I’ve been looking into economics recently as a way to understand wealth inequality, and I read something that just doesn’t make sense to me.
[https://www.thebalance.com/income-per-capita-calculation-and-u-s-statistics-3305852](https://www.thebalance.com/income-per-capita-calculation-and-u-s-statistics-3305852)
This source says that the 2018 nominal median income per capita was $33,706. It also says that in 1967, the national median income per capita was $2,464,but that would be equivalent to $18,261 in 2018 dollars. That’s roughly half of what our actual per capita income is.
From what I understand, the 1967 economy was doing fairly well, and throughout the 60s the economy was growing. So why is it that now, despite making twice what would expected if you just looked at inflation, people feel like the economy is really bad for the individual and that people aren’t earning enough money?
In: Economics
That’s interesting.
Looking at data from [median **household** income](https://www.multpl.com/us-median-income) and [median **household** income adjusted for inflation](https://www.multpl.com/us-median-real-income) gives a couple more datapoints.
The 1967 household median was $7,142.97, about 290% of the per-capita median. The 2016 household median ($59039) was only 190% of the per-capita median ($31099). So bills at the household level are therefore significantly harder to afford than they were then.
A couple of facts to consider there are that average population per household only dropped very slightly on average (from 2.19 to 2.02) [source](https://fredblog.stlouisfed.org/2016/12/the-puzzle-of-real-median-household-income/?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=fredblog). Meanwhile the percentage of women in the workforce increased from 41.1% to 56.8% [source](https://www.dol.gov/agencies/wb/data/facts-over-time/women-in-the-labor-force#labor-force-participation-rate-by-sex-race-and-hispanic-ethnicity). From that significant increase, we’d expect the ratio of household to per-capita to be significantly *higher* than it was then, not significantly lower. That would seem to indicate that even with more people working, fewer people in the household, and higher per-capita #s, wages haven’t kept up such that it’s harder for a median household to pay bills.
But to your point of why does the economy look relatively bad if the raw inflation-adjusted numbers look higher, let’s consider what those numbers measure and how they’ve played out. Not everything inflates at the same rate. As you can see [here](http://www.mybudget360.com/wp-content/uploads/2014/10/college-tuition.png), [here](https://www.mybudget360.com/wp-content/uploads/2014/10/real-tuition-vs-salaries.png), and [here](https://cdn.howmuch.net/articles/price-changes-in-usa-in-past-20-years-2294.jpg) there are some really big discrepancies. So sure, durable/one-time consumer purchases like big screen TVs or maybe a pair of pants are dramatically cheaper. But the major ongoing household expenses (housing, utilities, healthcare, and education) greatly exceed the inflation rate.
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