by Wolf Richter, Wolf Street:
Top 20% households made out like bandits, bottom 40% got crushed.
The median earnings of men working full time year-round in 2018 ticked up to $55,291. Adjusted for inflation, this was below the amount they earned in 1973, according to the annual data trove released by the Census Bureautoday. In other words, there has been a “real” income decline for men over the past four-plus decades!
Women have seen a lot of progress in their real earnings, but they started out much lower, and they still haven’t caught up with men – whose earnings are sitting ducks. The median earnings of women working full-time year-round in 2018 ticked up to $45,097, a new record. Since 1973, women’s earnings adjusted for inflation have surged by 40%. The female-to-male earnings ratio hit a record in 2018 of 81.6%, up from 56.6% in 1973:
“Median earnings” means half earn more, and half earn less. Even though the Census Bureau publishes the earnings history of men and women for all to see, in the media you will not readily find this history – that the real earnings of men in 2018 were below where they’d been over 45 years ago.
It’s a very uncomfortable topic: Women deserve every penny in earnings increases, and there should have never been such a gap between men’s and women’s earnings in the first place. But men’s real earnings are a fiasco.
What you will find in the media instead is “household income,” total, all forms of income combined by all members of the household – which is politically a lot more correct.
Household income, adjusted for inflation but before taxes, doesn’t look that hot either. But soothingly, in 2018 it set a new record of $63,179. This was up 19% from 1973, roughly the average of the 40% surge for women and the slight decline for men:
“Earnings” in this data are the fruits of labor – wages, salaries, and the like (first chart).
“Household income” (second chart) includes “earnings” and other “money income” from all household members, from these income sources:
- Earnings from work
- Unemployment compensation
- Workers’ compensation
- Social security
- Supplemental security income
- Public assistance
- Veterans’ payments
- Survivor benefits
- Disability benefits
- Pension or retirement income
- Rents, royalties, and estates and trusts
- Educational assistance
- Child support
- Financial assistance from outside of the household
- Other income
“Household income” is measured on a pretax basis. But it does not include noncash benefits, such as food stamps, subsidized housing benefits, or healthcare benefits — a biggie for executives at big companies. And it does not include capital gains, a biggie among the top income groups.
The income from investments (items 10, 11, 12, and 13 in the list above) play a critical role at the upper end of the distribution of household income.
And this is how the median household income, pretax and adjusted for inflation, has changed since 1967, by income segment (quintiles) and for the top 5% (red line):
Since 1967, the inflation-adjusted household income of the top 5% has soared by 125%, or by $231,224, to $416,520 in 2018 (not including capital gains).
But at the lowest quintile, household income ticked up only by $3,228 over the same period to just $13,775 and for the second quintile, it rose only by $8,072 to $37,293.
In 1967, the top 5% of households made 17.6 times more money than the lowest quintile. In 2018, the top 5% made 30 times more – not including the huge capital gains in recent years.