During a presidential debate in October 1980, candidate Ronald Reagan famously asked: Are you better off than four years ago? Recently released information from the Census Bureau on income, work, and poverty allow us to address that question in time for the 2020 presidential election.
Income and Work
Median household income in 2019 climbed to $68,703, an increase of 6.8 percent over 2018. At $98,174, income for Asian households was more than twice the income of black households. Some of that difference is attributable to vast differences in the proportion of families headed by a female with no spouse present: 9.4 percent for Asians, 40.7 percent for blacks. Among female-headed families there typically are fewer wage earners than among all other types of families including notably married-couple families.
Married-couple families $102,308
Non-family households $41,232
Men 75.4 percent
Women 77.5 percent
For married-couple families household income reached $102,308 which is two and one-half times higher than for non-family households. The 2019 increase in median income is the fifth consecutive year for family households and the second consecutive year for nonfamily households.
There’s an upside and a downside when comparing the earnings of women and men. The upside is that the 2018-2019 rate of increase was three times higher for women than for men. The downside is that women’s earnings lag well behind men’s even though slightly more women work year-round, full-time.
The Middle Class
Middle-class well-being can be measured in three ways. How much household income does the middle class have relative to the income of the wealthy or the poor? Is their income sufficient to meet their needs? How much has their income increased over time?
Defining the middle class in relative terms as all those households in the middle of household income distribution (the third quintile), the wealthy class has 3.7 times as much income as the middle class, but the middle class has 4.5 times as much as the poor. Using the second metric that addresses income sufficient to meet need, the $68938 of the middle class income in 2019 was 2.7 higher than the official poverty standard for a family of four including two children under age18. According to the third metric, middle-class household income increased by nearly $6000 over the four-year period ending in 2019.
In the end, whether we ought to worry about the future of the middle class depends very much on the values which we Americans bring to judging when the income gap between the middle class and the wealthy on the one hand and the poor on the other hand is acceptable or unacceptable. Reasonable persons likely will disagree, making it very difficult to reach agreement. Mayo Research Institute’s position is that the middle class will survive as long as a substantial portion of their income derives from work at good-paying jobs.
The Wealthy and the Poor
Income for the top 5 percent of households is 30 greater than income for the poorest households. Furthermore, the income of the poorest households is sufficient for the average person who lives alone to live above the poverty threshold but not for two or more persons who live together in the same household.
Two other measures, however, point to somewhat favorable developments for the poor. While the evidence is somewhat shaky, there is some comfort in that fewer than 3 percent of the poverty population remains poor for more than four consecutive years. In other words, in America there is no permanent poverty class because over time for various reasons — marriage, improved educational credentials and workplace skills, successful treatment of a disability that stands in the way of holding a job — large numbers of the poor exit poverty.
Additionally, when income is adjusted for number of persons living in the household and how it is shared the lowest quintile is the only quintile for which the 2018-2019 increase of 2.4 percent was statistically significant. The other four quintiles posted year-to-year gains but they were not statistically significant.
Second, while there are very large differences in mean household income from the poorest to the richest, all five quintiles, including the lowest quintile, reported 9 to 12 percent increases from 2018 to 2019.
More on the Poor
The poverty rate in 2019 was 10.5 percent, down 1.3 percentage points from 2018, and lower than at any time since poverty estimates were first published in 1959. The number of persons living below poverty in 2019 fell by 4.2 million since 2018. Among blacks, the poverty rate dropped by 2 percentage points. For Hispanics the improvement amounted to 1.8 percentage points.
The rate for 31 of 32 demograhic/geographic classifications was lower in 2019 than in 2018 and all 31 were statistically significant. Even so, differences in the poverty rate are startling when the estimates are broken down by marital status and work. For year-round, full-time workers the 2019 rate was 2.0 percent. For those who did not work at all it was 13 times higher.
Among married-couple families 4.0 percent lived in poverty. For families headed by a female the rate was 5 and one-half times higher. As noted already, household income for Asians in 2019 was $98,174. Even so, among Asian families headed by a female 16.0 percent were poor.
Putting aside the controversy surrounding the matriarchal family, the evidence demonstrates overwhelmingly that the traditional married family with a commitment to work confers large benefits across a wide spectrum of affordable goods and services that are not accessible to other family types. Marriage and work truly matter.
Edward J. O’Boyle is a Senior Research Associate with Mayo Research Institute. He has offices in West Monroe, Lake Charles and New Orleans. He can be reached at 381-4002 or email@example.com.