With this post, I am going to do something that I have never done before in Media Realism. I am going to revisit and expand on a post that I put up only a few weeks ago. The post was “Median Income Woes” and first appeared on September 24, 2014.
Essentially, I talked about recently published U.S. income data from the Social Security administration. Since then, and with a few encouraging e-mails from readers, I made a deep dive into the report. What I found was surprising and, may I add, deeply disturbing.
After I looked at the numbers, I checked and double-checked them. Searching across the web, I found a few media outlets and bloggers who picked up certain telling statistics from the report. So, all the stats and factoids that you will see may not totally surprise you. I will bet that you will not be familiar with all of them.
The talking heads on CNN and CNBC keep telling us that the economy is on the mend although all admit that we are experiencing the slowest recovery in measured history from the “Great Recession” of 2008-2009. Where are they misleading us? The key appears to be that they are ignoring basic statistics. They talk of average rather than median income which really distorts what is going on in this country.
So, fasten your seat belts. Let us look at what is really going on.
--The “average” yearly wage in the United States for 2013 was $43,041. If you take inflation into the equation, wages declined from the previous year even if you take the often criticized Federal government estimates as your benchmark. In fact, some have calculated that average wage is $500-600 below the 2007 level. Also, an average includes all wage earners and distorts the data. The 17 hedge fund managers who made over a billion dollars last year and the thousands of executives who made millions in 2013 all pull the average wage up somewhat.
--Let us look at median income, which to me is a far more meaningful statistic. To refresh your memory from Statistics 101, an average is a mean which takes ALL incomes and does a straight calculation dividing total income by total workers. The median is far more subtle. It is the 50th percentile. In other words, approximately half of people are above the median and half are below. The influence of high and ultra high earners are taken out of the statistic. According to the Social Security data, median pay for 2013 was $28,031. Have you heard anyone in the media discuss that? How about the 535 members of Congress or the White House spin doctors? Look at the spread between median income ($28,031) and average income ($43,041). The high income earners (top 10%) are pulling up the average income data and they are doing it significantly.
--So, if $28,031 was the median that means 50% of Americans made less than that. Digging a bit deeper, it gets worse.
--Some 39% of US workers took home less than $20,000 in 2013
--A staggering 63% of workers made less than $40,000 last year
--And sadly, 72% of us made less than $50,000 in 2013
Remember, the above data comes from the Social Security Administration report. It is not from some political group manipulating the data for their own purposes.
Most consumer analysts say that it takes $50,000 to provide a middle class lifestyle for the quintessential family of four. So, if 72% make less than that, a single breadwinner no longer cuts it anywhere in the U.S. Median household income is about $53,000 as I write. Adjusted for inflation, that is no higher than it was 30 years ago. Both man and wife work because there is no choice.
So, the recovery is largely a fraud if you look at middle America. The “Great Recession” is still going on for million of Americans.
If this keeps up, the middle class is toast. Implications for advertising are profound. People are running hard to survive. Some 25% of apartment dwellers do not have enough savings to cover two months rent. A stunning 40% are in severe trouble if there car needs serious repairs even though the average car on the road is now 11 years old and some malfunction with the vehicles is inevitable.
Yes, even the struggling have a smartphone. That is used by many to say that people are doing okay. May I suggest that you visit a depressed area as I have very recently? Everyone does not live as we do in advertising, marketing or communications. If you want to be a marketer in 2014-2015 America, take a hard look at the REAL America.
If you would like to contact Don Cole directly, you may reach him at email@example.com