Can We Bury the Middle Class Income Myths?

The graph above was created using inflation-adjusted median household income data and average household size data (both from the Census Bureau), and was inspired by an article in today's WSJ - "The Inequality Myth," (see previous CD post here).

Economist Brad Schiller wrote:

The Census data originate from an annual survey of households. The data don't track individual households from year to year, but instead just take a snapshot of the households in existence in March of each year. From these annual snapshots, we try to infer what's happening to the typical household over time.

The "typical" household, however, keeps changing. Since 1970 there has been a dramatic rise in divorced, never-married and single-person households. Back in 1970, 71% of all U.S. households were two-parent families. Now the ratio is only 51%. In the process of this social revolution, the average household size has shrunk from 3.14 to 2.57 persons -- a drop of 18%.

The meaning? Even a "stagnant" average household income implies a higher standard of living for the average household member.

Bottom Line: As the graph above shows, the average household size has declined by 21% from 1967 to 2006, while real, median household income increased by 31% over the same period. Result? A significantly, much, much higher standard of living for the average household member, i.e. the typical member of the middle class!

Isn't it time that we bury many of the myths forever about the "middle-class squeeze," "the war on the middle-class," "the American middle-class is fighting for its life," "Two Americas," etc.

Comments

[Philip7]

You could have included data back to 1931 and made it look even more dramatic. But if you look at the last seven years (during which we supposedly had a prolonged economic expansion), the median household income is now lower while the average size is unchanged. So I don't think you can blame the middle-class for feeling squeezed. And I don't think that the data since that chart ended is making them feel any better.

[bkb]

Great Graph...counterintuitive...and a great starting point to bury Old Myths. Two comments/questions:
1. I question the propriety of the deflator used to calculate 'Real' in 'Real Median Income'. If the deflator is not reflective of a typical asset basket the graph becomes a great example of how stats can be used to misinform.
2. The article includes the words "Middle Class"... probably not an accurate description of the composition of those in the analysis.

[hattryx]

please continue to use cpi numbers for inflation, excluding food and energy. after all, what business does the middle class have buying either of those? eat your ipods and drive your playstations, and stop complaining about your stupid 401k.

[victor1212]

What a joke. Try climbing out of your ivory tower some time and you'll find all the privleged middle classers you refer to who can't afford healthcare, or their mortgages, or their cars, or their favorite branded foods anymore any more. Hopoefully, you'll be joining our rarified ranks very soon.

You're sitting there extrapolating sweeping erroneous conclusions about the people who live in the middle of the bell curve in this country based on how the numbers have been skewed by those like yourself on the upper end.

Earth to Mark Perry, PhD, you're not Joe Everyman. You just make more than him/her. And you're not better than us either.


We don't take trips to Europe, travel far on vacation, drive Beemers or shop at Bloomies and part of the reason is all the money being gamed out of the system by people who make zeros for a living and contribute exactly that to Society.

Remember the old bomb shelter game? Please tell me why you'd be given a spot over someone who doesn't sit on their arse in AC all day?

[hpski]

Mark, I'm begging you to stop flogging a dead horse, or more likely "something else" your very attached to that has about as much life left in it. Aside from omitting energy & food, somehow the data you posted left out the tremendous growth of two income households. Your agenda is obvious, but the "blue collar middle class" types who blithely followed Rove's lies into the voting booth, don't read this stuff. Tell it to the choir, like, maybe Doug Feith?

[the final horseman]

Obviously this was a cheap way for you to publish or perish. Get real. "A man drowned in an average of six inches of water." Is Helicopter Ben paying you? Or one or both of the major political parties?

You sound like the poster boy for 'Piled Higher and Deeper'.

[hattryx]

0? what planet is this?