9/25/12

Young people are getting poorer in real terms

The Census Bureau reports (real and current) mean income in various age groups. Figure 1 presents the evolution of real mean incomes (in 2010 US dollars) normalized to the highest mean income, i.e.  to the mean income  in 2000 measured in the age group between 45 and 54 years (marked as 50 in Figure 1).
The mean income in the age group between 65 and 74 years has been healthy rising since 1987 (first reading available). In the youngest age group (from 15 to 24 years of age), there is no change since 1967. This observation is often discussed in blogs - poor youngsters.   
Actually, the situation is even worse.  The CB does not include people without reported income in the calculation of mean income. Figure 2 presents the portion of people with income in the same age groups as in Figure 1.  The portion of young people with income has been falling since 1978. I do understand that the Census Bureau has no responsibility for people without income, but to report 33,000,000 people as having no income puts the CB’s questionnaire under doubt.  There is no explanation why all those people have no income. More outrageous, there is no intention to include those sources of income which may resolve this issue. In terms of physics, the Census Bureau reports measurements of an open system, which may fluctuate with the changing portion of population.
In Figure 3, we correct the curves in Figure 1 for the portions without income.  Actually, the mean income has been falling since 2001. This effect has been explained in my book - Mechanics of personal income distribution: The probability to get rich.
Figure 1. The evolution of real mean income in various age groups normalized to the peak income of $54,177 (2010 US dollars) as observed in 200 in the age group between 45 and 54.
Figure 2. The portion of people with income in various age groups.

 

Figure 3. The evolution of mean income in the youngest age group, the original one and that corrected for the portion of people without income.  

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