In honor of today being tax day, this week's Demographic Tuesdays Community Poll asks: What is your household income by U.S. quintile groupings?
Not asking for anybody's actual income! As is common when asking sensitive questions, just using broad categories. In this case, the income ranges that define the 5 equally sized groups of households in the U.S., with the top quintile further subdivided into the highest 5%.
Some topics for discussion:
- Taxes & government
- Poverty
- Stagnant income
- Disparity & inequality
- Current Economic Insecurity (fear of job/income/housing/health loss)
- Future Insecurity (not enough to retire on; what to live on when elderly; 1st generation with children less well off than parents)
- Too much emphasis on the material; bad for spiritual values and real happiness
- Too much emphasis on growth & consumption, bad for planet
As always, it would be nice if this poll stayed up as a "Recommended Diary" for a full 24 hours, so that it will get an equivalent sample of us - morning to night, west & east coast.
Today's Poll - INCOME:
Same as last year, today's poll below asks for you income by broad groupings based on the United States Household Income in 2005 distribution:
Note that a household may consist of a person living alone or multiple unrelated individuals or families living together. This is different than a family which consists of two or more people (one of whom is the householder) related by birth, marriage, or adoption residing in the same housing unit.
There were 114,384,000 households in the U.S in 2005, with the following income distribution:
Income Group Range1 Mean2
Lowest Fifth: < $19,179 $10,655
2nd Fifth: $19,179 - $36,000 $27,357
Middle Fifth $36,000 - $57,660 $46,301
4th Fifth $57,660 - $91,705 $72,825
Highest Fifth > $91,705 $159,583
Top 5% >$166,000 $281,155
1 - Income Limits for Each Fifth and Top 5% of Households.
2 - Mean Household Income Received by Each Fifth and Top 5%.
The table above shows that the 20% of households with the lowest incomes had a mean income of $10,655 and the cut-point was at $19,179. The quintile of households had a range of incomes from $36,000 to $57,660 with a mean income of $46,301. The highest quintile households was defined by an income above $91,705 and had a mean income of $159,583 (the median would be much lower). The highest 5% of households (a subset of the top quintile) started at 166,000 with a mean of $281,155.
By the way, household income is usually used in these sorts of surveys, in preference to
individual/personal income income since of course so many individuals are part of households with more than one shared income. Obviously if you are single, living by yourself without a shared income, then the two are the same. As always, if not sure, just use your best guess/estimate.
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What Do You Think Are The Biggest Problems Related To Income & Wealth:
Some suggestions include:
- Absolute Poverty? Too many people very poor?
- Stagnant wages and income? No real growth in income
- Income & Wealth Disparity? Increasing gap with very rich getting very very much richer, true middle stagnating since mid-70s and upper middle stagnating since late 1990s. U.S. now with worst disparity since 1920s and worst in the among the Developed Democracies.
- Current Economic Insecurity (fear of job/income/housing/health loss)
- Future Economic Insecurity (pensions & social security, retirement fear of not enough to retire on; what to live on when elderly; first generation where children going to be less well off than parents)?
- Too much emphasis on material goods anyway; bad for spiritual values and real happiness.
- Too much emphasis on growth and consumption, bad for planet.
- Something Else?
- All of the above?
What is the appropriate way to do taxes? What is the role of government and politics in all this?
Discuss...?
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Inequality, Disparity, Stagnation for All But the Rich:
This table shows the increase in dollar income for various percentiles of household income from 1967 to 2003. Note the relatively strong increase (rise in the curver over time) for the 80th (yellow), 90th (pink) & 95th (dark blue) income percentiles; they are doing better over this time. Note the relative flatness for the 10th (brown) and 20th (purple)percentiles; not much change for the poorer folks:
These two graphs are even more dramatic. They show what percent of total national income is earned by the different income percentile groups. The first one compares the "bottom" 90% (in blue grey) to the top 10% (in black). Note that there is the least disparity, as shown by an increase in the share of national income by the majority 90% of us compared to a relative decline by the top 10%, from the early-1940s through the mid-1970s:
This graph show the same phenomenon focusing in on just the top 1% (yellow), the very top 0.1% (pink) and the very very tippy top 0.01% (blue)! Note the decline in disparity (measured as a decline in the rich's share of national income) from the mid-1940s through the mid-19080s, and then extraordinary take-off of the Plutocracy starting in the late 1980s:
It is so bad that, as (even) the NY Times put it the richest are leaving even the rich far behind!
(lots of good stuff at that link).
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What the Hell Happened to US?
Clearly something happened in the late 1970s. There was the oil shock and stagflation. There have been natural changes in the economy. But what some of us realized all along, even mainstream economists (welcome aboard Krugman) have begun to realize. There were a lot of non-inevitable political choices made that have resulted in separating the economic history of the U.S. since then from both our own prior period of relative equity and growth, and from the other developed democracies. That the other developed democracies do not have as much inequality/disparity as we do is evidence that this is not just the inevitable march of economic history. As much as we rightfully loathe Bush, this increasing acceleration of inequality and insecurity really took-off during the Reagan years with:
- the huge cuts in taxes for higher income brackets
- de facto increase in taxes on middle and working class with increase in payroll deduction taxes and state and local taxes.
- disprortionately accelerating increasing incomes for higher income groups (acclerated "catch-up" coming out of stagflation period)
- stagnating wages for working and middle class (fall further behind coming out of prior stagflation period)
- breaking and stiffling of unions and workers in general.
- GATT agreement for free capital and unfree labor, setting rules for so-called free trade and globalization.
Discuss...?
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Not Just Income:
Now of course income is a very incomplete measure. Most of all, income take into account net worth, accumulated personal or family wealth. It does not take into account loans and debt. It does not take into account if one is a student or retired. And of course $40,000 dollars a year goes a lot further in a small town or rural area then it does in say New York City.
Still, at least for me the two take away messages here is how low the household average and distribution is compared to what some people often think it is; and how the distribution is so badly skewed to inequality with an ever more very rich taking ever so much more of the total.
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More Online Info:
In addition to the linka above, there is more data on these issues at:
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Pulling Apart: A State-by-State Analysis of Income Trends from the good people at the
Economic Policy Institute and
Center for Budget and Policy Priorities which, along with
Center for Economic and Policy Research, are the good guy economic think tanks inside the beltway.
Also:
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Wikipedia on Income Quintiles
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Wikipedia on Household Income in the United States
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U.S. Census Bureau information on Income
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Other sites with Income related information
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U.S. Census Bureau Information on Poverty
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Other sites with Poverty related information
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Latest on Income and Poverty, including details and differences by State, Race, Sex, etc from U.S. Census Bureau and
more here.
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U.S. Census Bureau Analysis on Inequality (but ends in 1998)
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Measures of Household Income Dispersion
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U.S. Census on Household Wealth
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Some Related Books In No Particular Order:
Unequal Democracy: The Political Economy of the New Gilded Age, by Larry Bartels
The Conscience of a Liberal, by Paul Krugman
Falling Behind: How Rising Inequality Harms the Middle Class, by Robert H. Frank
Screwed: The Undeclared War Against the Middle Class, by Thom Hartmann
Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill), by David Cay Johnston
Perfectly Legal : The Covert Campaign to Rig Our Tax System to Benefit the Super Rich--and Cheat Everybody Else, by David Cay Johnston
The Squandering of America: How the Failure of Our Politics Undermines Our Prosperity, by Robert Kuttner
The Big Con: The True Story of How Washington Got Hoodwinked and Hijacked by Crackpot Economics, by Jonathan Chait
The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer, by Dean Baker
The Great Risk Shift: The New Economic Insecurity and the Decline of the American Dream by Jacob S. Hacker
P.S.: If you are feeling pinched, today of all days, use the public library or buy used ;)
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UPDATE - Measures of Inequality/Disparity: I had originally included this, then deleted it from the draft due to length. There are various statistical measures for inequality/disparity. How disproportionate the amount of total $$$ is taken by the richest 5% or 1% or 0.1% or 0.01% of the population (some commenters wish I had included those extreme high income cut-points in the poll, beyond just the 5%).
My point here, is that this is nothing new, economists and social scientists and policy makers are well aware of it, and that there are several widely used metrics for this issue; see Income inequality metrics.
The Gini coefficient is the most widely used:
You can think of the horizontal axis as percent of people and the vertical axis as the percent of income those people receive. Therefore the curves always start and end at the same places, where 0% of people make 0% of the country's income and 100% of people making 100% of the total income. The disparity comes in at the left hand side of the curve where the percent of people is higher than the percent of income they receive (i.e. 10% of the people getting 5% of the total income). And at the right hand side when the percent of income received rises more than the percent of people receiving it.
However, conveniently, it arguably underestimates severity of the income right skew by overmphasizing contribution of the middle of curve. Others include the Robin Hood index (gotta love the name) and the Theil index. Another, the Atkinson index, which
is unique relative to other measures of income inequality in that it allows the researcher to specify the social welfare function underlying the research. The social welfare function for most measures of income inequality, including the Gini and MLD, is predetermined by the measure’s weighting scheme. The weighting scheme Iis what determines a measure’s sensitivity to changes in different portions of the income distribution. For example, the Gini’s weighting scheme is such that it is most sensitive to changes in the middle of the income distribution.
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Disclaimer:
Of course none of these polls are "scientific." Since the poll is inherently self selecting and is not a random sample there is always the possibility for selection bias, including but not limited to responder bias, making the survey results different than truth. These dKos polls will never be valid random sample. And just sample size (number of respondents) alone does not make it valid since they still self selecting and has inherent selection bias. They probably have some validity, though since not a random sample, and don't know enough about total population, sample frame and self selecting factors, cannot even measure how inaccurate it is... yet probably has some validity... yet not valid and can't even measure how invalid... yet... maybe....
All that said, there are some indicators suggestive of some validity in these polls: for example if distriubtion is relatively stable and does not jump around wildly during the course of the day, this is not definititive but suggestive (at least that it is not being "freeped". Also, when poll done repeatedly, either same way, or only slightly different way (some advantage to doing slightly differently, if thought out, as test of validity), at different times, lets say different day of week, weekday and weekend, morning vs. night, months or years apart.
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