Income mobility

American Household Income, 1975 to Now: More Richer, Fewer Poorer

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Don Boudreaux over at Cafe Hayek highlights this interesting chart showing household income distributions from 1975 and roughly today, and the news ain't terrible. It shows that the percentage of households in every income distribution from fewer than $15 thousand a year to $75-$100 thousand a year has fallen, with the only rise–a pretty big 11.7 percent–in the over-$100K-a-year category.

As Boudreaux explains:

The percentage of American households with what might commonly be regarded to be middle-class incomes is indeed falling – but so, too, is the percentage of American households with what are surely "poor" incomes.  So once-middle-class Americans are not becoming poor.  Instead, they're becoming rich; their real monetary incomes are rising.  The percentage of American households earning high incomes ($100,000 annually and above) is on the rise – and impressively so.  Let me emphasize: A much greater percentage of households today (compared to 1975) have annual incomes of $100,000 or more (in 2013 dollars)…..

 the average number of persons per American household today (2013) is 13.6 percent fewer than in 1975, so each real dollar of household income is today shared by fewer people than in 1975 – meaning that the increase in "per-person-in-household" annual real incomes is even more impressive than these data show….these data are pre-tax yet post-cash transfers (such as Social Security payments),

Nick Gillespie from November on three more illuminating charts from Congressional Budget Office data on American income, income growth, and income inequality.

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  1. A household income of $100,000 is not high – it is solidly middle class. A wife making $45k and her husband making $60K are not in what most people would consider a high income bracket.

    1. Yet, it lands in the top quintile.

      1. Which makes me wonder how the quintiles are classified – what do they count as ‘income’? Do they count all government transfers as income? Or do they not count, hence people in a lower or middle quintile are living pretty much as well as people in the $100K ‘high’ quintile. And also, the upper quintile would include a couple with kids plugging along at $100K a year, as well as Bill Gates. Doesn’t seem very meaningful to me.

        1. I’m sure they don’t count all government transfers. But I’m pretty sure they do any direct payments like SSI, EITC.

          And a lot of transfers go to higher income people too through various tax credits and subsidies. And roads. Don’t forget roads.

          1. My sarcasm detector may not be working correctly. When did keeping your own money (tax credit) become a transfer?

    2. You don’t think that most people would consider double the median household income to be high?

      1. I guess it depends where you live. I know you don’t get anything more than solid middle class at an income of $100K or so, or even double that.

        1. Not solidly middle class at $200,000/year? Maybe in Manhattan or SF, but in most of the country $200,000/yr seems pretty solidly upper middle class even with two kids, and definitely upper class without kids.

          1. In parts of KY, 200k allows you to live like a King.

          2. In DC, $200K makes you slightly upper-middle class.

            I’m not too far from that with the wife-unit and with a low mortgage and saving for retirement and the kids’ college, we have very little disposable income, after the cost of living around DC pounds you in the ass.

    3. I think it depends a lot on whether or not you have kids. $100,000 a year with one kid is what I would call upper middle class. With one or two kids, probably middle class unless the grandparents are helping with childcare.

      1. We have two and middle class is what we are. I never thought I would break $100K a year and not feel like I was on top of the world. I am compared to an awful lot of the human race…so it must truly be a “First World problem”.

    4. 100K in California or New York is scraping by. 100K in Iowa or Texas is pretty decent.

    5. Seems like a lot to me. Where you live makes a big difference, though. And how much money you like to spend.

      1. Debt makes a huge difference as well. When you’ve got student loans, a mortgage, two car payments, a boat payment, and of course several credit card balances, that fat paycheck doesn’t go very far.

        1. This is true. But in most cases most of that debt falls under “how much you like to spend”.

  2. How many of these households went from single earner to dual earner?

  3. Where you live matters. $100K is a damn good living here in Maine, and jack shit if you live in Manhattan.

    1. Or just across the Hudson.

  4. DON’T FUCK WITH THE NARRATIVE.

  5. And the Chron just this morning printed a cartoon by noted lefty propagandist Tom Toles that suggested you can get a real education and not make a ‘middle class’ income.
    Of course he’s a lying piece of crap; the question is whether he’s lying about the income or the supposed ‘middle class income’.
    In further heartening news, I read this morning that fellow lefty propagandist Tom Tomorrow is now supporting himself on readers’ donations. Let’s be honest: he’s really Tom Yesterday.

    1. Anyone with half a brain can make a decent living, presuming they know something actually useful or can demonstrate basic competence.

      Those that can, do, those that can’t, protest.

      1. This.

        I read a “tearjerker” article, yesterday, about an adjunct professor who is “barely making it,” even with her degrees. Turns out that they are in literature, and she’s chosen to teach that, but somehow, we’re supposed to feel sorry for her, regardless of her choices.

        I think literature is important, really, if you know the cards are stacked against you in your current position, then perhaps you should consider something else.

        1. Literature is important. Literature professors, less so (though they do have their place).

          The tear-jerker articles that we should see are the ones where someone with less education, but with a good idea and willingness to work hard can’t succeed going into business on their own because the costs of compliance with all the licensing and regulation is too high. That’s a real problem that is really fucking over poor people.

        2. Translated: “I picked a career with low market value. Someone else’s money should make me feel better about my poor choices in life.”

    2. Correction:
      …”the question is whether he’s lying about the *education* or the supposed ‘middle class income’.

  6. Pfft. Nonsense. Life is becoming harder and more people are poorer than ever. Progressives have taught me that–I learned it from articles I can read on the my hand-held phone/computer that can instantly access most of the printed knowledge on the globe. Life sucks nowadays.

    1. Yeah, I saw that confirmed on my 55-inch flat panel TV, on one of the dozen or so news channels.

  7. What? Americans can’t be getting richer! Crime can’t be down! Those are just statistics!

    1. My post-tax income certainly isn’t going up.

      1. Compared to 1975, tax rates are a lot lower.

      2. My latest paycheck was $75 smaller than the one previous. Health insurance went up again, and nobody in the office has seen a raise in four years.

        1. How could Nixon have won? Nobody I know voted for him.

  8. American Household Income, 1975 to Now: More Richer, Fewer Poorer

    I have it from good authority that this cannot be possible because Capitalism and because we’re raping and murdering Gaia.

    Ok, ok, I have it from many little red Marxians who post silly memes on Facebook.

    1. Those guys need to get their story straight. I thought raping Gaia was how people got richer and that is why Capitalism and rich people are bad.

      1. Yeah. We’re supposed to be one with the earth, living in abject romantic poverty.

  9. I dont know where he got those facts, but they are totally off base. I see more and more people struggling to make ends meet than I do those going to the Hilton for dinner. Those on Disability are far worse off than they were in 1975. I can vouch for that. Cost of living had gone up over 145% since ’75 but Soc Sec has only gone up some 15% of income. Now tell me that they are getting rich on $675 PER MONTH!!!! Yet you stupid twits call your self Christians and conservatives who hate change. unless you get more money in YOUR pockets. Khrushchev said it in the past and its going to come true soon. “We (Communism) will not conquer you (USA) from with out, but from within. When the rich get too rich, the poor will rise up and take over in a new revolution” I fear that day is coming soon.

    1. Yet you stupid twits call your self Christians and conservatives…

      You got the wrong blog, dude.

    2. How much spittle did you have to wipe from your keyboard after that?

    3. Don’t look a gift horse in the mouth, Bob.

    4. Oldfoxbob|1.13.15 @ 1:36PM|#
      “I dont know where he got those facts, but they are totally off base.”
      If you’d have actually read the article, you’d know where they came from, and if you have data that says otherwise, why, post it right here!

      “I see more and more people struggling to make ends meet than I do those going to the Hilton for dinner”
      Yeah, well, you should get out more.

    5. I see more and more people struggling to make ends meet than I do those going to the Hilton for dinner.

      Perhaps you should decide about people actually going to restaurants rather than the dining room at a business-class hotel. Why would anyone not staying at, or having a meeting at, the Hilton go there for dinner?

      Perhaps try to get a reservation at a nice middle-class chain restaurant like Cheesecake Factory some time; I think you’ll be stunned at how hard it can be to get in with all the proles taking up space.

      1. Why would anyone not staying at, or having a meeting at, the Hilton go there for dinner?

        If you want prime beef, you pretty much have to go to a hotel to get it. Some of the best restaurants in the world are located in hotels.

        1. I have had some damn fine beef at hotel restaurants.

        2. “If you want prime beef, you pretty much have to go to a hotel to get it.”

          Or you could live in a state with cows

          1. After some research it seems that some USDA Prime is making it into stores like Costco, but that’s a recent development. For the most part it gets snatched up by hotels and high end restaurants, no matter what state you live in.

      2. “Why would anyone not staying at, or having a meeting at, the Hilton go there for dinner?”
        The only reason to eat there if you *are* staying there is that the local Micky D’s is closed.

    6. Who the hell goes to the Hilton for dinner?

      1. “Escorts”

        1. “Dinner”

          1. “Dessert”

        2. And you call yourselves Christians and conservatives!!!

      2. Nobody, that’s probably the point.

        “I see more poor people than unicorns eating hamburgers while riding the ferris wheel”

    7. I dont know where he got those facts, but they are totally off base. I see more and more people struggling to make ends meet than I do those going to the Hilton for dinner.

      Stupid Reason, using facts and data. Don’t you know that Oldfoxbob’s anecdotes are what really count?

    8. Bwaahaahaaa!

      Thanks, I needed a good laugh!

    9. I make $675 PER MONTH!!! straight from home.

    10. Those on Disability are far worse off than they were in 1975. I can vouch for that. Cost of living had gone up over 145% since ’75 but Soc Sec has only gone up some 15% of income.

      You seem to be confused about some very basic ideas of what constitutes income for this study.

  10. Reason loves to employ statisical games.

    Now re-write this article accounting for monetary inflation, number of two income households, and increased taxation.

    1. Reason didn’t write the article. “Don Boudreaux over at Cafe Hayek” wrote it.

      It says it there in the very first line. A smart guy like you should be able to grok that.

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