Mikey!, Income Distribution, Living in Cities

After a few friends and I struggled last night in a conversation regarding American poverty-levels and income distribution across our socioeconomic classes, I resolved today to research the issue, and write about it. -- And then e-mail the link to you, Mike. You cared the most. Consider this a shout-out. We had no facts last night. Now, we’re armed with a few.

Before I get started, I must make a quick note about economic data: most of the data released in 2006 refers to 2004 or earlier. There is a serious and persistent lag with financial and population data. Nothing to be done. Also, and quickly, you'll need to understand the difference between "household incomes" (a single individual is a household, and a family of four is also a household) and more specific data points, like four-person families. "Households" are baseline units of measurement. It also seems relevant that "per capita income", which we bandied about last night as something around $30k, isn't a data point that I encountered.

Straight away, I’ll tackle some of the hard data, all of which comes from 2003 Census Bureau reports unless otherwise noted:

1. The median household income in the United States was $43,318. (Report One)
   
2. The median household income in the Western states was $46,820. (Report One)
   
3. The median income of a four-person family in the USA was $65,093. (Report Two)
4. The median income of a four-person Washington state family was $69,130. (Report Two)
5. The median income of males was $40,668. (Report One)
6. The median income of females was $30,724. (Report One)
7. Poverty is defined by the Office of Management and Budget. The poverty thresholds in 2003 were:
   
• Family of four, $18,810.
• Family of three, $14,680.
• Family of two, $12,015.
• Individuals, $9,393.
8. 12.5% of people live below the poverty line. (Census Fact-sheet)

Here is another string of interesting data points from the Census Bureau. All of this data came from the aforementioned Census Bureau fact-sheet. It seems to have been updated in June 2006 despite the data seeming much older.

1. Per capita money income..............1999.............$21,587
2. Persons per household...................2000...........2.59
3. Retail sales per capita....................2002............$10,615

It is interesting to note that "retail sales" do not include service establishments (like restaurants) or other merchants whose primary business isn't consumer retail sales. This quite obviously confirms the notion of eating out as an absolute luxury. The poverty level for an individual is below the retail sales per capita ($9,393), and if you divide two of the above statistics -- the median household income by the people per household -- one can get a bastardized 'median individual income' of roughly $16,000, itself just above the retail sale figure.

I was a little surprised to learn how subjective notions like "Upper Middle Class" are. I spent a few hours trying to nail down a hard definition from a government agency, but I couldn't find anything. A few voices -- like Wikipedia and a blog titled Steve Jackson Games -- created definitions for Upper Middle class that seemed reasonable -- between $75-85k, or above $100k -- but were absolutely arbitrary.

Upper Middle Class, and Middle Class, and other designations don't exist. There is no such thing.

But, if one spends a long while sifting through reports like the Census's "Selected Characteristics of Households, by Total Money Income in 2004" he can build a basic percentile breakdown of the American population. I sifted. Percentiles look something like this:



If 15% of US households earn less than $15,000 a year, and 15% of US households earn more than $100,000/year, then perhaps the middle class is between those two extremes. You could draw up your own definitions of "upper middle" and "lower middle". The data above $100k, I should mention, was grouped together in the intial Census report. It wasn't my idea to conglomerate everything greater than $100k.

There is, however, more specific and sporadic information if you dig deep into, say, the New York Times archive. Here are some figures and links to articles that provided specific and occassionally conflicting data points regarding income distribution among the upper classes.

• Top .1% - "$1,672,726"/yr (Krugman - Feb 27, 2006)
• Top 1% - "$402,306"/yr (Krugman - Feb 27, 2006)
• Top 1% - "$341,773"/yr (Krugman - April 14, 2006)
• Top 1% - "$315,000"/yr (Non-Krugman editorial - July 19, 2006)
• Top 3% - "roughly $150,000"/yr (NYT news article - Dec 11, 2005)

Krugman in particular is unhappy about the consolidation of wealth in Bush's America. Perhaps Mr. Krugman's most scathing commentary reads like this:

"There's a persistent myth, perpetuated by economists who should know better -- like Edward Lazear, the chairman of the president's Council of Economic Advisers -- that rising inequality in the United States is mainly a matter of a rising gap between those with a lot of education and those without. But census data show that the real earnings of the typical college graduate actually fell in 2004," Krugman wrote July 14, 2006.

"In short, it's a great economy if you're a high-level corporate executive or someone who owns a lot of stock. For most other Americans, economic growth is a spectator sport," he finished.

A report published by the Brookings Institute last month titled "Where Did They Go? The Decline of Middle-Income Neighborhoods in Metropolitan America" seems to decry a trend that predates today's economy, but definitely validates concerns about the ever-increasing prices in urban America. I suppose the highlight of the study is its initial finding that "Middle-income neighborhoods as a proportion of all metropolitan neighborhoods declined from 58 percent in 1970 to 41 percent in 2000. This dramatic decline far outpaced the corresponding drop in the proportion of metropolitan families earning middle incomes, from 28 percent in 1970 to 22 percent in 2000."

The report found that upper income neighborhoods were growing rapidly, but that lower-income neighborhoods were also increasing. Interesting combination.

The data concerning Seattle suggests that the Puget Sound region has protected its middle-income neighborhoods remarkably well. You'll need to click the graphic to view its larger form, but notice that both Tacoma and Seattle/Bellevue/Everett crack the Top 10 list for middle-income neighborhoods.



I wonder if a collapse of Seattle's strong median household income would precipiate a push for ubanization, or if our medium-income housing is tied more closely to cultural issues pushed by the Lesser Seattle movement and its hero, Emmett Watson.

I don't know. Maybe you can tackle that one.