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Median Household Income Is at an All-Time High. Are You Happy Yet?: Podcast

Economist Mark J. Perry talks about rising incomes, flattening inequality, low unemployment, and why none of it seems to make us feel better.

Mark J. Perry, Carpe DiemMark J. Perry, Carpe DiemHere's some really good news: Median household income in the United States is at a record-high, inflation-adjusted $61,372. When you factor in the fact that today's households contain fewer people, the news is even better. In 1975, for instance, average income per person per household was just $19,500 in 2017 dollars. Now it's $34,000.

And get a load of this: There's no evidence that income inequality has grown since the 1990s, or that the ability to move up and down the income ladder has shrunk in that time period. More people than ever live in households pulling down $100,000 (again, adjusted for inflation) than ever. Fewer households make less than $35,000 (adjusted for inflation).

All of this comes courtesy of the U.S. Census, as compiled and analyzed by economist Mark J. Perry. Perry works at the American Enterprise Institute and the University of Michigan (Flint), and he runs the blog Carpe Diem.

Do you feel happy yet? On today's Reason Podcast, I talk with Perry both about his findings and why we don't feel richer, happier, or more secure than we do. Perry isn't a Trump booster by any means, but he suggests that some of the president's policies—particularly the reductions in certain taxes and regulations—are helping to keep an economic expansion that started under Barack Obama moving along. At the same time, he worries about accumulating debt and trade wars that can raise prices and introduce wild uncertainty into the economy. When investors "see that there's uncertainty about policy," he says, "that starts to distort decision making and capital spending."

Perry suggests one reason we don't feel more satisfied with economic improvements is that they are a feature and not a bug of a free enterprise system. "The benefits of a market economy and the march of progress are so constant and so gradual that either we don't appreciate it or don't notice it," he says. "So we have an under-appreciation of how much better things get all the time. If it happened all at once, we'd probably just be amazed."

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Audio production by Ian Keyser.

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Photo Credit: AEI

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  • Don't look at me!||

    Everyone is being told things are bad. That's why.

  • ||

    They're now talking 5% GDP is possible.

    Thanks Barry!

  • LarryA||

    ^This.
    "Everybody knows" economic times are bad for the same reason "everybody knows" about the rising tide of gun violence, despite falling FBI crime rates; and "everybody knows" about the degrading environment, despite EPA's improving air and water quality statistics: TV news and mainstream newspapers sez so.
    "If it bleeds, it leads."

  • NoVaNick||

    People are bored now that we no longer have to worry as much about famine, plague, nuclear annihilation, or beasts trying to devour us, so we must try to make the world perfect and equal in every way

  • SIV||

    MAGA

  • Juice||

    Mo money, mo problems?

  • Homple||

    No food on table, one problem. Food on table, many problem.

    ...Pseudo Confucius

  • Ecoli||

    That is good! Is that original to you?

  • some guy||

    Money can't buy happiness, but it can buy all the prerequisites.

  • loveconstitution1789||

    MAGA, Yet?

  • Tony||

    Yes, Obama repaired a lot of the damage to America domestic and abroad done by the Bush the Lesser administration. God knows what it will take to recover from Trump.

    I genuinely hope the economy stays out of recession. But it probably won't. I suggest you start hunting for a Democrat to blame now.

  • ||

    Are you on drugs? One can (easily) make the case he made it worse.

    He did let ISIS grow in power, he completely misplayed Syria and of course there were his violent escapades in Egypt and Libya. The latter ushering in a severe migrant crisis into Europe.

    People actually still believe, knowing what we now know, Obama was good on foreign policy? He was atrociously incompetent and shamelessly self-serving (see Iran deal).

  • Rev. Arthur L. Kirkland||

    Rufus The Conservative doesn't like the black guy.

    Yawn.

  • Red Tony||

    Kirkland The Rapist doesn't like facts.

    Yawn.

  • Ecoli||

    That is the bottom line for the left. You guys have lost every legitimate argument, so you fall back on the ole stand by: RACIST!!!!!

    See you at the polls.

  • NoVaNick||

    And you probably call any black who doesn't vote Democrat an Uncle Tom, AmiRight?

  • loveconstitution1789||

    Lefties dont like black guys in general.

    Obama was the president slave as far as Democrats are concerned.

  • Muzzled Woodchipper||

    Obama was the cross on which liberals nailed themselves so they might absolve themselves of their racist ways.

  • sarcasmic||

    If the economy is good and your team is in charge, then the current administration gets the credit.

    If the economy is bad and your team is in charge, then the previous administration caused it.

    If the economy is good and your team is not in charge, then the previous administration gets the credit.

    If the economy is bad and your team is not in charge, then the current administration caused it.

    Heads your team wins, tails the other team loses.

  • Gilbert Martin||

    "Yes, Obama repaired a lot of the damage to America domestic and abroad done by the Bush the Lesser administration"

    You can't actually prove so much as a single word of that claim to be true.

    Just like every other claim you've ever made.

  • some guy||

    Yeah I'm sure all the meddling by both Bush and Obama had nothing to do with it being one of the longest recoveries in history. Taking from productive, responsible people to prop up the irresponsible and the crooks is definitely good for the economy in the long run.

  • ||

    File under: We pretty much already knew this.

    And where's Barry to take credit for it? That snivelling opportunistic weasel taking credit for shit he ain't done.

  • ||

    Yes, the trends did shift that significantly. The more I look at the raw data the more I'm convinced there was no 'leading Obama effect'. There were spurts of improvement here and there but mostly it fell flat. The Recovery Act, his signature move, had at best mixed results and didn't go as well as expected by their own admission. Not only that, he went as far as to tell people 'get used to it' - as in low growth.

    That doesn't sound like the words of a guy who a) knew what he was doing and b) believed his measures would be leading indicators.

    The stock markets performed well under Obama in spite of him. Call him Lucky Balls. It was mostly driven by cost-cutting, saving retained earnings and reducing hours. There was no real growth as the underlying economy was meh at best.

  • swampwiz||

    So you expect a lot of growth with the MAGA tariffs?

  • Number 2||

    "The income gain last year was the fifth consecutive annual increase in real median household income starting in 2013,"

    Which was well after the Republicans took back control of Congress and stymied Obama's agenda. How about that?

  • Ecoli||

    From the bottom of a well all directions are up.

  • John||

    I think a better economy makes people happier in the very real sense that are avoiding the unhappiness that comes with a poor economy. People don't necessarily notice it because you don't always appreciate or understand something that you avoid.

  • some guy||

    Take someone from 1975 who only has a tiny CRT TV (maybe its color) that gets 3 channels (4 if the weather is right and you don't mind the fuzz) and give them the cheapest TV you can find at Walmart today plus the cheapest cable or satellite plan on offer.

    Now repeat for literally every other good or service we currently have.

    Just discussing income, income per household or income per person still doesn't capture the other half of the equation. Not only are we richer, but we can get better stuff with our money too.

  • mtrueman||

    "Just discussing income, income per household or income per person still doesn't capture the other half of the equation. "

    The other half is debt. The guy in 1975 with the shitty TV and no debt is more secure and independent than the guy today with average debt and a wonderful TV.

  • I'm Not Sure||

    And the guy in 1975 with the shitty TV and average debt is less secure and independent than the guy today with no debt and a wonderful TV.

  • mtrueman||

    Average household debt has increased since 1975. Security and independence have declined.

  • sarcasmic||

    Took me ten years to do it, but I've paid off all my debt with the exception of student loans, and have a nice emergency fund in the bank.

    Sadly I'm the only person I know who has done this.

  • mtrueman||

    "Sadly I'm the only person I know who has done this."

    The rest of us have really wonderful TVs.

  • I'm Not Sure||

    Unless there are people being forced into debt to buy really wonderful tvs, it sure doesn't seem to be much of a problem.

  • mtrueman||

    "it sure doesn't seem to be much of a problem."

    Not a problem at all if you own a bank.

  • swampwiz||

    I simply filed for Chapter 7 bankruptcy, and got out of 6 figure of unsecured debt; it only took me 3 months from the time I filed to the time the debt got discharged.

  • NotAnotherSkippy||

    That's rich coming from the guy whining about tariffs and praising the minimum wage.

  • mtrueman||

    Will that work with student debt, identified in these comments as a major contributor to debt? I believe bankruptcy does not extinguish study debt.

  • Muzzled Woodchipper||

    Correct.

  • NoVaNick||

    Housing and education are the main reasons people have gone into debt since 1975 because these have become a lot more expensive. They are also both heavily subsidized by government loans. Food and most other things are cheaper now comparatively than they were then.

  • mtrueman||

    "Food and most other things are cheaper now comparatively than they were then."

    Evidently not cheap enough.

  • sarcasmic||

    Being that poor people are fat, I'd say they're plenty cheap.

  • Paloma||

    Health care as well. Insanely expensive and Obamacare only made it worse.

  • Chipper Jones||

    Though once he steps into the 1975 car that is far more likely to kill him, the security advantage rapidly drops off.

  • Doug Heffernan||

    Try telling rust best appalachian trump voters that globalization has been good because it has raised their living standards by allowing them to consume and buy more stuff cheaply. They have been told that because everyone can afford a microwave, a cell phone and a television, if not two, that there has been an increase in living standards for the working class in this country. I do not think most people define their quality of life by the gadgets they can fill their homes with. They define their quality of life by whether they can send their kids to college, whether they have health insurance that is actually meaningful and protects them when someone gets sick. They define it whether they have and a nest egg for retirement. They define it whether they have a house that is safe and they can live in. Those are the living standards that really matter to people. All of those things have been chipped away at it. Being able to own a cheap television doesn't help that much.

  • Paloma||

    So why don't those rust belt people move to where they can find work? Mexicans do it all the time.

    As far as convincing them they're better off, save your breath. You can't fix lazy AND stupid.

  • Colossal Douchebag||

    Don't know about y'all, but I'm happy because I'm free. That's why I hang around this joint.

    I love money, but deciding myself how to earn it, how much, and how hard to work for it is the part I'm happy about.

    Money is good. Freedom is great.

  • swampwiz||

    Here's the essential problem - while incomes are going up, the "structural" costs of life - housing, health care, education - have been going up even more, so folks feel pinched. And these are the kinds of things that can't really be cut back (in the case of student debt, it is virtually impossible) without major changes & repercussions, so there is this constant flow of costs while at the same time the flow of income in seems to be quite unpredictable.

    ObamaRomneyHeritageCare has helped to smooth out the cost flow-out for health care, and it seems that a lot of folks have wisened up to the College Industrial Complex's lies about pursuing unlimited cost education (at least for folks who have not yet signed a deal with the Devil for big student debt). As for the cost of housing, this is mostly a problem with folks just putting up with living in high-cost cities but not earning a good income. One of the good things about the push for the $15/hr minimum wage - and Amazon's recent action to raise its associate's wage to that level, even though that wage isn't yet mandated by law - is that lower-wage folks living in expensive cities would have the option of simply living in a cheaper housing-cost area. Making $30K/yr in Peoria is quite doable; trying to do that in San Francisco is a crisis!

  • NotAnotherSkippy||

    This is inflation adjusted already, so no.

    And Barrycare has only driven costs up; it's hasn't smoothed out a damn thing. The per capita Medicaid expenditures are 50% higher than predicted for care that is no better than being uninsured.

    One of the good things about the push for the $15/hr minimum wage

    There are no good things about it.

    Making $30K/yr in Peoria is quite doable; trying to do that in San Francisco is a crisis!

    So don't live in San Francisco. And in Peoria you have the added benefit that no one is going to break into your car or shit on the streets.

  • Rich Dobbs||

    Goodhart's law?

  • vikeincheeseland||

    turn on the damn news.... they refuse to report that things are going well.

    that is why

  • ||

    I understand there are ulterior motives here, since were talking AEI, but readers may also want to read this:

    https://www.census.gov/ library/ stories/ 2018/ 09/ highest-median-household-income-on-record.html

  • MetaMatters||

    Interesting podcast. I would have liked to have heard two additional questions answered:

    1) There was a lot of discussion of income distribution. But that's different than wealth distribution. How does today's wealth distribution compare historically? I think people feel more affected by "wealth" than by "income" disparities.

    2) While the household income disparity has stayed relatively stable of the past 30-50 years, how much of that is based on the increase of two-earner families? It would be interesting to know the "per hour worked" income comparison, rather than the gross income. If a a lower-income household is working 80 hours a week today (2 full time parents)to make what a household worked 60 hours a week 50 years ago, while a higher-income household is working 30 hours a week today compared to 60 hours in the past...that could contribute (justifiably) to feeling a disparity.

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