Household Income Falls in March 2014

One step forward, two steps back. Median household income ticked up in February, only to fall back in March. According to Sentier Research, median household income fell to $53,043 in March 2014. This figure is 0.7 percent lower than in the previous month, after adjusting for inflation. The March 2014 median was 1.3 percent higher than the March 2013 figure, however, and 3.0 percent higher than the $51,482 of August 2011—the low point in Sentier's household income series. Sentier's median household income estimates are derived from the Census Bureau's monthly Current Population Survey.

We are still playing catch-up with the way we were. Median household income in March 2014 was a substantial 4.0 percent below the median of June 2009, the end of the Great Recession. It was 5.7 percent below the median of December 2007, the start of the Great Recession. It was 6.9 percent below the median of January 2000. For more information on household income trends for the nation, states, and metropolitan areas, visit the Sentier Research web site.

Source: Sentier Research, Household Income Trends: March 2014

First-Time Homebuyer Watch: 1st Quarter 2014

Homeownership rate of householders aged 30 to 34, first quarter 2014: 47.5%

Another decline in the homeownership rate of householders aged 30 to 34. The 47.5 percent rate recorded for this age group in the first quarter of 2014 was 1.4 percentage points below their rate a year ago and 1.1 percentage points below their fourth quarter 2013 rate. 

Householders aged 30 to 34 were once the nation's first-time homebuyers. Historically, this was the age group in which homeownership became the norm—rising above 50 percent. But beginning in 2007, the homeownership rate of 30-to-34-year-olds went into a tailspin. In the second quarter of 2011, the rate fell below 50 percent for the first time. It bottomed out at 46.9 percent in the third quarter of 2012 and has bobbled around 48 percent in every quarter since.

The only good news for the housing industry in the latest Census Bureau release is the rise in the homeownership rate of householders aged 35 to 39—the new age of first-time home buying. The homeownership rate of 35-to-39-year-olds climbed from 55.3 percent in the first quarter of 2013 to 56.5 percent in the first quarter of 2014—a 1.2 percentage point gain.

Nationally, the homeownership rate slipped to 64.8 percent in the first quarter of 2014, down from 65.0 percent one year ago.

Source: Census Bureau, Housing Vacancy Survey

Searching for the Middle Class

How do you define the middle class—is it a number or a feeling? In a recent study, the Congressional Research Service examined both approaches to defining the middle class.

The number. One way to define the middle class is statistically, such as dividing households into fifths based on their income. Everyone in the middle three quintiles, say, is defined as middle class. In 2012, this includes households with incomes between $20,591 and $104,087.

The feeling. Alternately, the middle class can be defined as a psychological pat on the back—the sense of satisfaction obtained when comparing your income to the income of those around you. Studies have found a strong link between relative income and self-reported happiness. "Relative income most affects well-being when a group's income is above the average in its state but not at the top (90th percentile) of the income distribution," notes the report. That feeling of well-being defines the middle class. If you don't feel it, you're not in it.

Source: Congressional Research Service, The Distribution of Household Income and the Middle Class (PDF)

Measuring the Losses of the Great Recession

"As society becomes richer over time, succeeding cohorts acquire more wealth than their predecessors," notes an Urban Institute study. "The cohort born in 1943-51 were wealthier than those born in 1934-42 (at the same age), who were wealthier than those born in 1925-33."

Until 1952, that is. For those born in 1952 and later, wealth began to shrink relative to preceding cohorts at the same age. The Great Recession had something to do with this reversal of fortune, according to the study, which estimates how much richer American households would be today if the Great Recession had never happened. Answer: 28.5 percent richer. For younger adults—Gen Xers in particular—the gap between what is and what could have been is much bigger—47 percent—because many were recent homebuyers and disproportionately affected by the housing market collapse.

Source: Urban Institute, Impact of the Great Recession and Beyond

Adopted, Step, and Biological Children

Adopted children live in the most affluent households. Biological children are the least affluent. A Census Bureau report analyzes the nation's adopted, step, and biological children under age 18 and the characteristics of their parents. These are among the findings...

• Number. Of the nation's 65 million children, 62 million are biological children of the householder, 2.4 million are step children, and 1.6 million are adopted.
• Income. The nation's adopted children live in households with a median income of $73,378. This compares with a smaller median of $64,974 for step children and an even smaller median of $59,905 for biological children. 
• Education. The parents of adopted children are much better educated than other parents. Thirty-nine percent have a bachelor's degree or more education compared with 31 percent of biological parents and just 20 percent of step parents.
• Homeownership. The parents of adopted children are more likely to be homeowners (76 percent) than the parents of step or biological children (61 and 62 percent, respectively).
• Race. The parents of adopted children are more likely than the parents of step or biological children to be of a different race than their child—24 percent versus 13 and 7 percent, respectively.
• Age. The parents of adopted children are older than the parents of step or biological children, with an average age of 44.8 versus 38.5 for step parents and 38.4 for biological parents. 

Source: Census Bureau, Adopted Children and Step Children: 2010

The Baby-Boom Generation Is Shrinking

As of July 1, 2013, there were 316,128,839 people in the United States. The Census Bureau recently released estimates of the population by single-year of age on that date. Here is the size, share of total population, age range, and birth date of each generation...

Recession generation: 19,868,088 (6.3%)
   aged 4 or younger, born 2009 or later
iGeneration: 58,003,393 (18.3%)
   aged 5 to 18, born 1995 to 2008
Millennial generation: 77,970,996 (24.7%)
   aged 19 to 36, born 1977 to 1994
Generation X: 49,211,709 (15.6%)
   aged 37 to 48, born 1965 to 1976
Baby-boom generation: 75,900,696 (24.0%)
   aged 49 to 67, born 1946 to 1964
Older Americans: 35,173,957 (11.1%)
   aged 68 or older, born 1945 or earlier

Aging is taking a toll on boomers and older Americans. Since 2010, the baby-boom generation has shrunk by 1.1 million, and the number of older Americans has declined by 5.1 million. Generation X is just beginning the downward slide, falling by 207,000. The millennial generation is still growing, however. Thanks to immigration, the number of millennials expanded by 1.4 million between 2010 and 2013.

Who Reads Hard Copy Books?

Forty-six percent of American adults say they read only hard copy books, according to a Harris survey. A slightly larger 48 percent read books in hard copy and in electronic formats, and 6 percent read only e-books. By generation, this is the percentage who...

Read books in hard copy only

Millennials: 34%

Gen Xers: 46%

Boomers: 52%

Matures: 57%

Source: Harris Interactive, Power(ed) Readers: Americans Who Read More Electrically Read More, Period

Yoga by Region

Every five years the federal government surveys the public about its use of "complementary" medicine, which is defined as "a group of diverse medical and health care interventions, practices, products, or disciplines that are not generally considered part of conventional medicine." The first findings from the 2012 survey results examine regional differences in the use of several categories of complementary medicine, among them yoga and massage.

Regional differences in the practice of yoga and massage are not a surprise, but interesting to see documented. Nationally, 8.4 percent of adults practiced yoga in 2012. The practice peaks at 12.1 percent in the Pacific states and bottoms out at 5.1 percent in the East South Central states of Alabama, Kentucky, Mississippi, and Tennessee. The regional pattern for massage therapy is similar. Overall, 6.8 percent of adults participated in massage therapy in 2012. The percentage peaks at 9.4 percent in the Pacific and Mountain states and bottoms out at 2.5 percent in the East South Central states. "Regional differences persist across a wide range of complementary health approaches," explains the report, and are due to "environmental and cultural factors" unique to towns and regions.

Source: National Center for Health Statistics, Regional Variation in Use of Complementary Health Approaches by U.S. Adults

The World's Most Popular Food

Will you dine on the world's most popular food today? The answer is "yes" if you plan to eat pizza, according to the USDA. In an analysis of pizza consumption, government researchers estimate that a substantial 13 percent of Americans aged 2 or older eat pizza on an average day. A government analysis of pizza consumption might seem a bit silly, but it's actually important because the dish plays such a big role in the American diet. Pizza accounts for a large portion of our daily intake of protein, calcium, sodium, and other nutrients—not to mention calories.

Younger Americans eat the most pizza. Twenty-two percent of children and teenagers (aged 6 to 19) eat pizza on an average day. Among those who do, the largest share have it for lunch (44 percent) and another 42 percent for dinner. The remainder eats it as a snack (10 percent) or even for breakfast (4 percent).

The likelihood of eating pizza on a given day declines with age to a low of 6 percent among people aged 60 or older. Among adults who eat pizza, the 59 percent majority have it for dinner, 28 percent for lunch, 11 percent as a snack, and 2 percent for breakfast.

Source: USDA, Food Surveys Research Group, Consumption of Pizza, What We Eat in America, NHANES 2007-2010

The Health Insurance Statistics Problem

There's a reason why economists are invited to testify before Congress and fêted at White House events while demographers are relegated to a warren of offices in the basements of beltway buildings. Economists are Big Picture people. They get it. Demographers are spreadsheet people. They don't.

The demographer problem explains why the "technicians" at the Census Bureau decided now was the time to introduce a new way to measure health insurance coverage—just as the Affordable Care Act goes into effect, just as the statistics collected by Gallup, Rand, the Urban Institute, and other organizations begin to show a jump in health insurance coverage. The Census Bureau's health insurance estimates for 2013 and onward will not be comparable with 2012 and earlier. Those crazy demographers.

Yes, yes, demographers have their reasons. The director of the Census Bureau explained their reasons after the news broke in the New York Times—the years of research, the tests, the results. Too bad that during all those years none of the technicians looked up from their spreadsheets long enough to see the Big Picture—the politics, the media, the nation's need for a story.

"The Census Bureau, the authoritative source of health insurance data for more than three decades, is changing its annual survey so thoroughly that it will be difficult to measure the effects of President Obama's health care law," explained the New York Times. Improved methodology is important, demographers would argue, but sometimes the Big Picture is even more important.

Income of the Population 55 or Older

Among people aged 55 or older, earnings as a share of total income by age...

Aged 55 to 61: 73%
Aged 62 to 64: 55%
Aged 65 to 69: 32%
Aged 70 to 74: 16%
Aged 75 to 79: 9%
Aged 80-plus: 4%

Among people aged 55 or older, Social Security as a share of total income by age...

Aged 55 to 61: 9%
Aged 62 to 64: 22%
Aged 65 to 69: 43%
Aged 70 to 74: 58%
Aged 75 to 79: 65%
Aged 80-plus: 70%

Source: Social Security Administration, Income of the Population 55 or Older, 2012

When Did Men's Income Peak?

Here's an interesting exercise. Take the median income of American men since 1950, adjust it for inflation, and rank it from highest to lowest to determine the year in which men's income peaked and how much it has declined since then.

Among all men aged 15 or older, median income peaked in 2000, at $37,791. Between the peak year and 2012, men's median income fell 10 percent—to $33,904, after adjusting for inflation. A 10 percent decline sounds pretty bad, but if you do this exercise for men of working age (25 to 64), the trends are even worse...

Year in which men's median income peaked
Aged 25 to 34: 1973
Aged 35 to 44: 1973
Aged 45 to 54: 1999
Aged 55 to 64: 2003

Percent change in men's median income, peak year to 2012
Aged 25 to 34: -27%
Aged 35 to 44: -19%
Aged 45 to 54: -17%
Aged 55 to 64: -13%

The median income of men aged 25 to 34 has plunged since 1973, falling from $46,598 to $34,113 after adjusting for inflation—a loss of $12,485. Men aged 35 to 44 have lost $10,345 since their peak. Men aged 45 to 54 have lost $9,762, and men aged 55 to 64 have lost $6,407.

Source: Census Bureau, Historical Income Statistics

Travelers 50-Plus

The average household spends about $1,500 on travel each year, according to the Consumer Expenditure Survey. The biggest spenders on travel are older Americans. The AARP recently surveyed Americans aged 50-plus to examine how frequently they travel for nonbusiness purposes and how they make arrangements for their trips. Some of the findings...

• Number of trips per year of more than 250 miles: 3.32 
• Most frequent travelers: 60-to-69-year-olds (3.81 trips per year)
• Percent using the Internet to book trip arrangements: 84%
• Top two reasons for travel: spend time with family (59%) and vacation (44%)

Source: AARP, AARP Online Travel Study

Summer or Winter?

According to a recent Gallup survey, only 34 percent of the American public worries a great deal about global warming. Maybe that's because fully 77 percent of Americans prefer summer to winter, according to a Harris survey. Here are the percentages who prefer summer by generation...

Millennials: 70%
Gen Xers: 80%
Boomers: 79%
Older: 86%

Source: Harris Interactive, Less than Half of Americans Believe Humans Are Cause of Global Climate Change

Underemployment among Recent College Graduates

For recent college graduates, underemployment is a bigger problem than unemployment, according to a study by the Federal Reserve Bank of New York. Underemployment is defined as working at a job that does not require a college degree. A recent Fed study measured the underemployment rate of all college graduates and recent college graduates.

Among all college graduates, the underemployment rate (calculated by dividing the number of college graduates who are underemployed by the total employed) has remained steady at about 33 percent over the past two decades. Among recent college graduates (those aged 22 to 27), a larger 44 percent were underemployed in 2012.

Although today's high rate of underemployment among recent college graduates is not unprecedented (the rate was 46 percent in 1990-91), there are some troubling differences between then and now. First, the share of recent college graduates who are underemployed in "good jobs" (with an average wage of about $45,000 per year) has declined from about half to about one-third. Second, the share of recent college graduates who work part-time has climbed from 14 to 23 percent.

"Taken as a whole, these trends provide evidence that the job prospects for recent college graduates have indeed worsened," conclude the researchers.

Source: Federal Reserve Bank of New York, Are Recent College Graduates Finding Good Jobs?

Payment Choice by State

A study of 2 billion retail transactions at a discount chain with thousands of stores reveals differences by state in the frequency with which customers pay with cash, debit cards, credit cards, or checks. Here are the states in which customers are most likely to use...

Cash: New Jersey
Debit: Arizona
Credit: Minnesota
Check: South Dakota

Source: Federal Reserve Bank of Richmond, Payment Choice and the Future of Currency: Insights from Two Billion Retail Transactions

Survey Tracks Changes in Health Insurance Coverage

In the field of demography, rapid change is rare. But rapid change is what we have today as the Affordable Care Act extends health insurance to millions.

According to the Urban Institute's Health Reform Monitoring Survey, the number of 18-to-64-year-olds with health insurance expanded by a substantial 5.4 million between September 2013 and March 2014. The percentage without health insurance fell from 17.9 to 15.2 percent during those months. But there are big differences in the percentage of 18-to-64-year-olds without health insurance by state, depending on whether the state chose to expand Medicaid...

States expanding Medicaid: 12.4%
States not expanding Medicaid: 18.1%

Source: Urban Institute, QuickTake: Number of Uninsured Adults Falls by 5.4 Million since 2013

What's Behind the Pension Gap?

There's a yawning gap in the pension participation of older workers by income. The Center for Retirement Research of Boston College analyzes 1992 to 2010 data from the Health and Retirement Study to determine why this gap exists and what can be done about it.

Among people aged 50 to 58 in 2010, only 19 percent of those with household incomes below 300 percent of the poverty level participated in a pension at their workplace. Among workers in the same age group with incomes above 300 percent of the poverty line, the 56 percent majority participated in a pension at work. What accounts for this gap? The results of the analysis show that the low participation rate of low-income workers is not due to a lack of interest nor due to a lack of income. Instead, the gap is caused primarily by the lower employment rate of low-income individuals (they can't get a job) and the lower probability that those with a job will be offered a pension by their employer (they can't get a good job).

"Policies such as automatic enrollment that focus on pension eligibility or take-up are unlikely to close the pension coverage gap," conclude the CRR researchers. There's no quick fix for closing the gap, they say, because it will require not only more jobs, but more "good jobs."

Source: Center for Retirement Research at Boston College, Lower-Income Individuals without Pensions: Who Misses Out and Why?

Few Older Americans Own a Smartphone

Cell phones are popular among Americans aged 65 or older, but smartphones are not. According to a survey by Pew Research Internet Project, fully 77 percent of people aged 65 or older own a cell phone, including the majority of people aged 80 or older. Here are the percentages by age...

Own cell phone
Aged 65 to 69: 84%
Aged 70 to 74: 84%
Aged 75 to 79: 72%
Aged 80-plus: 61%

Few of those cell phones are smartphones, however. Only 18 percent of people aged 65 or older own a smartphone, with the proportion falling steeply with age...

Own smartphone
Aged 65 to 69: 29%
Aged 70 to 74: 21%
Aged 75 to 79: 10%
Aged 80-plus: 5%

Source: Pew Research Internet Project, Older Adults and Technology Use

The 10 Largest Occupations, 2013

Just 10 occupations employ more than one in five (21 percent) American workers. Here are those occupations and the annual average wage for full-time workers in 2013, ranked by number employed...

1. Retail salesperson: $25,370
2. Cashier: $20,420
3. Food prep worker: $18,880
4. Office clerk: $29,990
5. Registered nurse: $68,910
6. Waiter or waitress: $20,880
7. Customer service rep: $33,370
8. Laborer: $26,690
9. Secretary: $34,000
10. Janitor: $25,140

Source: Bureau of Labor Statistics, Occupational Employment and Wages—May 2013

Hispanic is Not a Race

Hispanic is an ethnic origin and not a race. Demographers have been trying to explain that one for decades. No one struggles with the distinction between race and ethnicity more than Hispanics themselves, as revealed by a recent Census Bureau working paper.

Among the nation's 50 million Hispanics in 2010, fully 41 percent identified themselves as "some other race" on the census race question or did not respond to the race question at all. To solve this glaring problem, the Census Bureau is considering combining the race and ethnic origin questions on the 2020 census. For more, see Race Reporting Among Hispanics: 2010.

Household Income Rises in February 2014

Finally, an uptick in median household income. According to Sentier Research, median household income climbed to $53,093 in February 2014. This figure is 1.2 percent higher than the January 2014 median, after adjusting for inflation. The February 2014 median is 3.8 percent higher than the $51,152 of August 2011—the low point in Sentier's household income series. Sentier's median household income estimates are derived from the Census Bureau's monthly Current Population Survey.

Despite the increase, median household income in February 2014 was still 3.3 percent below the median of June 2009, the end of the Great Recession. It was 5.0 percent lower than the median in December 2007, the start of the Great Recession. It was 6.2 percent lower than the January 2000 median. For more information on household income trends for the nation, states, and metropolitan areas, visit Sentier's web site. 

Source: Sentier Research, Household Income Trends: February 2014