Monday, August 31, 2015

The New Income Estimates

The Census Bureau thinks long and hard before tinkering with the all-important Current Population Survey Annual Social and Economic Supplement (CPS ASEC), from which emanates much of what we know about the economic status of the American people. But sometimes change is necessary, and this is one of those times. The Census Bureau has been working on a redesign of the ASEC income questions for 14 years, attempting to improve the accuracy of the nation's official income statistics. When the bureau releases the 2015 CPS ASEC results on September 16 (with income data for 2014), the redesign will be fully implemented. Here's what you need to know...
  • A redesign of the CPS ASEC income questions has been sorely needed, in part because the original questions failed to capture most withdrawals from IRAs and 401(k)s. The redesign counts these withdrawals as income. 
  • Analyzing income trends will be problematic—at least in the short run. Data from the redesigned questions are not comparable with data from the original questions. To provide a bridge, the Census Bureau has released 2013 income data from a 2014 ASEC sample that was asked the new questions. At the above link, there are two sets of 2013 tables—the original and the redesign, allowing researchers to compare the original numbers with the redesign and also to determine the 2013-to-2014 trend when the 2014 data are released on September 16. 
  • The redesigned income questions boosted overall aggregate income in 2013 by 4.2 percent, according to a comparison of data from the original and redesigned questions. While earned income did not change, unearned income was 12.4 percent higher in the redesign. 
  • Median household income in 2013 was 3.2 percent greater with the redesigned questions. While there was no statistically significant change in median household income among younger adults, the median income of households headed by people aged 55 or older was about 5 percent higher primarily because of retirement account withdrawals. 
  • Many more Americans reported receiving income from an IRA, Keogh, or 401(k)—the figure rising from 1 million in the original to 5 million in the redesign.
It will take a while to digest these changes. The Census Bureau plans to provide a research file with adjusted income data, allowing for historical comparisons. Until then, the starting point for income trend analysis will be 2013.

Source: Census Bureau, 2013 Income, Poverty, and Health Insurance Products Based on Redesigned Current Population Survey Annual Social and Economic Supplement Questions

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