A bit of data on the income stagnation and related arguments

The main difficulties I have with the “falling incomes” argument is that the country has changed dramatically over the past few generations and people are often unclear about what they mean by this.

Here are just some of the key changes/issues:

• Women constitute a larger proportion of the workforce than they once did
• Minorities, especially latinos, comprise a larger share of the population (households, families, tax units, etc)
• Families (and thus households) are substantially smaller than before because younger generations are less likely to get and stay married and because they have fewer children when they do.
• There has been a marked increase in education credential attainment.  Comparing a HS (only) grad from 1960 to 2015 doesn’t make much sense.
• Some subgroups have changed their workforce participation behavior dramatically over the past few decades

Thus when we talk about directional changes in income it’s important to understand what we are actually concerned with.  Is it more along the lines of “the same groups in the same job working the same number of hours are earning less in real dollars” (i.e., people are getting paid less for the same sorts of efforts) or is it a broader statement like “households have less income than they did generations ago” (regardless of work, household size, race/ethnicity, gender, etc)?   The latter category is much easier to argue than the former.

Here are some data from the Robert Shapiro of the Brooking Institute:

[white non-hispanics households are generally earning more than earlier generations at similar ages]

[likewise for blacks too]

[and latinos]

We can pretty clearly see that later generations generally better off as compared to their counterparts of similar ages in prior decades, even without conditioning this on work force participation, education, household size, etc.  Household incomes have been relatively sluggish since the dot-com bubble burst, but that is still very long way from actually being poorer in real terms than their counterparts were in the 50s, 60s, 70s, etc.

This analysis gets a bit more complicated when you look at this purely in terms of “education” levels (without looking at race/ethnicity, workforce participation, etc).

It does look like relatively uneducated groups are doing worse than they once did.  I think there is probably some truth to this, but it’s also much overstated by changes in the characteristics of these credential groups.  People with less than HS degrees, for example, represent a much lower place in the ability distribution today than it did in earlier generations when many people did not worry much about education.  These less credentialed groups are also lean much more heavily black and latinos than they used to, which further skews the income data.

It can be helpful to look at individual income statistics here

Relative to a peak in the 70s, average male (personal) income is down somewhat.  The picture looks a lot different once you break it down by race/ethnicity though.

Much of this has been driven by larger numbers of males leaving the work force entirely.

At the same time hours worked by the employed has fallen too:

Median female personal income has increased significantly

The sexual demographics of the workforce have changed significantly

Median male earnings data by work type

If you look at this data by actual employment status, it’s quite apparent that most people that are actually working are earning more.

note: this should say less than 50 weeks a year, not 52!

Median female earnings by work type

Data by US census family units

There has been a pronounced change here.  Married families are more likely to be more fully employed than they once were, but there are substantially more unmarried families (especially female-headed).  The family household composition change necessarily changes the income distribution and creates more apparent “inequality” when looked at from the household or family perspective.

There has not been a large increase in the number of workers per family overall though.  Quite the contrary, the number of families with no earners has increased and the number of families with large numbers of families with extra earners has declined overall.

Data by US census household units

Household data

Data by number of people (not earners) per household….