Adjusted for Household Size, Real Income Reached an All-Time High in 2007

The Census Bureau just released its annual report that includes real, median household income for 2007 ($50,233). From the report:

Between 2006 and 2007, real median household income rose 1.3%, from $49,568 to $50,233 (see top chart above)—a level not statistically different from the 1999 prerecession income peak ($50,641 in 1999 and $50,557 in 2000). This was the third annual increase in real median household income. Compared with 1967, the first year for which household income statistics are available, real median household income has increased 29.6%.

Comments: A comparison of real median income in 1967 of $38,771 per household to income of $50,233 per household in 2007 (29.6% higher) doesn't take into account the significant 22% decline in average household size over this period, from 3.28 persons per household in 1967 to an all-time low of 2.56 persons per household in 2007 (Census data here for income, here for average household size), see top chart above.

When adjusted for household size, real median income per household member reached an all-time high of $19,546 in 2007 (see bottom chart above), 65.6% higher than the $11,820 income per household member in 1967, and more than 2 times the unadjusted increase per household of 29.6% reported above.

Lost in all of the discussions and media reports about stagnating wages, income inequality, and the decline of the middle-class, we have this amazing statistical reality: In just a little more than one generation, real median income per household member has increased by a factor of almost 2/3!

It's been said that "the media constantly dwell on minor problems without celebrating the broader, more upbeat context in which they exist." A 2/3 increase in real income per person in just 40 years is definitely part of the broader, more upbeat context.

Comments

[Dan Walker:]

Paul&&...if you do not like America, stay off NYMEX. If we need people to use our services and complain, we have New Yorkers.

Mark, you ever lie to someone taking a poll on the phone? Do you even answer the phone for a poll (I sure don't)?

2008 Aug 28 05:34 AM

[Taraman:]

When your success is totally dependent on convincing people that "things are bad" the people will never get the truth. Especially when there is a sympathetic old time media. Thankfully technology now allows for the "new media".

2008 Aug 28 08:06 AM

[CLH:]

Perry keep printing the truth something the left does not beieve in.

2008 Aug 28 08:31 AM

[GatorTrader:]

Shark - German economy?! Hahahahaha......That is the funniest damn thing I've read in YEARS.....Fortunately for you, the United States liberated your sorry-ass from tyranny. From the beginning of time, the Germans - contrived as "German unity" is - have always loved to be ruled by others like mindless dolts. I'm glad you now have the freedom to express yourself so eloquently. Every word reinforces your own ignorance. I do agree with you on one point - I'd love to see the US leave your godforsaken country and leave you all to fend for yourselves against the Russians. What great theater that would be - circa 1943-45......

2008 Aug 28 08:55 AM

[notsosmart:]

the germans had their ass kicked twice within 50 years & only the marshall plan kept them from being russian.LOL

2008 Aug 28 10:13 AM

[Chuck Okie:]

Thanks for the data, had not seen it before. Would like to see the last graph adjusted for headline inflation, if possible.

Side note: humans are funny animals if we had the luxury of just watching them, unfortunately we have to interact with them.

2008 Aug 28 10:47 AM

[sumosama:]

great analysis! Thanks for the hidden gem of good news!

2008 Aug 28 12:27 PM

[Xyrus:]

Now, adjust that for inflation. Oh...I guess you didn't think of that.

1967: $11,820
In 2007 Dollars: $72,655

So taking inflation into account, REAL income has dropped by over $53000, yielding a REAL per person income decrease of 449%.

There's really nothing to celebrate.

~X~

2008 Aug 28 01:51 PM

[trikerguy:]

Xyrus has it right. For a PhD to spin the statistics is not unheard of, but it does call into question his ethics.

2008 Aug 28 02:37 PM

[Paul D. Cas...:]

Isn't the fact that Mark's using "real" income informing us that the numbers are already adjusted for inflation?

2008 Aug 28 03:50 PM

[alajac:]

If they aren`t adjusting for inflation accurately (and we know that it is in the government`s interest to maladjust in order to avoid having go to the voters to raise revenues in order to actually cover real expenses), then the numbers may be inaccurate and not meaningful.

2008 Aug 28 04:27 PM

[Umm, yeah:]

Yes, they're adjusting for inflation, but as we all know, they started cooking the inflation numbers differently now versus the 70's and are currently understating inflation. If anything, this shows the dramatic effect of what happens when you understate inflation by a few percent a year across several decades.

2008 Aug 28 04:36 PM

[Xyrus:]

If these numbers are really adjusted for inflation, then what inflation values are they using?

There are several sites where you can enter in a year and a dollar amount to see what that dollar amount is in today's dollars. When I did this, I got today's equivalent to the 1967 per person income to be over $72,000.

If that is the real worth of those 1967 dollars, then how is our real per person income "higher"? The vast majority of the country earns less than that $72K limit, and therefore have less "real" income.

Regardless. I don't see how today's real income is even higher than 10 years ago, considering the dollar's meteoric plunge over the past decade.

~X~

2008 Aug 28 08:14 PM

[notsosmart:]

its this kind of brain that put us in this mess.LOL

2008 Aug 28 09:06 PM