Median Household Income In The US: A Crisis Spanning Multiple Generations


Household income is a taboo topic even though people have a visceral enjoyment of spending their hard earned money.  As we go out and spend during this holiday season many people have absolutely no clue what other family members or neighbors make.  Some would argue that household income is absolutely private and I would agree to a certain point.  The mainstream media is focused on getting people to spend and part with their money.  At this they are highly successful.  Just take a look outside your window and I am certain you will see the artifacts of spending with brand new cars and other shiny lawn toys.  Yet most Americans base the success of others by their purchasing knickknacks and have little clue as to what other households pull in with their income.  This taboo led us into this debt fueled crisis with Americans going into massive debt to keep up with neighbors that never had the income to support their conspicuous consumption.  This article will try to paint a full picture of the income situation across the country.


The distribution of median household income in the US

I’ve noticed a few more mainstream articles discussing life of households making $50,000 a year.  Why is this important?  This threshold is important because this is the median household income in the US:

distribution of household income united states

Source:  Census

This figure has held steady for many years but only until the recent profound recession did people start becoming enlightened to this fact.  I’m sure many Americans have had similar thoughts over the last decade:

“Hey, how is my neighbor able to purchase a BMW when we pull in $50,000 and live in the same type of home?”

“How was my neighbor able to take that luxurious vacation to Hawaii when we work at the same company doing the same job?”

For the most part, a large part of it was financed with debt.  As the reality is setting in we need only look at the above chart for a clearer picture of the economic balance sheet of most households.  Part of the misconception of household income stems from the marketing and ornaments that people carry on the outside.  Since income is a taboo subject most people are left looking at visual cues when in reality many Americans are simply getting by.  This is fact.  One out of three Americans has absolutely no savings account.  How is that for being financially stable?

Let us examine the chart above more closely however:

-To be in the top 25 percent of household income you would need $85,000 or more in income per year

-To make the top 10 percent of household income you would need to make $135,000 a year or more in income

-Approximately 4 percent of households report an income of $200,000 or higher

-Roughly 2 percent of households make more than $250,000 in income per year

The figures are interesting and now with the subject more openly discussed because of the wicked recession, many people are realizing that many are not as wealthy as they once thought and with access to debt being limited, the faux leverage has been yanked out of the system as the graft filled financial system tries to eat up the buffet of taxpayer bailouts.

Breaking down the average income of Americans

The above data examines total household income meaning a likely two or more wage earners per household.  Yet how much does the average American worker make?  That data is also readily available:


Source:  Social Security

People are somewhat shocked that most Americans make $25,000 a year or less.  Your typical American worker is pulling in $25,000 a year which makes sense when the typical household has two workers and the median household income is $50,000.  Of course the figures shift a bit where you might have someone making $35,000 and someone else making $15,000 working a part-time job which is becoming much more common in this country.

Much of the recent job growth has occurred in lower paying occupations:


Source:  NELP

Lower-wage occupations are categorized as those paying less than $10 per hour.  It is an interesting dynamic that is directly impacting the median household income of Americans.  This crisis is spanning multiple generations as many younger workers are coming out with large amounts of debt particularly with student loan debt expecting to earn as much as their parent’s generation.  The facts on the ground show a dramatically different reality.

Read the rest at My Budget 360