Update: Long-Term Household Income Trends

The Unrepentant Capitalist last visited the topic of household income trends and the plight of middle class families in a post titled 'Middle Class Problem? What the Data Says' in December of 2013.  Based on USCensus household income data, the Unrepentant Capitalist concluded the middle class was in good shape as a significant number of middle class households had, over the long haul, moved into the upper income group.  The USCensus has been tracking inflation adjusted household income data since 1967 which allows for a 50+ year view of how family incomes are faring.

So, what’s happened to incomes in the last 7 years?

 

Firstly, there is no formal definition that quantifies annual income for a middle class household.  A widely used rule of thumb says that middle class income should be defined as an income range from 1/2 to 2x median income. 

 

The 2013 study used a median annual income of $51,939 (rounded to $50,000) to define a middle income household annual earnings to range from $25,000 to $100,000.  Lower incomes were those below $25,000/yr., and households above $100,000/yr. were upper income.  

 

Fast forward to 2019’s data where median annual income is $68,703.  This says a middle income household earns $35,000/yr. to $150,000/yr.  Lower income is below $35,000/yr. and upper income is above $150,000/yr.  (Yes, the data's been rounded.) 

 

With the income buckets updated, and data plotted, what’s verdict?  Good news, families are prospering!  The long-term trend noted in the 2013 study still holds. Households continue to migrate from the lower and middle income groups (the red and blue portions of the bar chart) into the upper income group (the orange portion of the bar chart). 

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NOTE: 

In an effort to branch out from the 'tried and true' Excel, the Unrepentant Capitalist used a new data visualization tool (Tableau) to create the chart above.  The data labels in the orange bars (the High Income group) for the years 1985 to 1967 don't appear in those bars. The assumption is that since the numbers themselves are bigger than the space available in the bar, Tableau blocks those numbers from appearing on the chart.  

For completeness sake, those missing numbers range from 3% in 1967 to 7% in 1985.  

Whether it's a 'some assembly required' child's toy on Christmas Eve or a data visualization tool, the Unrepentant Capitalist has a habit of stubbornly refusing to consult the instructions.  Net-net, sometimes data doesn't appear on charts as it should, and the front door on Barbie's beach house doesn't always close properly.