What Is Your U.S. Income Percentile Ranking?

Where do you stack up in the distribution of income within the United States?

We can help you answer this question using the data that the U.S. Census Bureau has collected on the total money income earned by individual Americans, as well as for the families and households into which Americans gather themselves!

If you're a visual person, we'll first present the information graphically in chart form and then we'll present a tool where you can get a more precise estimate of what your percentile ranking is within each of these groups. In the charts below, first find the income that applies for you on the horizontal axis, then move directly upward to the curve that defines the cumulative distribution of income. Once you've found your place on S-shaped curve in each chart, look directly to the vertical scale on the left hand side of the chart to determine your approximate U.S. income percentile ranking.

The first chart applies for individual Americans, which includes all people Age 15 or older who received some kind of money income on a regular basis, say from full-time jobs or Social Security benefits, but not for things like food stamps, health benefits, housing assistance, capital gains, etc.. With that being the case, the Census Bureau's data tends to understate the amount of effective income that Americans have, especially at the lower end of the income spectrum:

Our second chart shows how the distribution of income changes when individual Americans are grouped into families, which the Census Bureau defines as being a "group of two people or more (one of whom is the householder) related by birth, marriage, or adoption and residing together":

Our third chart is similar to the families chart, but here, individual Americans have been grouped into households. Households are different from families in that they consist of "all the people who occupy a housing unit", regardless of whether they are related to each other by birth, marriage or adoption, or not, and even a single individual who lives alone is considered to be a distinct household.

So much for the pictures - let's see where you really fit in! To find out where you, your family or your household ranks among each of these categories, just enter your personal income, your family's income, which includes the incomes of your spouse and other family members who live with yout, and also the combined income of just the people who live within the walls of the same household that you do. We'll do some quick math and provide a more precise estimate of the percentage of all American individuals, families and households that you outrank given the incomes you enter.

And as a bonus, we'll also break down the numbers for your Individual income to tell you how you compare to your fellow male and female Americans.

It all starts below! (Unless you're accessing this article through a site that simply republishes our RSS news feed, in which case, you should click through to our site to access a working version of our tool....)

Income Data
Input Data	Values
Select Year of Interest	2012 2011
Your Personal Total Money Income
Your Family's Combined Total Money Income
Your Household's Combined Total Money Income

Your Estimated U.S. Income Percentile Ranking
Calculated Results	Values
Among All U.S. Individuals with Incomes
- Among All U.S. Men with Incomes
- Among All U.S. Women with Incomes
Among All U.S. Families
Among All U.S. Households

For our readers who live outside of the United States, you can still get in on the action if you convert your income from your local currency into U.S. dollars first!

Notes

The default data we've presented in the tool above represents the average total money income of U.S. individuals, families and households for the year you select. Oh, and as a bonus, you can also see where you would have fit in the U.S. income distributions we've modeled going back to 2011 by selecting your year of interest (other years may appear in the future!...)

In the tool above, your percentile ranking indicates the percentage of Americans who either share your income or earn less than you do. As such, it tells you what percentage of the population you're above in the income-earning food chain.

For example, a percentile ranking of zero would indicate that you are at the very bottom end of the American income spectrum, while a percentile ranking of 100 indicates that you are effectively at the very top end. A percentile rank of 50.0 would indicate that you're within spitting range of being the middle of all Americans, as our tool should be able to place most people within 0.2% of their actual percentile ranking.

Finally, if you're looking for the income data for this year, please note that the U.S. Census Bureau will report the data it collects for this year sometime in September of next year. The delay isn't all bureaucratic - they send out the surveys for income in March of each year, just as or after most Americans fill out their income taxes for the previous year so their income figures are still fresh in their memories, and then it can take the Census Bureau's statisticians up to six months to sort it all out and make some kind of coherent sense of it all!

References for 2012 Incomes

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement.Table PINC-01. Selected Characteristics of People 15 Years and Over, by Total Money Income in 2012, Work Experience in 2012, Race, Hispanic Origin, and Sex. [Excel Spreadsheet]. 17 September 2013. Accessed 17 September 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement.Table PINC-11. Income Distribution to $250,000 or More for Males and Females: 2012. Male. [Excel Spreadsheet]. 17 September 2013. Accessed 17 September 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement.Table PINC-11. Income Distribution to $250,000 or More for Males and Females: 2012. Female. [Excel Spreadsheet]. 17 September 2013. Accessed 17 September 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement.Table FINC-07. Income Distribution to $250,000 or More for Families: 2012. [Excel Spreadsheet]. 17 September 2013. Accessed 17 September 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement.Table FINC-01. Selected Characteristics of Families by Total Money Income in: 2012. [Excel Spreadsheet]. 17 September 2013. Accessed 17 September 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement.Table HINC-06. Income Distribution to $250,000 or More for Households: 2012. [Excel Spreadsheet]. 17 September 2013. Accessed 17 September 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement.Table HINC-01. Selected Characteristics of Households by Total Money Income in: 2012. [Excel Spreadsheet]. 17 September 2013. Accessed 17 September 2013.

Total Compensation: U.S. Government Employees vs the Private Sector

How does the total compensation of the average U.S. federal government employee compare to that of the average U.S. individual income earner who works full-time, year-round?

To find out, we've taken the average cash incomes earned by each and added the average benefits that each receives through their employer as reported by the Congressional Budget Office in 2012. They found that:

On average for workers at all education levels, benefits for federal employees cost about $20 per hour worked, whereas benefits for private-sector employees cost $14, CBO estimates. Thus, benefits for federal workers cost 48 percent more per hour worked, on average, than benefits for private sector workers with similar attributes. Benefits also constituted a larger share of compensation for federal workers, accounting for 39 percent of the cost of total compensation, compared with 30 percent in the private sector.

We next visualized those numbers, in which we reveal the average total compensation of U.S. federal government employees and individual Americans who work in full time jobs all year long:

We find that while the average U.S. federal government employee makes $14,632 more in direct cash income than their private sector counterpart, at $74,436 versus $59,804, the extremely generous benefits with which they are also compensated boosts their real income margin by $26,632 over the average private sector income earner, putting their total compensation at $114,436 versus $87,804.

Keeping in mind that the average income of Americans in the private sector is considerably elevated by some very highly paid individuals such as CEOs, very specialized medical professionals, sports stars and entertainment moguls, the total compensation of U.S. federal government employees puts them all in a league of their own. And that's not even including their extreme job security.

Is it any wonder then that U.S. federal government employees are almost more likely to die than leave their jobs?

References

Asbury Park Press. Federal Employees, 2011. [Online Database]. Accessed 28 June 2013

Congressional Budget Office. Comparing the Compensation of Federal and Private-Sector Employees. [PDF Document]. January 2012

Previously on Political Calculations

• The Smiths Go to Washington - we look at the distribution of income for U.S. federal government employees in 2008.


• The Smiths Go to Washington, Part 2 - we revisit the Smiths who work for Washington D.C. to see what they made in 2011.


• What's Your Income Percentile? - our model of the distribution of income in the United States for 2011.


• A "Relatively Modest" Income - what President Barack Obama said of the incomes earned by the employees of the federal government.


• The Distribution of Federal Employee Salaries - we adjust our 2008 data on the distribution of income for U.S. federal government employees for inflation to make it apply for 2009.


• The Distribution of Income for U.S. Federal Government Employees (2011 Edition) - in which we reveal just where U.S. federal government workers fit among all full-time, year-round income earners in the U.S.

The Distribution of Income for U.S. Federal Government Employees (2011 Edition)

Yesterday, as part of our look at the distribution of income for U.S. federal government employees in 2011, we compared them with the distribution of incomes earned by all individual American income earners. But is that really a good comparison?

If we're talking about major contributors to the level of income inequality in the United States, the answer is clearly yes. But then, that includes everyone from widows drawing Social Security survivors benefits and people who only work part time during the course of the year. One thing we reported in our previous analysis is that roughly 95% of the 2,221,780 civilian, non-postal service members of the U.S. federal government workforce work full-time, all year-round.

So, if we want to get a better sense of how the distribution of income for U.S. federal government employees compares to U.S. individual income earners, we should compare them with the portion of the U.S. population who is employed in full-time jobs, all year round.

And that's exactly what we've done in the following chart!:

In our chart, we find that the median income earned by a U.S. individual in 2011 who works full-time, all year-round is $44,934, some $22,040 less than the median income earned by U.S. federal government employees.

Meanwhile, the average income earned by a U.S. individual in 2011 was $59,804, which is $14,632 less than the average income of $74,436 earned by U.S. federal government employees.

So, once again, we find that the pay of U.S. federal government employees are strongly skewed to the upper end of the income spectrum of the United States.

But then, that only considers the cash portion of their compensation. In the next part of our analysis, we'll factor in the value of the benefits that each receive!

References

Asbury Park Press. Federal Employees, 2011. [Online Database]. Accessed 28 June 2013

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement. Table PINC-01. Selected Characteristics of People 15 Years and Over, by Total Money Income in 2011, Work Experience in 2011. Race, Hispanic Origin, and Sex: Worked Full-Time, Year-Round, Both Sexes, All Races. [Excel Spreadsheet]. Accessed 28 June 2013

Previously on Political Calculations

• The Smiths Go to Washington - we look at the distribution of income for U.S. federal government employees in 2008.


• The Smiths Go to Washington, Part 2 - we revisit the Smiths who work for Washington D.C. to see what they made in 2011.


• What's Your Income Percentile? - our model of the distribution of income in the United States for 2011.


• A "Relatively Modest" Income - what President Barack Obama said of the incomes earned by the employees of the federal government.


• The Distribution of Federal Employee Salaries - we adjust our 2008 data on the distribution of income for U.S. federal government employees for inflation to make it apply for 2009.


• The Distribution of Income for U.S. Federal Government Employees (2011 Edition) - the post you're reading right now, as it appears on our own site, complete with all charts!

The Smiths Go to Washington, Part 2

How has the distribution of the income for U.S. federal government employees changed since 2008?

We ask that question today, because we revisited the Smiths of Washington D.C. to see how much cash income that each person with "Smith" in their surname took home from their federal government job in 2011 [1].

Let's get right to it, shall we? Our chart below shows the cumulative distribution of cash income [2] for all non-postal U.S. federal government employees named "Smith" for 2011:

Now let's do some quick comparisons with 2008. The data for federal government employees excludes military and postal employees:

Data	2008	2011	Change	Percent Increase
Number of "Smiths" Employed by U.S. Federal Government	8,753	9,437	684	7.8%
Number of U.S. Federal Government Employees	2,040,066	2,221,780	181,714	8.9%
Median Income of U.S. Individuals	$26,513	$26,588	$75	0.3%
Median Income of U.S. Federal Government Employees	$60,310	$66,974	$6,664	11.0%
Average Income of U.S. Individuals	$38,376	$39,660	$1,284	3.3%
Average Income of U.S. Federal Government Employees	$68,294	$74,436	$6,142	9.0%
Highest Paid "Smith" Employed by the U.S. Federal Government [3]	$275,000	$362,448	$87,448	31.8%

The following chart illustrates the percent increase in the incomes of the median and average U.S. civilian, non-postal federal government employee and U.S. individuals from 2008 to 2011:

The pay of U.S. federal government employees has been frozen since 2010. As you can see from our table above comparing the median and average incomes of regular Americans with U.S. federal government employees, they did extremely well during the deep recession years by comparison.

Next, we've built a quick tool where you can find the percentile ranking of your income among the U.S. federal government's employees. If you're reading this article on a site that republishes our RSS news feed, click here to access a working version of this tool at our site!

Income Data
Input Data	Values
Your Income

Your Federal Government Employee Income Percentile (2011)
Calculated Results	Values
Your Percentile Ranking Among All U.S. Individual Income Earners
Your Percentile Ranking Among U.S. Federal Government Employees

In the tool above, the results indicate the percentage of either U.S. individuals or U.S. federal government employees who earn either as much cash income as you do, or less. As a heads up, our model of the distribution of income for U.S. federal government employees is least accurate at the very lowest end of the income spectrum, where it may overstate the income percentile by as much as 2.5%. However, once the entered income reaches the tenth percentile, it is typically within 1% or less of the actual values over the rest of the income spectrum.

Our default data in the tool above is the median income earned by all U.S. individuals in 2011. 50% of Americans with income earn more than this amount, and 50% earn less.

As you can see however, our tool estimates that about 5% of all U.S. federal government employees earn this amount or less, which means that at least 95% of all U.S. federal government employees earn more than this annual pay. That means that the U.S. federal government's non-postal, civilian employees are major contributors to the overall level of income inequality in the United States.

In upcoming posts on this topic, we'll compare the U.S. federal government's non-postal, civilian workers to U.S. individuals who work full-time, all-year round.

Notes

[1] Why 2011? We plan to compare the income distribution of federal government employees with those of regular Americans, for which the most recent year that the U.S. Census Bureau makes the data available is 2011. The Census Bureau won't release the data for 2012 until sometime in September 2013.

[2] We combined each Smith's base pay with any additional "award" they were paid in 2011 to come up with their total cash income for the year.

[3] Joseph K. Smith, a Medical Officer employed with the Veterans Health Administration in Birmingham, Alabama took home a cash income of $362,448 in 2011 (salary only). Interestingly, the largest bonus paid to a "Smith" employed by the U.S. federal government in 2011 was paid to another Medical Officer working out of the same station, Phillip D. Smith, who pocketed an extra $19,425 on top of his regular annual pay of $258,267 in 2011.

References

Asbury Park Press. Federal Employees, 2011. [Online Database]. Accessed 28 June 2013

U.S. Census Bureau. Federal Government Civilian Employment by Function: March 2008. [PDF Document]. Accessed 28 June 2013

U.S. Census Bureau. Federal Government Civilian Employment by Function: March 2011. [PDF Document]. Accessed 28 June 2013

The Incomes of Women Without Wages

Who is the median woman who doesn't earn a wage or a salary?

The question arises because of something we did last year. Specifically, when we extracted data for this demographic category of American income earner from other data published by the U.S. Census Bureau.

What makes this particular demographic category so interesting is that U.S. women who do not earn wages or salaries make up what is perhaps the lowest income earning group within the United States. To see what we mean, >our chart below shows the inflation-adjusted median incomes earned by women from 1947 through 2010 in terms of constant 2010 U.S. dollars:

So just who is the median woman who doesn't earn a wage or a salary, who is part of the lowest ranks of income earners in the United States?

The answer came to us when we were looking at the history of average Social Security retirement and survivors benefits paid out over time, for which the Social Security Administration provides data for selected years going back to 1956. Our chart below shows what we found:

What we find is that the income earned by the median U.S. woman without a job paying a wage or salary for the years from 1956 through 2010 is largely consistent with benefits paid by Social Security, which means the median U.S. woman who doesn't earn a wage or salary is of retirement age - typically Age 62 (for those taking a reduced benefit) or older (for those taking non-reduced benefits).

We note that for much of the data, the median income is less than the average income. This is a characteristic of the lognormal distribution of income. However, we do observe an upward shift in the data over time, which we believe corresponds to the increasing number of women with wage and salary income in the United States, whose incomes reflect their growing share among Social Security recipients.

The variation in the median income data would also appear to be somewhat consistent with having an increasing portion of income derived from investments, such as those that might be earned through an Individual Retirement Account or 401(k)-type retirement investment programs, which we recognize in the surges for median income earned in 1986-1989, 1997-1999 and later in 2005-2006, which coincide with booming periods for the U.S. stock market.

Once again, that would be very consistent with the kind of income that would be earned by a woman of retirement age in the United States, who it would seem collectively make up the lowest income earning demographic group within the United States!

The Demand Curve for the U.S. Minimum Wage

How much will President Obama's 2013 State of the Union proposal to increase the federal minimum wage to $9.00 per hour affect the teens and young adults who make up roughly half of all those who earn the minimum wage or less in the United States?

We've been dancing around that question as we've been considering the recent history of minimum wage increases in recent weeks, but today, we're finally going to answer it!

Or rather, you are, because we've built a tool that you can use to do the math for yourself! Here, you just need to enter either President Obama's or your own proposed minimum wage (ideally in terms of constant 2011 U.S. dollars), and our tool will do the rest!

Minimum Wage Data
Input Data	Values
Proposed Minimum Wage [U.S. Dollars per Hour]

Approximate Quantity of Americans Age 15-24 with Incomes
Calculated Results	Values
... After Minimum Wage Increase

For those of you accessing this tool through a site that republishes the RSS feed for our posts, click here to access the original functioning version of the tool above!

Using President Obama's proposed minimum wage of $9.00 per hour, we estimate that the number of 15-24 year old Americans with incomes would decline by over 1.8 million from 2011's figure of 26,014,000 to the 24,192,580 figure estimated by our tool above, assuming no major shifts of the demand curve for American teens and young adults.

Here's how we get to that figure. We built a demand curve for the minimum wage using the income data that the U.S. Census Bureau has collected and reported in an easy-to-use digital format for each year from 1994 to 2011 (until this September, this will be the most recent year for which this data is available.)

In doing that, we considered the timing of when changes in the U.S. federal minimum wage occurred in the years they were implemented, and weighted them accordingly.

And then, we considered the situation where a number of states have set their minimum wage levels above the federal minimum wage. Since the minimum wage that applies in those states is the greater of the federal or state minimum wage level, we then took into account the percentage of the U.S. population that might be affected by that difference, and weighted the effective national minimum wage level by the affected state populations exposed to higher minimum wage levels as well.

Our last step was to then adjust the resulting effective national minimum wage level for inflation, with the results recorded in terms of constant 2011 U.S. dollars.

The results of that hour's worth of work on our part is presented in the chart below, in which we visualize the demand curve for the U.S. minimum wage.

We next identified the years that coincide with the Dot-Com Bubble, which ran from April 1997 through June 2003, since the effect of the bubble first caused the demand curve for Age 15-24 Americans to shift to the right during the inflation phase of the bubble (April 1997 to August 2000) before shifting back to the left during the deflation phase of the bubble (August 2000 to June 2003) and ending up roughly where it started.

Having identified the years that were affected by the dynamics of the Dot-Com Bubble's inflation and deflation phases, we then excluded the data for these years from the linear regression analysis of the remaining data, as they are clearly the result of an atypical situation for the U.S. economy. Here, we assume that the demand curve follows a mostly linear path for the prices and quantities involved outside the years affected by the Dot-Com Bubble.

And that's how we created the demand curve for teens and young adults based on the empirical evidence we've documented below!

Now, some of our economically-minded readers might wander if using the minimum wage per hour is the right "price" to use in our chart.

It is, and here's why. Since we're spanning the years of 1994 through 2011 in our analysis, we considered the changes that have been recorded with respect to the distribution of the total money income earned by Age 15-24 individuals over that time. We adjusted the 1994 distribution of income for this age group to be in terms of constant 2011 U.S. dollars, then determined the net change in the number of individuals at a number of income increments between 2011 and 1994. The results of that exercise are presented graphically below:

From 1994 through 2011, the most recent year for which the data is currently available at this writing, the U.S. Census Bureau reports that there has been a net decrease of 1,012,000 teens and young adults with incomes. As you can see in our chart above, virtually all of the negative change in the number of Americans Age 15-24 with incomes has occurred at annual incomes that fall below $15,000.

At the current U.S. federal minimum wage of $7.25 per hour, the annual income earned by an individual earning that wage today while working full-time (40 hours per week), year-round (52 weeks) is $15,080. That means that virtually *all* of the decline in the number of Americans Age 15-24 with incomes from 1994 to 2011 have occurred at the income levels that were the most directly impacted by minimum wage increases over that time.

Recall also that after adjusting for the effect of inflation, the total amount of income earned by American teens and young adults in 1994 and in 2011 is virtually identical. Increasing the minimum wage does not increase the amount of money available to pay wages and salaries, so it provides no benefit to the nation's GDP.

In effect, what this empirical data demonstrates is that increases in a price floor like the minimum wage simply locks out those who find themselves falling below the floor from the job market, without doing much to really benefit those who are at or above that threshold.

Maybe a good question to ask right now is just why President Obama hates American teens and young adults so much?...

On a closing note, using the President's proposed minimum wage level of $9.00 per hour and the quantity of 24,192,580 teens and young adults estimated in our tool above in our economic deadweight loss analysis tool puts the approximate deadweight loss to the U.S. economy with respect to 1994 at just over $5.6 million per hour in terms of 2011 U.S. dollars. And that doesn't even begin to reflect the increased costs to U.S. families and taxpayers who will be additionally burdened to support this portion of the U.S. population.

Data Sources

Southern Regional Education Board. Population and Demographics. Age Distribution of the Population - Total Population. [Excel Spreadsheet]. June 2012. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Detailed Person Income (P60 Package). Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 1994, Work Experience in 1994 and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Detailed Person Income (P60 Package). Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 1995, Work Experience in 1995 and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Detailed Person Income (P60 Package). Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 1996, Work Experience in 1996 and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Detailed Person Income (P60 Package). Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 1997, Work Experience in 1997 and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Detailed Person Income (P60 Package). Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 1998, Work Experience in 1998 and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Detailed Person Income (P60 Package). Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 1999, Work Experience in 1999, Race, Hispanic Origin and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Detailed Person Income (P60 Package). Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 2000, Work Experience in 2000, Race, Hispanic Origin and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Detailed Person Income (P60 Package). Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 2001, Work Experience in 2001, Race, Hispanic Origin and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement. Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 2002, Work Experience in 2002, Race, Hispanic Origin and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement. Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 2003, Work Experience in 2003, Race, Hispanic Origin and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement. Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 2004, Work Experience in 2004, Race, Hispanic Origin and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement. Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 2005, Work Experience in 2005, Race, Hispanic Origin and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement. Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 2006, Work Experience in 2006, Race, Hispanic Origin and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement. Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 2007, Work Experience in 2007, Race, Hispanic Origin and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement. Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 2008, Work Experience in 2008, Race, Hispanic Origin and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement. Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 2009, Work Experience in 2009, Race, Hispanic Origin and Sex. Both Sexes, All Races. [HTML Document]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement. Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 2010 (Based on Census 2010 Population Controls), Work Experience in 2010 (Base on Census 2010 Population Controls), Race, Hispanic Origin and Sex. Both Sexes, All Races. [Excel Spreadsheet]. Accessed 6 March 2013.

U.S. Census Bureau. Current Population Survey. Annual Social and Economic (ASEC) Supplement. Table PINC-01 - Selected Characteristics of People 15 Years Old and Over, by Total Money Income in 2011, Work Experience in 2011, Race, Hispanic Origin and Sex. Both Sexes, All Races. [Excel Spreadsheet]. Accessed 6 March 2013.

U.S. Department of Labor. Bureau of Labor Statistics (BLS). Current Price Index - All Urban Consumers. Not Seasonally Adjusted. [HTML Document]. Accessed 6 March 2013.

U.S. Department of Labor. Wage and Hour Division (WHD). Changes in Basic Minimum Wages in Non-Farm Employment Under State Law: Selected Years 1968 to 2013. [HTML document]. Accessed 6 March 2013.

U.S. Department of Labor. Wage and Hour Division (WHD). History of Federal Minimum Wage Rates Under the Fair Labor Standards Act, 1938-2009. [HTML Document]. Accessed 6 March 2013.

Find Your Age-Based Income Percentile Rank

Building on our previous data visualization exercise, we've now gone the extra mile and built a tool you can use to estimate what your percentile income ranking is for your age group!

Just enter your data in our tool below, and we'll do the math, which is based on the age-based distribution of income in the United States for 2012 as reported by the U.S. Census Bureau.

Age and Income Data
Input Data	Values
Select Your Age Group	Age 15-24 Age 25-29 Age 30-34 Age 35-39 Age 40-44 Age 45-49 Age 50-54 Age 55-59 Age 60-64 Age 65-69 Age 70-74
Enter Your Total Money Income

Where You Rank Among Your Age Group
Calculated Results	Values
Your Income Percentile Ranking Within Your Age Group

Some quick notes - the data from which we built this tool doesn't provide a lot of detail at either the lowest end of the income spectrum or at the highest end. As a result, if your entered income places you below the 5th percentile or above the 95th percentile for your age group, we can only tell you that you fall into that percentile range as our tool's accuracy appears to break down below and above those levels.

We're also experimenting with how to incorporate the code behind our tool directly in this post. If you find the tool doesn't work when you first try to access it on our site, please check back later - we'll have it up and running as soon as our time allows.

Visualizing the 2012 Distribution of Income in the U.S. by Age

Where do you fit in the 2012 ranking of total money income by age group in the United States?

While we've previously built a tool where you can find out your percentile ranking among all individuals, men, women, families and households in the U.S., we thought it might be fun to break the data for individuals down a little differently - by age group!

Our chart below reveals what that distribution looked like for 2012, as indicated by the curves showing the major income percentiles from the 10th through the 90th percentile for each indicated age group on the horizontal axis.

The data in the chart represents the income distribution for the estimated 194,271,175 Americans from Age 15 through Age 74. As such, the space between each of the percentile curves on the chart then covers the total money income of some 19.4 million individual Americans.

What stands out most in the chart are the changes in the vertical spread between the 10th, 50th and 90th percentiles by age group, which might be taken as a measure of the relative income inequality for each age group. For example, we see the Age 15-24 group seems to have the greatest income equality, with the least amount of vertical separation between each of the income percentile thresholds.

We said "seems" for the Age 15-24 group, because believe it or not, this group has the highest income inequality of any age group as measured by the Gini index. The reason why has to do with the high concentration of very low income-earning individuals within this age range (for example, about 50% of all minimum wage earners are found in this age group!), against which a relative handful of very talented young people, including entertainers and star athletes, go straight from their school years to multi-million dollar incomes, often before many of these individuals see their careers flameout before they even make it into the next age group. The same phenomenon isn't true for the older age groups, who all tend to gain in income as they gain greater experience, as their Gini index values do follow the pattern we observe in the chart above.

Speaking of which, one thing that's pretty clear in the chart is that incomes at each major percentile threshold increase across the board as individuals accumulate work experience up through the Age 40-44 group. Above that point, that's would seem to only be true for above-median income-earning individuals.

Going back to the overall patterns we observe in this income distribution visualization, we see that the greatest vertical spread between the 10th and 90th percentiles occurs for the Age 50-54 group, which corresponds to the peak earning years for Americans.

But that vertical spread indicating income inequality diminishes rapidly for older age groups, which is consistent with the transition from earning wages and salaries to only having retirement income. It's especially interesting to see that the peak the retirement-associated decline occurs earlier for the 90th percentile income-earners, while it occurs around Age 55-59 for the lower income-earning percentiles.

The vertical spread between the 10th and 50th percentiles are interesting as well. Here, see see that after rising rapidly for the young, the 50th percentile income level begins to plateau for those around Age 35-39, then holds fairly level through Age 55-59, after which it declines as older individuals increasingly leave wage and salary-earning jobs they've had for years for retirement.

We'll revisit this chart in an upcoming post, where we'll conduct something of a thought experiment....

Notes

We took the age-based total money income data presented by the U.S. Census to construct cumulative income distributions for each included age group, then used ZunZun's curve-fitting tools to develop mathematical models for each to calculate the income that goes with a particular income percentile. The indicated incomes in the chart above are typically within a few hundred dollars of the IRS' published data.

As another hint to what's coming soon here at Political Calculations, those mathematical models just might show up in the future as a new tool that you can use to see exactly what your income percentile ranking is within your own age group!

Reference

U.S. Census Bureau. Current Population Survey. 2012 Annual Social and Economic Supplement. Table PINC-01. Selected Characteristics of People 15 Years Old and Over by Total Money Income in 2011, Work Experience in 2011, Race, Hispanic Origin, and Sex. [Excel Spreadsheet]. 12 September 2012.

The Discovery of the Unseen

The planet Neptune has never been seen by anyone looking at the night sky through just their own eyes. So distant is it from the sun that the light it reflects toward the Earth is so faint that the planet is effectively invisible in the darkness of night. And yet, the outermost large planet of our solar system was discovered by astronomers who knew exactly where to look....

Following William Herschel's discovery of Uranus in 1781, the world's astronomers went to work to observe and describe the seventh planet of the solar system, taking detailed measurements of its trajectory in space.

Forty years later, French astronomer Alexis Bouvard published detailed tables describing Uranus' orbit about the sun. More than that however, his tables incorporated the lessons learned about planetary orbits from Johannes Kepler and Sir Isaac Newton to chart the path Uranus would follow into the future.

But then, something strange happened. Significant discrepancies between Bouvard's projected path for Uranus and its actual orbit began to be observed - irregularities that were not observed in the tables he had created to describe the orbital paths of the planets Jupiter and Saturn using the same methods. Soon, observations and detailed measurements confirmed that Uranus was moving along a path that was not described by Bouvard's careful calculations.

These irregularities led Bouvard to hypothesize that an as yet unseen eighth planet in the solar system might be responsible for what he and other astronomers were observing.

Over twenty years later, astronomer Urbain Le Verrier was working on the problem, taking a unique approach to resolving it.

What made Le Verrier's work unique is that he applied the math developed by Sir Isaac Newton to describe the gravitational attraction between two bodies to solve the problem. Here, he used Newton's theory to anticipate where an as yet unknown, but more distant planet also orbiting the sun would have to be to create the effects observed upon the position of the planet Uranus in its orbit.

Le Verrier completed his calculations regarding the position of the hypothetical eighth planet on 1 June 1846. A little over three months later, on 23 September 1846, the planet Neptune was observed for the first time at almost exactly the position in space where Le Verrier predicted it would be, confirming Newton's gravitational theory in the process.

We're going to do something similar today to explain why household income inequality in the United States has increased over time, even though there has been no change in individual income inequality.

From Darkness to Discovery

Our first chart below is based on data taken from the U.S. Census' data [Excel spreadsheet] on the inflation-adjusted median and mean income for all Americans from 1947 through 2010, which we've presented in terms of constant 2010 U.S. dollars. For reference, we've also indicated the NBER's official periods of recession in the U.S. during this period with the shaded red vertical bands on the chart:

Next, we took the U.S. Census' breakdown of inflation-adjusted median income for both men and women for each of these years [Excel spreadsheet] and used the math that applies to log-normal distributions to construct the combined median income that applies to individuals. Our results are shown in the chart below, along with the actual median incomes reported by the U.S. Census so we can compare our calculated results with them:

As you can see, our calculated results in creating a weighted median from the subsets of median income data for men and women are very close to the actual real median income numbers for all individuals. Here, because per capita income has been demonstrated to follow a log-normal distribution, we are able to use this math to either combine or extract subsets of data that have never been officially presented.

As an aside, we achieved the results above by treating the reported median income data the way we might calculate a weighted average. The beauty of the log-normal distribution math is that we can do this with medians, which we ordinarily could not do otherwise.

In the chart above, you can see the effect of the changing composition of the U.S. workforce, as the relative share of women earning incomes in the United States has increased since 1947. In 1947, the median income for individuals is much closer to the median income for men than it is for women. By 2010 however, we see that the median income for individuals is about halfway in between the median incomes for men and for women, reflecting that nearly equal share that both sexes now have among all individual income earners in the U.S.

Extracting The Unseen

The U.S. Census Bureau provides the median income data for individuals (or persons), men and women. It also reports median income data for both male and female wage or salary earners [Excel spreadsheet], whom we'll simply describe as Working Men and Working Women.

Using the math we demonstrated above with this data, we can extract the median incomes for two categories of people for whom the U.S. Census has never reported median incomes: men and women with incomes who do not earn wages or salaries, or as we'll describe them from now on, Non-Working Men and Non-Working Women! Today, we're putting what we found for all U.S. individual income earners together for the first time:

Constructing Households

Now, let's combine our median income earners into two-person households, pairing working men and women, working men and non-working women, non-working men and working women and finally non-working men and non-working women. We've shown our results below, along with the U.S. Census' official median income for U.S. households:

Well, look at that! The households formed by our single-wage and salary income earning couples from 1947 through 2010 closely parallels the actual real median income for U.S. households with a working man and non-working woman over that time (except for the years 1974 through 1977, where there seems to be an anomaly in the Census' data for working men - and here, the actual median splits the difference!) Also keeping in mind that the actual median household income might include the income contributions of additional people (say individuals between the ages of 16 and 24 who might be working part time at minimum wage jobs while also attending school and living at home with their parents), which likely accounts for the difference between the two, we've pretty much just demonstrated that we can successfully model basic U.S. households using just the data that applies for U.S. individuals.

But wait! What about single person households? Our next chart throws them into the mix as well!

Using the figures for 2010, we approximated the income percentiles for each of our single and two-person median income earning households. The table below reveals our results (our model should put each approximated percentile within 0.2 of the actual percentile!):

Household Type	2010 Median Income	Approximate Income Percentile
Working Men and Working Women	$64,075	61.4
Working Men and Non-Working Women	$50,026	50.7
Working Women and Non-Working Men	$49,344	50.1
Non-Working Men and Women	$35,295	36.7
Working Men Only	$37,102	38.6
Working Women Only	$26,973	27.7
Non-Working Men Only	$22,371	22.4
Non-Working Women Only	$12,924	11.5

It occurs to us that all we would need to increase the income inequality among households in the United States is to increase the nation's percentage of single person households among all households. That would work by increasing the number of households at the lower end of the income spectrum, even though it would have absolutely no effect upon the measured income inequality for individuals. The U.S. Census Bureau shows the change in the number of single person households since 1960:

Here's the U.S. Census Bureau's Gini index measure of the amount of income equality among U.S. households for the years from 1947 through 2010:

And here is the Gini index measure of the amount of income equality among U.S. individuals for the years from 1947 through 2005 (the data since 2005 is presented here - it's similar to all that recorded since 1960 in the chart below):

The relevant data in the chart above is the Gini measure indicated with the hollow circles, which is based on the "fine", or more detailed, income bins reported by the U.S. Census in its annual Current Population Survey. The other data in the chart, indicated by solid diamonds, represents income distribution data reported by the U.S. Census in larger, or more "coarse" income bins, which are less detailed and are therefore a much less accurate measure of the nation's level of income inequality in any given year.

Intersections and Connections

Looking at where all the data in these three charts intersect and overlap, What we find is that since 1960, the level of income inequality for U.S. individuals as measured by the "fine" Gini index is nearly constant, but has increased significantly for U.S. households. What has changed over that time is the composition of U.S. households, with a steady increase in the percentage of single person households.

Without a corresponding increase in the measured income inequality for U.S. individuals, the increase in the measured income inequality for U.S. households has been almost entirely driven by the increase in the number of single person households over time.

So income inequality among U.S. households isn't increasing because the rich are getting richer. That means that policies intended to right this situation by going after the rich in the name of "fairness" are guaranteed to fail, because the real cause of the increase in income inequality among U.S. households over time is something that cannot be fixed by such actions.

If only the people pushing such policies could see that....

And that concludes our eighth anniversary post. Thank you for joining us today - we greatly appreciate your choice to spend so much time with us (we really do try to draft shorter posts!)

Celebrating Political Calculations' Anniversary

Our anniversary posts typically represent the biggest ideas and celebration of the original work we develop here each year. Here are our landmark posts from previous years:

• A Year's Worth of Tools (2005) - we celebrated our first anniversary by listing all the tools we created in our first year. There were just 48 back then. Today, there are nearly 300....


• The S&P 500 At Your Fingertips (2006) - the most popular tool we've ever created, allowing users to calculate the rate of return for investments in the S&P 500, both with and without the effects of inflation, and with and without the reinvestment of dividends, between any two months since January 1871.


• The Sun, In the Center (2007) - we identify the primary driver of stock prices and describe a whole new way to visualize where they're going (especially in periods of order!)


• Acceleration, Amplification and Shifting Time (2008) - we apply elements of chaos theory to describe and predict how stock prices will change, even in periods of disorder.


• The Trigger Point for Taxes (2009) - we work out both when, and by how much, U.S. politicians are likely to change the top U.S. income tax rate. Sadly, events in recent years have proven us right.


• The Zero Deficit Line (2010) - a whole new way to find out how much federal government spending Americans can really afford and how much Americans cannot really afford!


• Can Increasing the Minimum Wage Boost GDP? (2011) - using data for teens and young adults spanning 1994 and 2010, not only do we demonstrate that increasing the minimum wage fails to increase GDP, we demonstrate that it reduces employment and increases income inequality as well!


• The Discovery of the Unseen (2012) - we go where so-called experts on income inequality fear to tread and reveal that U.S. household income inequality has increased over time mostly because more Americans live alone!

References

Kitov, Ivan. "Modeling the evolution of Gini coefficient for personal incomes in the USA between 1947 and 2005," MPRA Paper 2798, University Library of Munich, Germany. 2007.

Lopez, J Humberto and Servén, Luis. "A Normal Relationship? Poverty, Growth and Inequality". World Bank Policy Research Working Paper 3814, 2006.

Pinkovskiy, Maxim and Sala-i-Martin, Xavier. "Parametric Estimations of the World Distribution of Income". NBER Working Paper No. 15433. October 2009.

Political Calculations. The Distribution of Income for 2010: Households. 14 September 2011.

U.S. Census Bureau. Changing American Households. [PDF document]. C-SPAN. 4 November 2011. p. 6.

U.S. Census Bureau. Table P-2. Race and Hispanic Origin of People by Median Income and Sex: 1947 to 2010. [Excel spreadsheet]. September 2011.

U.S. Census Bureau. Table P-4. Race and Hispanic Origin of People (Both Sexes Combined) by Median and Mean Income: 1947 to 2010. [Excel spreadsheet]. September 2011.

U.S. Census Bureau. Table P-53. Wage or Salary Workers (All) by Median Wage and Salary Income and Sex: 1947 to 2010. [Excel spreadsheet]. September 2011.

Wendt, Phil. Income Disparity by the Numbers. Phil Wendt's Studio. 26 December 2011.