Comments on: Average Income in the United States (1913-2006) http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/ Making the "Invisible Hand" Visible Fri, 05 Mar 2010 00:29:30 -0500 http://wordpress.org/?v=2.9.2 hourly 1 By: Steve http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/comment-page-1/#comment-36776 Steve Fri, 24 Apr 2009 21:57:19 +0000 http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/#comment-36776 I look at these figures and I while it would be usefull to see both mean and median information, it seems that most of the posts that are trying to contradict the data cite examples that actually support the data. In reference to Greg's comments about 1933 it appears that the graph shows about $12,000 in 2006 dollars that would translate into an actual average annual income of about $840 in 1933 dollars. This seems in line with the extremely difficult situation so many people found themselves in those years. After all #12,000 average is about 1/4 of todays average; meaning the average household (whether mean or median) had 75% less purchasing power. I look at these figures and I while it would be usefull to see both mean and median information, it seems that most of the posts that are trying to contradict the data cite examples that actually support the data. In reference to Greg’s comments about 1933 it appears that the graph shows about $12,000 in 2006 dollars that would translate into an actual average annual income of about $840 in 1933 dollars. This seems in line with the extremely difficult situation so many people found themselves in those years. After all #12,000 average is about 1/4 of todays average; meaning the average household (whether mean or median) had 75% less purchasing power.

]]> By: John http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/comment-page-1/#comment-36192 John Wed, 15 Apr 2009 09:21:59 +0000 http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/#comment-36192 Thanks for the enlightening info. Eye opener. Thanks for the enlightening info. Eye opener.

]]> By: Randy http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/comment-page-1/#comment-33275 Randy Sun, 01 Mar 2009 10:45:43 +0000 http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/#comment-33275 These figures do not seem to agree with Wikipedia entry under average income in the US (googled). These figures do not seem to agree with Wikipedia entry under average income in the US (googled).

]]> By: Greg http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/comment-page-1/#comment-33218 Greg Fri, 27 Feb 2009 22:20:07 +0000 http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/#comment-33218 My assumption is that these figures are annual income not adjusted for inflation and are mean figures. Unfortunately, be they mean (arithmetic average) or median values, they still do not tell the story. By 1932 25% or so were 'unemployed", working for nickles and dimes where they could; the CCC started in July 1933 with 225,000 working for a $30 a month--$360 a year; that makes a 225,000 long string of $360 incomes working up the list toward the median. Stories are rife of individuals working for a couple weeks at 20¢ an hour--maybe $2.80 a day--for a few weeks, then spending weeks looking for another job. I'd be surprised if the lower 50% of the workers earned more than $2,000 a year, which adjusts to $37,600 in 2007 dollars. To get a true picture, median income and arithmetic average WITH standard deviation are needed. My assumption is that these figures are annual income not adjusted for inflation and are mean figures. Unfortunately, be they mean (arithmetic average) or median values, they still do not tell the story. By 1932 25% or so were ‘unemployed”, working for nickles and dimes where they could; the CCC started in July 1933 with 225,000 working for a $30 a month–$360 a year; that makes a 225,000 long string of $360 incomes working up the list toward the median. Stories are rife of individuals working for a couple weeks at 20¢ an hour–maybe $2.80 a day–for a few weeks, then spending weeks looking for another job. I’d be surprised if the lower 50% of the workers earned more than $2,000 a year, which adjusts to $37,600 in 2007 dollars. To get a true picture, median income and arithmetic average WITH standard deviation are needed.

]]> By: Greg http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/comment-page-1/#comment-33217 Greg Fri, 27 Feb 2009 22:01:19 +0000 http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/#comment-33217 Mean, median and mode are not all acceptable as fulfilling the term "average" as Will Nov 9th, 2008 at 3:31 am suggests. There are many measures of the central tendency of populations and each gives a different picture of the population. In the case of income distribution, the arithmetic mean (the most commonly understood average) is handy since population size X arithmetic mean = total income. The median can't be used this way, always gives a smaller number, but can be used to state the figure which 50% of the population exceeds. Say a room of 1000 people were polled and the results showed median $30,000 and average $50,000. Now add one hedge fund manager that took home $2 billion. The median adjusts up to the next higher take home level--maybe $30,100 or so; the average to almost $2,048,000. With the highest earner present the average no longer clearly represents the income situation of the population. Mean, median and mode are not all acceptable as fulfilling the term “average” as Will
Nov 9th, 2008 at 3:31 am suggests. There are many measures of the central tendency of populations and each gives a different picture of the population. In the case of income distribution, the arithmetic mean (the most commonly understood average) is handy since population size X arithmetic mean = total income. The median can’t be used this way, always gives a smaller number, but can be used to state the figure which 50% of the population exceeds. Say a room of 1000 people were polled and the results showed median $30,000 and average $50,000. Now add one hedge fund manager that took home $2 billion. The median adjusts up to the next higher take home level–maybe $30,100 or so; the average to almost $2,048,000. With the highest earner present the average no longer clearly represents the income situation of the population.

]]> By: tom rossmann http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/comment-page-1/#comment-31103 tom rossmann Thu, 22 Jan 2009 01:17:41 +0000 http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/#comment-31103 This data is just plain wrong. Given that 95% of the population didn't pay income tax in 1917 and that people earning below $2000 paid 2% income tax and most Americans supported families on <1000 per year these figures are off by a factor of 5-10 between 1913-1930. Not sure where this data came from but it is totally inaccurate. This data is just plain wrong. Given that 95% of the population didn’t pay income tax in 1917 and that people earning below $2000 paid 2% income tax and most Americans supported families on <1000 per year these figures are off by a factor of 5-10 between 1913-1930. Not sure where this data came from but it is totally inaccurate.

]]> By: mcj http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/comment-page-1/#comment-30900 mcj Sat, 17 Jan 2009 11:35:31 +0000 http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/#comment-30900 I'm also questioning the average income. I just cleaned out my grandparents house and found old tax returns. Grandfather was an engineer and my grnadmother was a teacher. Their income combined wasn't $13k. How did you come up with that number. Are you sure it wasn't $1300/year? I’m also questioning the average income. I just cleaned out my grandparents house and found old tax returns. Grandfather was an engineer and my grnadmother was a teacher. Their income combined wasn’t $13k. How did you come up with that number. Are you sure it wasn’t $1300/year?

]]> By: Beginner Basics of Affiliate Marketing - 5 Star Affiliate Blogs http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/comment-page-1/#comment-29161 Beginner Basics of Affiliate Marketing - 5 Star Affiliate Blogs Mon, 15 Dec 2008 15:07:32 +0000 http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/#comment-29161 [...] at least an average income is very common for the “20″ that do well in AM. A six figure income per year for an [...] [...] at least an average income is very common for the “20″ that do well in AM. A six figure income per year for an [...]

]]> By: Will http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/comment-page-1/#comment-27186 Will Sun, 09 Nov 2008 08:31:22 +0000 http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/#comment-27186 This graph has been adjusted for inflation and does look to be a mean distribution. Using any of mean, median, or mode and calling it an average is considered acceptable in statistics. The use of a mode wouldn't be the best for data like this. The use of a median will slightly misrepresent the population as a whole since you cannot get back to GDP with it. And the use of a mean will accurately represent the population as a whole yet will be higher than your perceived expectations due to outliers. If this graph used nominal prices it would be more of a display of inflation rate, rather than one of economic growth which requires the usage of real (real means corrected for inflation) values. Here's a graph showing the difference. http://upload.wikimedia.org/wikipedia/en/f/f4/Historic_gasoline_prices.png Pat, the numbers from the graph correspond very well to the numbers you gave. Using the inflation calculator already provided by another in the comments, "What cost $3000 in 1954 would cost $21016.46 in 2004." I chose '54 because it's an easy line to use and 2004 because it's the last on the graph. The graph average from '54 appears to be $27k-28k. "What cost $7000 in 1963 would cost $43079.77 in 2004." The graph average from '63 looks to be $32k-33k. And you already stated you were making an above average pay. I would say you were doing extremely well right out of college and not just "above average". This graph has been adjusted for inflation and does look to be a mean distribution. Using any of mean, median, or mode and calling it an average is considered acceptable in statistics. The use of a mode wouldn’t be the best for data like this. The use of a median will slightly misrepresent the population as a whole since you cannot get back to GDP with it. And the use of a mean will accurately represent the population as a whole yet will be higher than your perceived expectations due to outliers.

If this graph used nominal prices it would be more of a display of inflation rate, rather than one of economic growth which requires the usage of real (real means corrected for inflation) values. Here’s a graph showing the difference.
http://upload.wikimedia.org/wikipedia/en/f/f4/Historic_gasoline_prices.png

Pat, the numbers from the graph correspond very well to the numbers you gave. Using the inflation calculator already provided by another in the comments,

“What cost $3000 in 1954 would cost $21016.46 in 2004.”
I chose ‘54 because it’s an easy line to use and 2004 because it’s the last on the graph. The graph average from ‘54 appears to be $27k-28k.

“What cost $7000 in 1963 would cost $43079.77 in 2004.”
The graph average from ‘63 looks to be $32k-33k. And you already stated you were making an above average pay. I would say you were doing extremely well right out of college and not just “above average”.

]]> By: Pat Klaus http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/comment-page-1/#comment-27143 Pat Klaus Fri, 07 Nov 2008 18:06:36 +0000 http://www.visualizingeconomics.com/2008/05/04/average-income-in-the-united-states-1913-2006/#comment-27143 I don't know how these figures have been adjusted, but they do not reflect anywhere close to the actual incomes at the time. I was born in 1939. My family was an "average" family as I grew up and their annual income was under $3000 in the 50's for sure. In 1962 I graduated from college with an engineering degree and earned a salary of $7000 a year which was above average. Is there a chart that shows median US income over time, but in raw terms, and inflation adjusted? This chart as presented does not reflect reality for me. I don’t know how these figures have been adjusted, but they do not reflect anywhere close to the actual incomes at the time. I was born in 1939. My family was an “average” family as I grew up and their annual income was under $3000 in the 50’s for sure. In 1962 I graduated from college with an engineering degree and earned a salary of $7000 a year which was above average.

Is there a chart that shows median US income over time, but in raw terms, and inflation adjusted? This chart as presented does not reflect reality for me.

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