Economics

Incomes Are in the Crapper; "Poor People and Minorities" Hit Hardest

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Are you better off now than you were, er, 15 years ago?:

The median income of U.S. households fell 2.3% in 2010 to the lowest level since 1996 after adjusting for inflation, the Census Bureau reported Tuesday.

The weak economy has driven median household income down for three straight years, to $49,445 in 2010, a total 6.8% decline since the recession began in December 2007. The government says the recession ended in June 2009.

Poor people and minorities were hit hardest. Median income for black households fell 3.6% to $32,206 while white household income dropped 1.3% to $54,620….

Income fell least for the most affluent households — down 1.2% to $180,810 in 2010 for the top 5% of households. Income declines got increasingly large down the income ladder. The bottom fifth of households — those making $20,000 or less in 2010 — saw incomes decline 3.8% after inflation.

More here.

Do you feel poorer than you were in the mid-1990s?

Does this sort of analysis—that argues that purchasing power has generally gotten better over time, despite inflation and wage stagnation—ring true for this past 15 years?

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  1. You know who’s not any poorer?

    JOOOSS!!!11!!

    1. And Unions.

    2. What recession?

  2. Does this sort of analysis – that argues that purchasing power has generally gotten better over time, despite inflation and wage stagnation – ring true for this past 15 years?

    Up until fairly recently, we were importing deflation, and reaping the benefits of improved productivity.

    That seems to have pretty much ended with ZIRP and Washington’s fixation on “stimulus”. Thanks, guys!

  3. I’m much poorer than I was in the mid 90s. As much as I’d like to blame Washington, I have a feeling those damned kids we had are to blame…..

    1. Kids do tend to do that to you.

      1. I thought the main reason to have kids was for cheap labor…

  4. Much better off than I was in the 90s, but then I was a student till 2000 and you really don’t have much to go but up at that point.

    Still, year over year since 2000, each year has been better than the last.

    1. Seriously. When I graduated I was broke and I could fit all my worldly possessions into a VW Jetta. I’ll bet I looked much more “poor” than many of the people who qualify as technically “impoverished”.

      Education. How does it work?

  5. Since 1995 my income (adjusted for CPI) has almost exactly tripled. Thanks for asking.

    1. R C Dean is so rich he’s got TWO monocles.

      1. Wouldn’t that just be glasses?

        1. Not when you put them on the same eye.

        2. Anyone can get glasses. Only the rich wear a monocle on each eye.

    2. My income (not adjusted for inflation) has risen slowly since the late 90s. My expenses have probably tripled. Welcome to divorce.

  6. I had more free money in the past, but we used to be DINKS. Add a kid and a wife pursuing a law degree + no minimal pay raises + inflation – suddenly I feel like a rich college student.

    1. suddenly I feel like a rich college student.

      Yeah yeah yeah…like everyone else you would give it up for youth right.

      All i know is that i was a fucking idiot in my 20s and every 20somthing I meet I find intolerable…and I happen to like the gray hairs I am getting around my temples.

      1. Shorter Joshua: GET OFF MY LAWN!!!

  7. after adjusting for inflation

    That’s cheating!

  8. I’ve got one kid headed to law school, one who’s an undergrad and two who are in kindergarten. But thanks for asking.

    1. I had to sell my monocle to RC Dean, the bastard.

      1. How does he get to have two monocles when you don’t have any? There should be a law…

  9. You guys shouldn’t post something so stupid without comment.

    “Poor households” didn’t get poorer. This Census report says that income distributions have changed over time. It specifically does not say that they tracked the same poor people over time and compared how much they earned in the present to how much they earned in the past.

    To make this really, really obvious: People who were in the lowest quintile in 2000 census are not the same people in the 2010 census. Many of the people who were in the lowest quintile back then are in a different quintile, or dead. Comparing incomes that fall within a certain percentile range from different census surveys doesn’t tell us a thing about how poor people in 2000 (or any other time period) are doing right now.

    1. No it’s always the same poor people, poor forever, never aging, never dying, never changing!

    2. Math is haaaaaard!!!! haaha!

  10. Do you feel poorer than you were in the mid-1990s?

    Sure.

    But am I actually poorer in any measurable sense?

    Hell no.

    One should never trust their “feelings” when it comes to their own wealth and the wealth of others…

    …jealous monkey brains and diminishing expectations and all that prevent any reliable gauge using feelings in this regard.

  11. Median Household Icome is $49,445?

    Seriously, how can a family live on that?

    1. How big is the family?

  12. I was still in college in 1996. I think my taxable income was on the order of $4k.

  13. I’m waaaaaaaaay better off financially than in ’96.
    I wonder what the poor people are doing tonight?

    *pours Mexican babies’ blood into gold goblet, adjusts jets on hot tub*

  14. You guys love Uncle Milt when he talks about the draft, but you never learned his life’s work. “Tight money was spectacularly effective; the stock market, and also nominal income growth, plunged. Low inflation turned into actual deflation…”. Tight money, defended here and everywhere in the GOP, is killing us.

    If you want incomes to increase, the Fed needs to crank up QE3 and really go for it this time. Our best fiscal quarters since 2008 all happened during QE2 and its been garbage since the market realized that was it.

    1. Our best fiscal quarters since 2008 all happened during QE2 and its been garbage since the market realized that was it.

      deleveraging…how does it work!!

      1. Answered below, because of buggy software.

  15. Asking if a specific individual is better off isn’t very helpful. Suppose that real wages are declining. 15 years ago I was an entry level worker. Today’s entry level workers are poorer. Now I am an experienced worker who makes more than I did 15 years ago, but less than the experienced workers of 15 years ago. The fact that my income is higher doesn’t mean wages aren’t falling.

    I am not convinced that people are actually poorer than 15 years ago, but asking if you are better off is not very relevant.

    1. Today’s entry level workers compete with a giant wave of migrant workers that we didn’t have 15 years ago, and even outsourced workers in India and elsewhere. Those guys are clearly better off today.

      And they are far lower on the ladder of skilled labor due to improvements in technology leading to improvements in productivity at the top end. The same could be said for experienced workers.

      Plus when you “adjust for imflation” apparently you get to swap out the analog tv and the 10 lb cell phone and the dialup modem for all the improvements we have today as long as the price is the same and call it even.

      It’s a dumb comparison all around.

    2. …and the point of whether YOU are better off, is that all these changes I listed are economic progress, which benefits everyone including you with advances like the ones I mentioned, even if the people in specific roles within that economy do not get to stand still and expect to be just as valuable to it.

    3. I’m an entry level worker and I make more than the median household income.

      STEM degrees, people.

  16. @Lost_In_Translation

    You can deleverage a hell of a lot faster with looser money, as Rogoff and others have said. Its taken on faith around here that printing money is a sin, but examine that faith-based position.

    Lenders have enjoyed 1% inflation for 3 years, which is pure rent-seeking by the Fed board members representing banks. They exploit a discretionary, subjective rule of money supply (the amorphous “low inflation % full employment”). Don’t we all prefer objective, transparent, rules-based regulation? Why not for money supply?

    Say the Objective Rule is to target 2% inflation (or 5% nominal growth, etc), shouldn’t we print money to get 2% (or 5% nominal growth) for this year and to “catch up” to the last 3 years?

    (I’m writing assertively, but I don’t really know the answers. I know Uncle Milt is opposed to Nick’s War on (Nonexistent) Inflation.)

  17. Everyone’s situation is different.

    In 1997, I left 10 years as a state employee behind to join the IT world. My first job paid $6,000 more than I got as a state employee, the client hired me 9 months later and doubled that salary. I got several large raises during the next couple of years, then left for another job that paid a third higher than that. Left that job (life in IT at the time) for a independent consulting gig that paid $150/hr (what a great 6 months!), then hired on with the client for around $95000/yr.

    Then the boom dropped. I got caught in the dot.com bubble and was laid off and unemployed for 5 months. Got an indie contract for 10 months, then unemployed again for 15 months with no unenployment benefits (it sucks to be self-employed). Finally got another job at $20/hr then lucked into one of my former employers hiring me 10 months later at double the salary. Stayed there for 4 years but left almost 2 years ago to work for a client, finally back to the salary I had in 2002.

    We’re starting to do better though, because my husband makes more money (more of a normal track through COL raises) and all of our kids are out of high school and have chosen not to go to college.

    We also came out of Chapter 11 bankruptcy a year ago (15 months was a bit too long) so the only debt we have now is our mortgage.

    My job is a bit wobbly, we had lots of layoffs, but we’re cautiously feeling better about our situation despite the poor economy.

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