The following three blog posts -- the December 2024, the April 2025, and this one -- comprise a summary of what I have been doing since I began blogging over a decade ago. They work together. I find it difficult to summarize the problems of social-economic malaise. A lot of happiness, distress, and lost dreams hang on the outcome of money issues. Survival itself. The economy is complex, the solutions defy simplicity. The next three posts are somewhat shorter and more concise. 

The first, here, is about income distribution. The next is about how about 40% of U.S. society is left out of prosperity and damaged by our malfunctioning economy. And the December one is about Solutions, and it's long. 

            The CBO Report on Inequality                                                "Distribution of Household Income, 2018" is the title, but it covers the period between 1979 and 2018, a 39 year period. Exhibit 22 (page 32) is my focus, as it focuses on "Trends in the Distribution of Income After Transfers and Taxes, 1979 to 2018" from the Congressional Budget Office.  

Below the graph is a link to the data source, where we uncover the details, see "Data Underlying the Exhibits". I find the details inflamatory, a conclusive set of evidence that our economy has failed. The table shows 3 groups' average incomes over 39 years; the groups are the lowest earning 20%, the middle 3 quintiles or middle 60% average income, and the average income for the top quintile or 20%.

                   

  The table shows that the lowest 20% increased their incomes (inflation adjusted) by $18,000, from $19.7K to $37.7K. This is a 91% gain, mostly caused by transfer income. This is post-tax and post-transfer income.

The middle 60% grew their income by $25,600, from $48,200 to $73,800. This is an 88% gain. 

The top quintile grew their income by $132,800, from $111.1K to $243.9K, an increase of 119%. 

I visualize the economy from the CBO report as the 10 - 20 - 20 - 20 - 70 income distribution economy. Roughly, the lower 20% receives 10, the next 3 quintiles receive 60, and the last 20% receives 70; the total for all is 140. The top 20% receives about half. The CBO report states that the top 20% receives 48% of all post-tax and post-transfer income, and that reflects roughly the 10-20-20-20-70 picture I paint. 

Let's compare the CBO's chart with the RealTime Inequality graph. This shows percentage of income growth 1976 to 2018. The top red is the top 10%, the blue the middle 40%, and the orange is the lower 50% of households, post-tax and post-transfer income movement. First graph is growth:  
                          

The next shows RealTime's graph on "Average Real Income", 

                  

This graph indicates, 1979 to 2018, the households in the lower 50% grew their real post-tax and post-transfer income by $8,200. The middle 40%, between the 50th and 90th percentiles, grew their incomes by $30,500, and the top 10% grew their incomes by $239,100. This is really grotesque! 

I understand why many people are disgusted with the status quo. 

The CBO shows the lowest 20%, then the middle 60%, and the top 20%.
The RealTime shows the lowest 50%, then the middle 40%, and the top 10%. 
Both indicate the top income growth and total income levels far surpasses the growth and incomes in the lower-earning household population.   

 I think the above argument and graphs are central to understanding how distressed the U.S. population is about the malfunctioning economy. The lion's share goes to the richest and the crumbs go to the poorest.  

Millions Are Left-Out of Prosperity

            Millions Are Left-Out of Prosperity   

The nation needs to increase, somehow, the incomes of most workers. Every day I deal with workers at stores, shops, offices, banks, etc. who earn too little. For instance, at Walmart stores the median worker’s annual earnings are $27,642 states the report Executive Excess; hourly that comes to $13.30. At O’Reilly’s Automotive it’s $35,806, at Starbuck’s it’s $14,209, at Public Storage it’s $31,827, at Kroger’s grocers it’s $31,302. At fast-food restaurants the average worker earns $31,350 per year. Warehouse workers earn $35,580, and child-care workers $32,050 per year. This is too low.  

The Job Quality Index is a monthly report that compiles the earnings’ level of 82% of the full-time workforce, the full-time nonsupervisory workers. Drawing from data at the Bureau of Labor Statistics it shows that 55% of U.S. full-time workers, about 60 million workers, earn an average of $37,537 per year, equivalent to $18.04/hour. That’s the lower-earning 55%; while the higher earning 45% earn $74,048 per year, or $35.60/hour. The average yearly income for all, 100% of, “nonsupervisory workers” is $54,392. The Bureau of Labor Statistics confirms this number. But in 1972, 53 years ago, the average weekly earnings were $60,476 (see the Fed’s FRED graphs and here), about 10% higher. To repeat, 53 years ago the annual earnings were about 10% higher than today’s earnings, notwithstanding that the entire economy expanded by about 150% (per capita and adjusted for inflation).   

As a result, the extent of U.S. poverty and hardship has been forgotten, or accepted blandly as normal, and is rarely accurately mentioned in media reports. There is a wide gap between what the public imagines and the reality of poverty and hardship. Just as there is a huge gap between those who are well-off and those not-well-off, which is similarly under-reported. I'd like to shed light on the dire state of inequality in this report.  

"Making Ends Meet in 2024", is the title of a regular report from the Consumer Financial Protection Bureau (CFPB), the most recent being November 2024. It shows that 42.3% of U.S. households would be broke in less than one month and not be able to "cover their expenses using savings or borrowing if they lost their main source of income." That shows about 5 out of 12 Americans living on a shoe-string. And only 26.4% are well-off, about 1 in 4, and could handle expenses for more than six months. Most Americans do not realize how bi-polar we are economically. The average household income is over $180,000 annually (divide the national income of about $24 trillion by the number of households), yet the average pre-tax income for the lower half is around $40,000. (It’s difficult for readers to process numbers, I’ve found. Compare 40 to 180, that’s easier. 40 is what the lower half get, 180 is the potential all could have.) We have very high incomes that pull the overall “mean average” higher. The average household net worth is over $1.2 million; yet the lower half own an average of $60,000, or about 2.5% of all savings, and most of that savings is tied-up in home equity. We may sound extremely rich, but it’s only a mathematical illusion; only 1 in 4 could survive without income for more than 6 months. Prosperity is eluding millions.  

Precarious seems a fair description of this condition; precarity is a way of life for perhaps a majority.  

And 42.9% "had difficulty paying at least one bill or expense in the previous year." (shows page 14 of the CFPB report). And about a third, or 31.0%, of all respondents had difficulty with bills more than 3 times during the past year. About a third of all Americans are skimping and struggling. Details about credit cards and bank overdrafts also show this precarity.   

The CFPB 2017 report asserted in its title that “more than 40% of U.S. adults struggle to make ends meet”. It showed that 24% of adults had less than $250 in liquid assets, and 54% had less than $5,000. (page 80) On reading that I gulped. About a quarter can’t find $250? Wow! Who would guess that the average annual household income is over $180,000, and $1.2 million is the average household savings. Sorry. We live in a dysfunctional society with a media that fails to inform.  

Another report from the United Way charity, published annually, the ALICE report (Asset Limited, Income Constrained, Employed) shows that 42% of adults in 2024 lived with hardship or poverty. It states that the needed annual income for a family of four living in a medium-priced location is $91,284.  (Des Moines Iowa is the location) The Official Poverty Level (OPL) for this size family is (officially) $31,400. Therefore, you will need 3 times the OPL cut-off level to reach the necessary survival budget amount that ALICE recommends. The public is sadly misinformed.  

The Federal Reserve issues an annual report on economic health, the most recent one, the "Economic Well Being of U.S. Households in 2023", shows that 27% of adults went without medical treatment in 2023 because of inability to pay for it; that’s around 67 million adults (p.30). And about 37% of adults said they would be unable to pay off an emergency expense of $400 within 30 days. The fan belt on your car’s radiator blew apart, for instance. Most of the 37% would put it on a credit card and pay installments. Others? They’d stall the payment on their utilities or rent and keep their car running so they could drive to work.  

Our official guide to poverty, the U.S. Census report on poverty, also includes the Supplemental Poverty Measure. The SPM is more realistic because it shows the income distribution among households after taxes have been deducted and after government transfer payments have been added to income. It shows that 41.3% of households have incomes below 200% of the Official Poverty Level (OPL). The SPM shows that 12.9% of Americans lived in SPM poverty (not the OPL 11.1%). These 41.3% should be categorized as the poverty-and-hardship level. Hardship is real. It’s under-appreciated.   

Another U.S. Census survey, the Pulse report for February, 2024, asks "Difficulty paying for usual household expenses in last 7 days?" Results: Very 14%, Somewhat 20%, A little 29%, Not at all 35%. (total 100% with 14% not replying) And "Frequency of not being able to stop worrying" Results: nearly every day--17%, more than half the days--24%, several days--28%, not at all--30%. (with 20% not replying) See Health Table 1, and Spending Table 1. In the first question14% and in the second question 20% did not reply. I report the percentages of those who answered.

Again, only 35% could pay "usual expenses" without difficulty. And only 28% were worry-free. My reaction is that there's a severe plague of worry. I've never gone days upon days worrying without being able to stop.

We have other institutions and academic studies reporting much different poverty levels than the OPL. They provide income floors below which it’s not possible to escape hardship. Comparing three of these report’s minimum-needed income levels, or survival floors, we can judge how inadequate the OPL measure is. The examples include the "survival budget" from the United Way's ALICE report, and the "Family Budget Calculator" (FBC) from the Economic Policy Institute, and of the "Living Wage" calculator from Massachusetts Institute of Technology (MIT). These three studies quantify the necessary incomes needed to survive; incomes below them indicate the hardship levels. 

The question I'm pursuing is, "How much income is needed to survive relative to 100% OPL amounts)?"  

Below I've listed the Census’s 100% and 200% income amounts needed for the one, two, three and four person households. And below I’ve listed the EPI Basic Budget, the MIT Living Wage, and the ALICE Survival Budget.  

Household size: 

             1 person  2 person       3 person       4 person   
Census 100% OPL     15,060           20,440                   25,820            31,400 -- 100% OPL  

Census 200% OPL     30,120           40,880                    51,640           62,400 -- 200% OPL 

EPI Family Budget Calculator – minimum necessary income 

              314% OPL -- 47,305          62,230                   84,520       101,044 -- 323% OPL  

MIT Living Wage  

             277% OPL -- 41,745      289% OPL -- 59,113       81,411     99,091 -- 317% OPL 

ALICE Survival Budget                229% OPL -- 46,932                       91,284 -- 292% OPL  

Conclusion: It takes an income that’s double or nearly triple the Official Poverty Level to live a normal, economically secure life. Our political conversation should focus on raising personal and household incomes and savings levels. Millions of our neighbors live with constant anxiety about paying their bills. We should seek to provide economic security to millions who are stressed to the point of despair. The potential of a good society is impossible when the national anthem is "Hard Times, Come Again No More".