Household income posts first gain in 6 years....but wages slide..

[sinkingfeeling]

http://money.cnn.com/2006/08/29/real_estate/wealthiest_American_cities/index.htm?cnn=yes

<snip> Based on a sampling of 3 million households, median U.S. household income for 2005 was $46,326, an increase of 1.1 percent in real, inflation-adjusted dollars over the previous year. It was the first time real income rose since 1999.

Although real household income was up, wages and salaries lost ground. Wages for men fell 1.8 percent to $41,386; wages for women fell 1.3 percent to $31,858.

[displacedtexan]

1. I wonder how much of that "income increase" was real estate-related.

Was it an increase "on paper," or did that many people get raises?

Or did the rich just get richer?

Color me skeptical of this report.

[thoughtanarchist]

2. moonlighting, overtime or sending spouse to work are likely possibilities

Other possibilities for this mathematical result can include:

-- unemployed professionals taking on low income jobs when their benefits have already run out (a.k.a non-participating labor rejoining the labor force in a low-wage capacity)
-- more working age kids taking job while / instead of college
-- consistent gains in the income of high income brackets
-- several or all of the above, including the reasons in the article as listed below:

"The difference between rising household income and falling wages and salaries may be traced to two factors: Household income can include other sources of income, such as from stock dividends. And some households may have added low-income workers who helped raise the income of those households but lowered the median wages."

[Warpy]

3. Real estate plus the unearned income of the wealthy

and those extended pay packages for CEOs also skewed the income figures upward.

Paper profit should never be counted as income, but this administration is desperate enough for good economic news that they're breaking all the rules.

[progree]

5. Real MEDIAN household income - doesn't include the wealthy

There were a couple of posts that seemed to indicate that the real median household incomes might be skewed upward because of big gains among the wealthy. But the Median household income is the household in the middle of the income scale, i.e. rank all households from lowest income to highest income. The household in the dead center is the median household. So if the rich and super-rich were doing fantastically, it would not affect the median household statistic at all. (It would affect the average of course).

That said, I found it interesting and sad that the real median household income of non-seniors fell:

==============================
Even the best number from yesterday’s Census Bureau report for 2005 is bad news for most Americans. It shows that <[real>] median income rose 1.1 percent last year, to $46,326, the first increase since it peaked in 1999. But the entire increase is attributable to the 23 million households headed by someone over age 65. So the gain is likely from investment income and Social Security, not wages and salaries.

For the other 91 million households, the median dropped, by half a percent, or $275. Incomes for the under-65 crowd were hurt by a decline in wages and salaries among full-time working men for the second year in a row, and among full-time working women for the third straight year. In all, median income for the under-65 group was $2,000 lower in 2005 than in 2001, when the last recession bottomed out.

New York Times Editorial, "Downward Mobility" 8/30/06
http://www.nytimes.com/2006/08/30/opinion/30wed1.html?_r=1&oref=slogin
==========================================

Here's another note of concern from another source that I haven't checked out:

"The number of uninsured people climbed by 1.3 million in 2005 to 46.6 million, a record high. The percentage of people without insurance rose from 15.6 percent of the population to 15.9 percent. Both figures were substantially above the figures for the 2001 recession year, when 41.2 million people--14.6 percent of Americans--were uninsured."

[FogerRox]

6. Correct, Average income would show that skew, not Median

One way this can happen is when the husband works, and the wife, and 2 out of 3 kids are 16 or over, are working too.

[KayLaw]

4. Can't remember what it's called . . .

I read about it on Shadow Statistics. The government now considers your mortgage payment as income. Whatever that payment is, is money you, as your own landlord, receive as rental income. That way as ARM payments rise, homeowners may feel poorer but are counted as richer.

On edit: It's called Imputed Interest Income. If you'd like to learn more, just do a Google search using those words and/or "Shadow Statistics" .