The folks at the Census Bureau have just finished compiling the most recent data on income distribution. I’m betting that the following chart will get a lot of political play:
Yes, median real household income was lower last year than in 2000. And yes, it has in fact grown somewhat in the past few years.
My two cents: The real news (and the really sad news) is the rising poverty rate over the same period:
But I’m betting this will be ignored. With convention season underway, all data entering the public square will be viewed through the lens of electoral politics.
The talking points in the above chart are less crisp for either side (poverty today is higher than in 2000, but lower than in 2004). And more to the point: elections are determined by the median voter, not by the families on the brink of poverty.
There are pages of fascinating reading in the full data release, here.
Mark Thoma rounds up reactions from across the blogosphere, here.
and 
. You can also watch it on 
#6 and #7, are you aware that the top graph is the median income? What happens to people at the top and bottom of the distribution does not effect it. Unlike a mean, it is robust to outliers.
And #6, unless you happen to have a circle of friends that mirrors the demographic and income composition of the US (or you re-weight their opinions by those sampling weights), your anecdata only say that the people you know are the not the median income earner in the U.S. If a CEO said regarding the economy, that all his friends were doing well, you would probably jump all over him because he doesn’t have a representative sample of the U.S. A moment of retrospection should lead you to the same conclusion regarding your friends. Be careful about generalizing from anecdata.
I don’t know, Dennis, but I liked his argument: “bad things happen sometimes, let’s not get all hot and bothered about it.”
I have a question: how much of this is variance around a fit line? For either or both graphs, given basic randomness, given natural fluctuation? I looked through the economist’s reactions and not one addressed this,instead to speak about public policy and economic cycles and who is to blame. But aren’t we taught that randomness and probabilities are real and that they would affect gross measurements like this. I’ve been taught, for example, that in macro measures like this, there will be fluctuation and there will be runs, even though there is likely a trend line. Examples are legion and well known, which means I have another question, I guess: why then are economists talking about fault without figuring the natural variance? (I’m serious. I actually am asking this, not making a point.)
What about the after-tax median household income? After all, what we really get to pay the bills with is what Uncle Sam and the governor lets us keep. It is my understanding that with the recent tax cuts, after tax median household income is up even higher.
Ironman: the median is less sensitive to the extremes than the mean; that is why we use it.
All of this is no surprise. I hope to get the time to read the entire report, but these two charts are very important. There has likely been an increasing gap between the top 1% and the rest of the country.
I was actually more intrigued by the numbers from 1992/93 to 1999/2000. These were the Clinton years. Impressive. We need more of this, no matter who can bring it.
The chart above is based on the median income (half above, half below), not the average. If the top 1% had a really sucky year, it would only show in the chart if the cause was something that also impacted those in the $45,000-$55,000 income range.
In a war year with a bad overall economy it doesn’t surprise me in the least that poverty isn’t mentioned on the campaign trail. Since the Great Depression, only when the middle-class is doing well can we turn our attention to poverty.
http://blackpoliticalanalysis.com
poverty line is a difficult assessment because it is the level of annual income below which a household is defined to be living in poverty. This is defined differently by different governments and institutions and, in spite of the great importance of its intent, is not in fact as meaningful as one might wish.
Because it is a specific threshold, say household earnings at 20% (don’t know the actual number) of the average household earnings when the average wage increases this 20% increases and so too does the number of people below the poverty line, even though those people may not be any poorer than previuosly.
the disturbing thing here is it happened as the average wage was falling. So therefore it seems that the 20% has fallen yet there are more people below the line. This means that those in poverty are even poorer than before and there is more of them.