Median Income

One of the major themes of the recovery from the “Great Recession” has been the increasingly unequal distribution of income.  Here is another piece of evidence for this debate.  The Census Bureau has reported that the median income has dropped for the 5th straight year.  A quick math refresher on what “median” means follows.

If you lined up all the people in the US in order of their income from lowest on one end to highest on the other, the median person (or household) would be the one in the middle.  The median person could look up or down the line and see exactly the same number of people on both sides.

If the total income of the society (measured by Gross Domestic Product or GDP) is going up but the median income is going down, then that means that the lower half of society is gaining less than upper half.  More specifically, if the median income is dropping it means that more people are below the old median than before.

If you look at mean or per capita income you won’t see the impact of then unequal distribution of increased income as these are simple averages.

Of course the question of income inequality is a contentious one.  While no one outside hardcore communists would argue for complete income equality, the current size of income inequality between rich and poor has become an issue.  Some say that income inequality is good for society because it incentivizes entrepreneurs and innovators.  Others argue that extreme income inequality can destroy democracy or tear the “social fabric.”

What do you think?

One thought on “Median Income

  1. Income Inequality has been growing since the 1970s and the worst part is that the inequality line is mostly between the middle class and the upper class. This means that if the average American just makes enough money to have food on the table and to have a roof on top of their head, then they would never be able to have more because of that big gap in between. Income inequality has made life so much harder for people to live because it has created a strict line in between two classes that can never be broken. The line symbolizes the difference in between those classes which is that the middle class can never have as much as the upper class. I personally don’t want the world to continue going this way because if it does, the gap will keep increasing and one day the middle class will be identified as the lower class also. There needs to be a border line by which the income st-abilities have to work around.

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