*Income-Wise, What Percentage of People are Worse Off Now Than in 2000?*"

I asked Doug Short at Advisor Perspectives that

*seemingly*simple question after posting his chart of Real Disposable Income in Illusion of Prosperity: Deflating the American Dream; No Recovery in "Real" Income.

click on any chart for sharper image

My comment from the above link: "

*Real median incomes are down 7.3% since 2000. That means at least half of the population is worse off now than 13 years ago!*"

**Notes Regarding Disposable Income**

Not only is half the population worse off, it is worse off by at least 7.3% in "real" inflation-adjusted term, using the CPI as the deflator.

Unfortunately, the true situation is far gloomier.

Here's the primary reason: Disposable Personal Income (DPI) includes income from all sources (including transfer payments – Social Security, Medicare, private pensions, etc.) less all taxes on income: Federal (including FICA), State and (if applicable) local.

**Other taxes (e.g., property or sales taxes) are not subtracted from income in the DPI formula**.

It's also safe to assume that substantially more than half the population has no disposable income from stocks or bonds. Meanwhile, interest on CDs and other bank accounts is next to zero (not that the bottom half holds substantial CD assets either).

Ignoring sales taxes and property taxes, I asked Doug Short "

*The chart of median real income since 2000 shows 50% of the people are negative by 7% or so. Where is the zero-Line? In other words, since the year 2000, what percentage of people are actually ahead in terms of real income?*"

Doug Replied ...

The monthly household income data from Sentier Research has only the median incomes before taxes (not just disposable income). The annual data (now through 2012) from the Census Bureau has a number of breakdowns of the data, but none, I think, that would enable the calculation you mention. However, a telling graph is a comparison between the median (middle) and the mean (average).

Check out the mean skew of these chart (all households) – real (inflation-adjusted) data. It shows how much faster the mean has grown over the median.

**Income Skew in Percentage Terms**

**Income Skew in Dollars**

Note the slopes on the lines in red that I added to the charts.

- Since the year 2000, the mean (average) income fell from $76,180, to $71,274 (a decline of $4,906 or 6.44%).
- Since the year 2000, the median income fell from $56,080 to $51,017 (a decline of $5,063 or 9.03%).

Since the year 2000, however, both the mean and the median income has been sinking, but not at the same rate. Worse yet, that income decline does not even properly take into account rising sales taxes and property taxes!

Although the data cannot precisely answer my question "

*Income-Wise, What Percentage of People are Worse Off Now Than in 2000?*", I believe it's safe to assume that the top 10% has not taken much of a hit at all (if any), while the top 1% gains year-in and year-out.

Yet, year-in and year-out a parade of Keynesian and Monetarist economic fools plead for more inflation to fix the problems.

Mike "Mish" Shedlock

http://globaleconomicanalysis.blogspot.com

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