Consumer expenditure survey illustrating the income divide
erikrood.com
erikrood.com
Income before taxes is not "income before taxes net of transfer payments." (It can't be, because one of the most salient transfer payments in the US, the EITC, is administered through the tax system.)
One might assume that poverty is sticky and therefore the bottom 20% of earners is relatively constant, but while poverty might be sticky "low income in a year" is not sticky on a year-to-year or decade-to-decade basis.
Many people in the lowest 20% for income were middle class N years ago and still are. They're spending out of their savings faster than their savings throw off interest/dividends. That's OK; their retirement math mandates it. ("Wait, how can you afford a mortgage on $10k a year of inc... oooooh.")
Some folks also deal with substantial income volatility on a year-to-year basis. Relevantly to many HNers, there are a variety of structures in which business owners hit the bottom 20% in formative/bad years.
Same for the large percentage of women in lower earning groups and larger overspending there: that's natural, young women make less money, but they also get a lot of money from boyfriends, frequently those in the top income group, and spend it, so why is that a problem at all?
It's hard to draw any meaningful conclusion from these graphs.
Breakdowns are "Rent, Home without mortgage, Home with mortgage."
I wonder what percentage of the bottom 20 percent are homeless. Because that data is not even being included. It assumes the most destitute all have homes of some sort. This is not true.
And it may be higher, depending on the definition of homeless being used. Most people think of street people as The Homeless, but social workers, et al, also consider many other people to be homeless. They are often counted among the hidden homeless. These include people who are couch surfing, living with relatives temporarily to avoid being out in the street, people in temporary shelters and people in substandard housing considered unfit for human habitation.
Seems a bit obvious.
> And it may be higher, depending on the definition of homeless being used. Most people think of street people as The Homeless, but social workers, et al, also consider many other people to be homeless. They are often counted among the hidden homeless. These include people who are couch surfing, living with relatives temporarily to avoid being out in the street, people in temporary shelters and people in substandard housing considered unfit for human habitation.
> couch surfing
Couch surfing is (usually) not homelessness, I slept on people's couches when I was trying to get out of my mom's house in the most expensive city in Canada. I lived just fine, though. Couch surfing is not always great, but it isn't homelessness.
> living with relatives temporarily to avoid being out in the street
Unless your relatives are abusive, I don't think living with relatives counts as homeless either. If I were comfortable around my parents, I don't see why I would've moved out yet, it'd be a waste of money.
> substandard housing considered unfit for human habitation
Substandard housing is tenuous, I've lived in places with a horribly leaky roof, flaky electricity, and questionable structural integrity... but I don't even think that quite counts as homeless. I guess it's closer. "Unfit" is ill-defined, many houses that people would gladly have lived in in the 40s would be considered "unfit" today, but I doubt these "unfit" homes are presenting an overwhelming mortal danger like being homeless.
> temporary shelters
Temporary shelters I don't know about, I don't think they count people living in camping tents (or other non-permanent tents) as housed.
The legal definition of homeless varies from country to country, or among different jurisdictions in the same country or region.[2] The term homeless may also include people whose primary night-time residence is in a homeless shelter, a domestic violence shelter, long-term residence in a motel, a vehicle, squatting, cardboard boxes, a tent city, tarpaulins, shanty town structures made of discarded building materials or other ad hoc housing situations. According to the UK homelessness charity Crisis, a home is not just a physical space: it also provides roots, identity, security, a sense of belonging and a place of emotional wellbeing.[3] American government homeless enumeration studies[4][5] also include people who sleep in a public or private place not designed for use as a regular sleeping accommodation for human beings.
I fully accept this definition, I just don't consider staying with relatives or friends, or in a degraded-but-serviceable house, to be homelessness, even if you don't have any other decent choice.
I'm not ecstatic with my housing choices right now. I live in a ~7m² room with no windows or ventilation, but that doesn't mean I'm anywhere near homeless.
A couple other possible confounds come to mind, such as highly-educated stay-at-home parents.
1) Going into debt for college makes you poor, and
2) A lot of college degrees are just not worth the cost, if you're expecting them to lead to a good income.
But these data don't have anything to do with "being poor" -- it's entirely about income, which is still positively correlated with more education.
Something something protectionism, something something basic income.
It all seems like junk to me.
The downside to protectionism is it makes it harder for firms to find workers. The downside to basic income is that it's a massive expense to government, would require higher taxes, and may reduce incentives for people to work (which is why it's mostly being trotted out as a way for people to subsist when automation potentially wipes out labour).
I more mean the bleak pictures painted to gain these ideas favor are pretty much junk in my opinion.
I don't see "has a college degree" in the data. I think you are projecting it on the data.
It's more aptly described as "any college courses" and it's likely self-reported. Remember that the vast majority of "college" is not postgraduate degrees at elite Ivy League universities, but rather started (but didn't finish) at a community college or for-profit diploma mill.
I can easily imagine {teachers, college students, temporarily unemployed/underemployed taking care of dependents, retired persons} falling in the "college" + "bottom 20%" category.
But yes, you're right. It's not clear exactly what data is being graphed.
The most significant implication seems to be that as more money flows to the top, it is not being recirculated at the rate it would if it were still in the hands of middle or low-income workers. This is not a moral judgement on the especially rich (in this case). They're making more money than they can reasonably spend, and even if they could spend more, it wouldn't be in their best interest. As I understand it, though, this is not a good thing for the economy.
As housing costs increase and rent payments continue to flow to the top, inequality will continue to accelerate. Housing policy that promotes affordability needs more attention and effort behind it.
The fact that they are in the bottom 20% of income seems less relevant. If you are in/near retirement or simply underemployed, owning your home means you have to work less to cover your costs.
* Is this individuals, individuals who work, or households? * Is this data self-reported or somehow collected and correlated by experts? * Does any of this data include people who don't file taxes? * What is the definition of the "college degree" category? Does this include the "college" category or degrees from non-accredited colleges/trade schools? * Does "income" represent all benefits or just paycheck? I'm under the impression that civil servants make little in paycheck, but their benefits are back-loaded with pensions and health benefits that aren't visible if just analyzing "income".
These all have a large impact on the data and could easily sway the impression that the reader gets.
This stat presumably includes people who are retired, people who are dependents (e.g. on a parent), and people who are on welfare. I don't think you can conclude much without breaking that down further.
During the lean times, the temporarily poor may be cashing out savings and 401k (and taking huge penalties), burning through home equity lines of credit, borrowing money from relatives, working under the table, etc.
eg. Have a 60k a year job, 40k a year expenses and over a couple of years save up 20k in savings. Get laid off and your income goes down to 20k that year but you're only able to cut your expenses to 30k. You drain half your savings, spending 150% of your income that year. Next year, you're able to land a job paying 65k and you can start building up your savings again.
Median Family Income: https://fred.stlouisfed.org/series/MSPNHSUS
Median Price of New Homes: https://fred.stlouisfed.org/series/MEFAINUSA672N
Comparing 1965 to 2015, in 1965 a new home cost less than half of what a family earned in a year, in 2015 it cost 4 times annual earnings. Times have changed. The crossover point, where median house prices exceeded median family annual incomes didn't occur until the 1980s -- meaning people who bought houses during that period or prior likely had little trouble servicing multi-decade mortgages, or even paying them off early.