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Average Household Income in the United States

A Surprising Look At Your Neighbors' Pay Stubs

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Household Income in the United States

The Federal Government revealed shocking statistics about household income in the United States. The richest 5% of Americans consists of married couples, both of whom worked, and earned a combined $157,176.

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There are several key facts about average household income in the United States that stand out when you look at the data.

  • Most of the Top 5% of households (which requires income of $157,176) consist of two earners. That means that a husband and wife both making $78,588 would qualify, together, as a Top 5% households based on their combined earnings. This results in a "reach up" effect whereby two blue collar working class earnings, for instance, can actually qualify for the middle class based on their household income. That's why you see spouses that both work at lower paying factories often able to afford the trappings of the middle class; with shared food, housing, and utility bills, the economies of scale that come with marriage or cohabitation permit a greater percentage of income to go to discretionary spending.
  • The wealthier you are, the less likely it is you rent. When you spend money on renting, you're throwing cash out the door because you aren't building equity in your property through appreciation and you aren't getting the tax write-off of the mortgage.
  • The wealthier you are, the more likely it is you're married. Combining this data with what we know about average household income in the United States from Dr. Thomas Stanley's research, it becomes clear that stable, long-term, committed couples are far more likely to reach financial independence than non-monogamous single people. This has to do with building home equity over decades, as well as the economies of scale we discussed a moment ago.
  • To be in the top 20% of household income in the United States, you only need an adjusted gross income of $88,030. If you are a household with two earners, as most of these are, that means just $44,015 per spouse. It's highly unlikely that a couple in this situation realize the fact they are earning more than 8 out of 10 American households, especially if they are facing college tuition for their children or costs of caring for older family members.

  • White men and women represents approximately 74% of the population of the United States but make up 87.93% of the Top 5% earning households. This means that white men and women are overrepresented by 13.93% compared to minority groups. When looking at the education correlation with wealth (the higher the degree attained, the higher the income a household earns statistically), most of this can be accounted for by the lower rate of high school graduation in African American and Hispanic males. This would indicate the best opportunity to fix income inequality among racial groups would be by investing in education and providing access to college.

This data is taken from the New York Times and is based upon the most recent Census data available at the time of publication, recorded in 2005.

Household Income by Quintiles According to the New York Times

Data All Households Lowest 20% Second 20% Middle 20% Fourth 20% Highest 20% Top 5%
Households (in 1000s) 113,146 22,629 22,629 22,629 22,629 22,629 5,695
Lower limit $0 $0 $18,500 $34,738 $55,331 $88,030 $157,176
Median number of income earners 1 0 1 1 2 2 2
Owner occupied 62.4% 49.0% 58.8% 68.9% 80.5% 90.0% 92.8%
Renter occupied 29.2% 48.3% 39.7% 29.9% 18.7% 9.6% 6.9%
Non-family households 31.93% 58.92% 40.02% 29.96% 19.12% 11.64% 9.36%
Family households 68.06% 41.06% 59.97% 70.04% 80.87% 88.35% 90.61%
Married couple families 51.35% 19.03% 38.89% 51.00% 67.05% 80.08% 85.59%
Single-male family 4.32% 3.08% 4.64% 5.69% 4.89% 3.30% 2.47%
Single-female family 12.38% 18.94% 16.43% 13.35% 8.93% 4.24% 2.54%

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