life expectancies already. Ohh wait.

Past performance may not be indicative of future returns.

Past performance is indicative of future returns when no underlying fundamentals have changed. I'm not familiar with the shift in human behavior that has made altruism more effective than self-interest in providing goods for others. Perhaps you could elaborate?

I'll elaborate. The economy is becoming a place where only the most talented programmers and marketers and salesman are in demand. Average human labor, like the cab horse, is becoming useless. There isn't likely any new technology that is going to come along to put average human labor back in demand again. No new tractors to drive, no new factories to work in, no new ships to sail.

We need to transition to a society that supports the economically worthless, because most people eventually will be. Either that or kill them all, which, I suspect, will be the eventual solution several generations from now. I agree that there is no changing human nature.

dirk: "In the scheme of history, a couple hundred years isn’t very long. A reversion to the mean bet may be wiser than a continuation of the trend bet."

dirk - "Past performance may not be indicative of future returns. "

Isn't betting on a reversion to the mean a bet on past performance?

Technology is the new "Mr. Nobody".

I like this post because it doesn't mention the change in wealth or income in the top 1% or 10% of wealth or income holders during the same period.

Good work on hiding the ball.

Anyone want to post the change in wealth and income during same period. Naw, doesn't fit the script.

Really, the post wasn't that long, for you not to have read all of it...

Income inequality got mentioned twice, once explicitly "yet the top three percent has done quite well" and once implicitly "the median American family earned 5 per cent less in 2013 than in 2010 after inflation even though the average American family took home 4 per cent more".

I did read it, and the Alphaville post was blocked.

But, this data came out recently, with all of the coverage focusing on the gains of the top 1% and 10% of wealth and income holders, AND with coverage on the decline of the middle.

Funny how this post only made a discussion of one tail of a two tail distribution.

So if the top 10% were making less, the median would increase?

Ask the Walmart family members if Walmart employees made more that question.

derek, I also do not understand your comment regarding the median and the top 1%. Why don't you do a little experiment: take a balloon and mark the median. Then squeeze one end of the balloon and remark the median and come back and tell me your results.

"Squeeze the balloon" - Bill, we are glad you are here to educate us on the fixed pie economy.

Thomas, Apparently, some need it. Come back and tell me how the economy grew from the 2001 tax cuts for the wealthy.

Bill, come back when you can explain how tax cuts must necessarily cause economic decline. Or, better yet, come back an explain to me how increasing G at the expense of I is anything more than consuming today instead of tomorrow.

@Thomas, I'm back. That was much too easy. Here is Bruce Babbits summary of the effects of the Bush tax cuts; the Tax policy foundation has a more detailed summary:
http://economix.blogs.nytimes.com/2013/05/21/the-bush-tax-cut-failure/ Better read Babbits article because I will be coming back with more if you want it.

By the way, Thomas, now its your turn: tell me how a long term tax cut that creates a massive deficit and transfers money to those with a lower marginal propensity to consume (the wealthy) leads to a better economy. You can be in favor of short term deficits, but how about baking into the economy a long term structural deficit, benefiting those with the lowest MPC.

Bill, you didn't answer my question. Wipe the spittle off your cheek.

Oh, and Derek, I want to thank you for your generous contribution to my upper class well being by giving me those tax breaks in 2001, and for those that went forward till today. You were very generous also in supporting military engagements on the credit card, and for supporting cuts in the safety net to support the lifestyle to which I have now been accustomed.

So you've benefited from the tax cuts and built your own personal wealth, yet still get to enjoy the moral high ground via leftish-y preening on internet comments. Talk about the best of both worlds!

Not A Boomer,

I am the unintended beneficiary of the Right, free riding on your generous and successful lobbying and PR efforts to those less wealthy than me to give me a better lifestyle.

By the way, I wonder what you consider being a "Lefty"--it is so 1950'sh. This is 2014.

Or, am I responding to Dick Cheney.

You mean YOUR successful lobbying and PR efforts. I'm *not* a boomer.

Put your money where you mouth is.

@Thomas, If you are asking me to raise my taxes, while you keep yours the same at the same income level as mine, then you are asking me, once again, to subsidize your tax cut. Man up.

I'm baffled by the belief that the rich paying higher taxes, somehow translates to the poor having higher wages.

Hey Bill,

Maybe I got this wrong, but I always figured there was a moral element to the idea of progressive taxation. Rich people SHOULD pay more in taxes.

Now, if you buy this, I think you should voluntarily send in the additional amount you think you should pay, regardless of what other people are doing.

Have the courage of your convictions, man! Who knows, your example might inspire like-minded inhabitants of the moral high ground.

Brian, There is a greater immorality in not having progressive taxation. And thank you for recognizing it.

Think about what disposable income means, and what share of it is taken at various levels of the income distribution.

Moreover, if you believe in meritocracy, you want everyone to have an even chance to compete. That means making sure they can have the human capital..education, early healthcare, a family not in bankruptcy or too poor to help their children.

I just came back from a three week trip to Scandinavia--Norway, Denmark, Sweden and Finland. We visited all types of neighborhoods. I didn't see the poverty or uneven economic conditions you see in the US.

As for me paying more, if you earn the same as I do, and want me to help you avoid paying your taxes, don't count on it.

That just makes you a free rider.

Man up.

By the way, I like how those Libertarians like Elon Musk get the government to subsidize their businesses and have others take the risk. Much like asking me, out of my convictions, to pay more, while you don't if you have the same income level.

Bill, the debt is $18 trillion. Your fear that someone else's taxes will go down is unfounded.

I don't think I'm undertaxed. Taxes are quite progressive today, thank you. But I get the sense you disagree.

If I thought I was undertaxed, I'd send in the difference.

Morality is pretty simple. And pointing your finger in every direction except inward is...revealing.

...and while I don't think I'm undertaxed, I am that odd Ricardian who holds a reserve of $250,000 on my family's balance sheet in respect of our share of the $18 trillion debt (along with $50,000 for our share of Illinois's mess), so at least I'm not poorer than I think I am on this score.

Surely your conscience twinges at the burden the current generation has shirked too, doesn't it?

Will it always be taboo to admit that one views these trends as a positive? Shouldn't we be glad that we are finally getting back some of the ground we gave up in the 20th century? We are returning more to the natural order of things. As a lover of nature, including human nature, I couldn't be happier.

Could more low-skilled immigration be a solution?

A far as I reme,ber Cowen belives immigration will create more jobs for everyone. clearly that would improve family incomes.

Once again, more immigration turns out to be the solution.

I would like to know how the median 1980 individual fares today, not how s/he compares to today's median.

The numbers are from a FED paper that also includes a break down by age on page 9. http://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf The median worker in 1980s is now retired so I do not think their income then compared with what it is today says much about wages. The data on the wealth in the paper in more important for the mean and media income of people over 65

All this talk about income, but very little about net worth. About half of people with high net worth also have high incomes. I should know, I am comfortably in the 1% for net worth but not for income--and bullish on America.

" But for net worth, the 1 percent threshold for net worth in the Fed data [in 2012] was nearly $8.4 million, or 69 times the median household’s net holdings of $121,000."

Here, here, let's raise a toast.

Ah, but the natives are getting restless, my lord.

Am comfortably in one measure of the distribution, but not the other, and wonder why people keep giving me tax cuts on unearned income, my stock portfolio, or estate plans for my kids.

We both must be blessed.

Maybe I'll go somewhere to trickle down my wealth and income to make some person who manufactures my purchases in China better off.

Why do we use second-best data? Why not look at compensation, or better, after-tax consumption? And let's look at people and not families. Then this data might tell us something (but maybe not what we want it to tell us)

Data is just a bludgeon for Economic Justice Warriors.

I'm clicking through just to find out what is meant by "Midwest."

Nothing a little $20 minimum wage can't fix!

Nah, paying the minimum wage worker $20 will merely result in them buying three times as many google or buffett class B shares each year because minimum wage workers never buy anything, they just couch surf, use hitchhiking to get around, eat at soup kitchen, and go to free clinics. Why would they ever buy food, buy a car, buy a house, pay for health insurance and pay $20 to see a doctor when workers can live on zero income?

The only people who spend money buying stuff are the 99% consumers who never work but simply depend on high profits making the rich richer to make them spend their infinite money flow from the wealth effect shopping for stuff they don't need.

The ideal economy is when the 1% CEOs and managers get rid of the 99% workers so every penny of prices is profits creating massive wealth which will mean the 99% consumers will spend like mad from the wealth effect.

Pretty obvious that the federal government should tax the income and wealth of those in the Northeast.

All I know is it isn't Kentucky, which is weird since it might include Pennsylvania.

We are still recovering from 2008. I bet the EU is doing worse.

We haven't recovered from 2000-2001.

Worth copying this comment from the FTA post:

horn | September 5 8:07pm | Permalink
1) You didn't adjust for the decrease in family size since 1989, which has been sizable. You are purposefully comparing apples to oranges. Presumably to push a personal POV. And the # is easily findable.

2) From 2007-2010, bottom quintile rose 6.3% median and 5% mean. Top 10% fell 6% mean, smaller drop on median. Bottom was only quintile to see gains. So, massive reduction in inequality then. Same thing happened in 2001-2004. Top 10% fell 6.19% then also. 2004-07 bottom 20% rose 4% on average.
Overall, bottom 20% rose 4.9% mean and top 10% fell 5.9% from 2001-2010.
[All sourced: Prior Fed Res Survey June 2012]

3) You didn't adjust for the 13m more illegal aliens who entered the US since 1989, most of whom are at the bottom of the income tables for various reasons. After all, if 100m households made gains, but 10m households entered with a median income of zero -- all the numbers would go down for average AND median.

4) The bottom quintile has a mean & median number of workers of Zero. If you don't work, how can you expect gains from working? Whereas the top quintile has ~2 workers per household. You can go from middle to top quartile just by marrying another worker. Bottom quintile does not have this option.
Only 5% in the lowest quintile have 2 workers - typically recent college grads or recent immigrants, compared to the 76% in the highest quintile with 2 [or more] workers. In the 2nd highest quintile you have almost 70% with 2 workers and only 5% with no workers: so the path out of the lowest quintile is quite clear if you choose to measure by 'household' income. [Source: IRS data]

5) You haven't used log-charts, purposefully distorting the data set yet again. The rise from $60 to $65k is not the same size as the rise from $90 to $95k. One is 5.5% the other almost 9%. Tufte is ashamed of you.

So, all in all, probably the worst article of misinformation I have seen from the FT in 2+ decades. On the plus side, you can only improve from here!

cheers

Are you saying that the data showing increasing median incomes over the 50s and 60s were wrong because they didn't take into account the shrinking household size of the big surge of immigrants which today would be illegal because no one even considered closing the border to people from north and south who wanted to work in the many mostly unskilled open jobs?

Before Reagan, the debate was how to make the incomes rise faster or catch up for minority groups, and so on. Since it seems more about how to prove a shrinking pie isn't really shrinking but some people are going on a hunger strike so the pie is smaller.

I figured something like that was likely

@JWatts (I can't seem to reply within the thread)

Yes. It's a bet that the long term trend is more meaningful than the short term one. It's not a sure bet, but it might be a better one.

Most jobs for most of history were shit jobs that paid shit. The way I'd bet is that that will be true for most of the future.

It's reading this blog for five years that has turned me into a socialist. The turning point was when Tyler called for shantytowns in my home state.

You could decide to turn into a capitalist.
The economic system promoted here isn't free market capitalism, so you'd be good.

What is it?

What I read is a (sometimes reluctant) support of the status quo, with a call for some tweaking, in ways that are interesting but not really distinctive from what we've got going now.

And the status quo is not free market capitalism. Not more than a smidge here and there.

You think I read wrong? Or you think the status quo is free market?

Since homosexuals are by nature sterile, this does mean families will earn more in the future with two incomes? Seriously, a lot of baby boomers will be retiring and new jobs and industries will open up. Unless of course the government has its way. Also, immigrants earn less than native people. The large influx of immigrants is distorting all the numbers.

Uh, no, homosexuals are not sterile. Plenty of lesbian couples out there asking for sperm donors, for sure

Incomes have gone down, but lots of things have gotten way way cheaper, while health care, big city real estate, and education have gotten more expensive.

Comparing living standards is really what's most relevant. Though today's lack of economic stability and predictability is obviously a huge problem.

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