The Constitution of Affluence: An Update

Today’s Washington Post covers a Sentier Research report on median household incomes in the United States. Predictably, the number dropped during the last recession. A bit less predictably but more distressingly, it has continued to drop since. Here’s the trendline as shown by Sentier (indexed to January 2000):

In 2012 dollars, median household income was $55,470 in January 2000; bottomed at $49,538 in August 2011; and has since recovered a bit ($50,964 in June 2012).

Note of caution: these are pre-tax dollars. If you account for several rounds of tax cuts, the numbers would probably look a bit better—to the extent that we’ve propped up private incomes with public debt. Happy now?

Note further: going back to 2000 shows how miserable the Bush decade was. Median incomes beat the January 2000 index in exactly five out of 138 months (the current reading is 89.3). This stellar record coincided for many years with a drop in the unemployment rate, until the onset of the recession.

Other not-so-fun facts: during the “recovery” (June 2009-June 2012), the Post summarizes the report, the median income loss was largest among households led by the self-employed (9.4 percent) and smallest among government employees (3.5 percent). Those households also report the largest median income ($77,998). And here is the Sentier/Post picture of the three-year median income trend by age cohort:

To earn success in America, you should (1) get a government job and (2) get old in a hurry, ideally by skipping your pre-retirement decade. After that, transfer payments will keep increasing and you can play bingo in a doctor’s office, practically for “free” and for two or three decades running.

It’s a great system, so long as you can afford it.