American Consumers Newsletter

by Cheryl Russell, Editorial Director, New Strategist Press
October 2010

Are You Better Off than Your Parents?
IN THIS ISSUE:

1. Hot Trends:  ARE YOU BETTER OFF THAN YOUR PARENTS?
2. Q & A:  WHO HAS HIGH INCOMES?
3. Cool Links:  IMMIGRATION FACTS, PRISON DEATH RATE
4. New Strategist Reference Tools:  AMERICAN ATTITUDES, AMERICAN HEALTH, AMERICAN GENERATIONS, and AMERICAN TIME USE

To see Cheryl Russell’s Demo Memo blog, click here.

1. Hot Trends 

Are You Better Off than Your Parents Were?

For Americans under the age of 55, the answer is no. It is not just the Great Recession that has set us back, either. Rather, the recession has unmasked the long-term decline in our standard of living. Yet most of us continue to assert that we are better off than our parents were at the same age. Even those of us with doubts are likely to blame our problems on the recession and assume any setbacks are temporary. How wrong we are.

Let’s take a look at what has happened to our standard of living. To do that, we must dive deeply into the numbers–an effort that requires navigating the backwaters of the Census Bureau’s voluminous online presence. It is tedious work, which is why you rarely see the revealing comparisons that you are about to read in the paragraphs below.

Before we dive into the data, however, let’s take a look at the surface conditions–the 2009 income statistics released last month from the Current Population Survey’s Annual Social and Economic Supplement. The CPS has been collecting data on the income of Americans since the late 1940s. It is the best comparative measure of socioeconomic trends. On the surface, those trends look surprisingly calm. The latest survey results show that median household income stood at $49,777 in 2009–not significantly changed from 2008. Behind this remarkable stability in the midst of the Great Recession is the baby-boom generation in its peak-earning  years. The age structure of the population is keeping the median afloat. But beneath the surface, conditions are rough.

Let’s get our heads wet by focusing on just one age group: 45-to-54-year-olds, the peak-earning years. This age group is the backbone of the American family and economy. The question is, are 45-to-54-year-olds doing better than their parents were at the same age? We can find out by comparing the socioeconomic status of 45-to-54-year-olds in 2009 with the status of their 45-to-54-year-old counterparts in 1989 (in many cases, their parents).

The first comparison is easy to find in Table H-10 of the Current Population Survey’s historical household income statistics. The Census Bureau has gathered all the numbers, adjusted them for inflation, and published the results in an easily accessible table. The finding: Compared to their parents, today’s 45-to-54-year-olds are falling behind. In 2009, households headed by people aged 45 to 54 had a median income of $64,235. This is 7 percent less than the $69,352 median income of householders aged 45 to 54 in 1989, after adjusting for inflation. The decline in household income occurred despite the increase in working women and the rise in educational attainment.

Now comes the harder part–comparing the incomes of today’s men aged 45 to 54 who work full-time with the incomes of their counterparts in 1989. You won’t find a table displaying these numbers on the Census Bureau’s web site. You have to do the work yourself by diving into the archives of the Current Population Survey and examining, page by page, the scanned hardcovers of the old (and beloved) income reports. There, in Table 25 of Money Income of Households, Families, and Persons in the United States: 1988 and 1989, you can see the incomes 20 years ago of men aged 45 to 54 who worked full-time. Back then, those men earned $61,230 (in 2009 dollars, an adjustment you must calculate yourself). Today, their 45-to-54-year-old counterparts earn 11 percent less, only $54,333. The growing incomes of women who work full-time has made up for some of the loss in men’s income at the household level, but has not entirely closed the gap.

Surely men with college degrees are doing better. We can find out by diving deeper into the Money Income report, scrolling downward to Table 29, where you see that 45-to-54-year-old men with a bachelor’s degree who worked full-time earned a median of $83,453 in 1989 (in 2009$). Today, their counterparts earn only $77,667. That figure is 7 percent less than what their fathers earned after adjusting for inflation.

Table 29 has more news for us. It reveals that men aged 45 to 54 who worked full-time and who had a high school diploma but no further education once made a decent living. In 1989, those men earned a median of $53,395 (in 2009$). In 2009, their counterparts earned just $37,107–a stunning 31 percent loss, after adjusting for inflation.

On top of these income losses, 45-to-54-year-olds are also less likely than their parents were to have defined-benefit pensions or health insurance, not to mention having to pay more for housing, health care, college, and retirement. The percentage of men aged 45 to 54 with employment-based health insurance (through their own or their wife’s job) fell from 74 to 67 percent between 1989 and 2009. The percentage who have no health insurance whatsoever climbed from 12 to 19 percent during those years.

Why do we continue to insist that we are better off than our parents were? One important reason is lifecycle experience. The average 45-to-54-year-old man makes considerably more today than he did in his youth. In 1989, men aged 25 to 34 who worked full-time had a median income of $42,897 (in 2009$). Today those men, now aged 45 to 54, have a median income, as noted above, of $54,333–27 percent more than their youthful income, after adjusting for inflation. No doubt, they feel like they are getting ahead. They do not know that they have fallen behind.

There is another reason we feel better off than our parents:  we have more stuff than they did–bigger houses, better televisions, computers and cell phones. Our gadgets give us the illusion of plenty. They have lulled us into accepting a lower standard of living without asking why or demanding that policymakers do something to counteract the downward trend.

By Cheryl Russell, editorial director, New Strategist Publications. If you have questions or comments about the above editorial, e-mail New Strategist at demographics@newstrategist.com.

BET YOU DIDN’T KNOW

Percentage of baby boomers who think their
standard of living is better than their parents
was at the same age: 60 percent.

Source: The Baby Boom: Americans Born 1946 to 1964

2. Q & A

Who Has High Incomes?

We have waited a long time for this. Finally, the Census Bureau has updated its income brackets to show demographic data for households with incomes that fall between $100,000 and $200,000. With the release of the 2009 income statistics from the Current Population Survey, the bureau is providing the full range of demographics for the income elite in $5,000 increments. For many businesses, the highest-income households seem to be the only customers left, so the data have arrived at an opportune time.

A substantial 20.1 percent of households had an income of $100,000 or more in 2009, which is why the Census Bureau felt the need to provide more information about households above that level. A smaller 8.2 percent of households had an income of $150,000 or more in 2009, and just 3.8 percent had an income of $200,000 or more. The percentage of households with incomes of $200,000 or more has ranged narrowly between 4.0 and 3.7 percent for the past decade.

Among the 4.5 million households with an income of $200,000 or more, fully 80 percent are headed by people aged 35 to 64. Householders aged 45 to 54 are the largest share of these households (33 percent). Householders aged 55 to 64 are a slightly larger share (25 percent) than those aged 35 to 44 (23 percent).

By providing detail on households with incomes between $100,000 and $200,000, we can see more precisely the median incomes of high-earning households such as dual-income couples in which both husband and wife work full-time ($103,527) and households headed by someone with a professional degree ($123,784).

For more on the income of Americans, check out the latest Current Population Survey data here.

By Cheryl Russell, editorial director, New Strategist Publications. If you have any questions or comments about the above Q & A, e-mail New Strategist at demographics@newstrategist.com.

BET YOU DIDN’T KNOW

Percentage of workers whose employers provide health care benefits, by wage quartile…

Lowest pay quartile:  42%
Highest pay quartile:  92

Source: American Health

3. Cool Research Links

To keep up-to-date on ever-changing demographics and lifestyles, check out these useful links.

Immigration Statistics
Once again, immigration is a hot button issue. At this site you can get the latest data on legal immigrants in the recently released 2009 Yearbook of Immigration Statistics, as well as the latest report on undocumented immigrants. These reports are updated annually by the Department of Homeland Security. The latest Yearbook shows that legal immigration reached an all-time high in the 2000-09 decade. More than 10 million people became legal permanent residents of the United States during those years. In contrast to record-setting legal immigration, the number of undocumented immigrants has declined because of the economic downturn. The number of illegals living in the United States fell from a peak of 11.8 million in 2007 to 10.8 million in 2009.

Prison Mortality
Although access to this research (which appeared in the August 2010 issue of Demography) is restricted, the astounding results published in the article, “Incarcerating Death: Mortality in U.S. State Correctional Facilities, 1985-1998,” are worthy of attention. In the article, Vanderbilt University sociologist Evelyn J. Patterson compares the mortality rate of men in state correctional facilities with the rate of men who are not in prison. She discovers that imprisoned black men have a lower mortality rate than black men who are not in prison. After controlling for firearm and motor vehicle deaths, the mortality rate for imprisoned black men is still lower. The reason, suggests Patterson, is that imprisoned black men have greater access to basic health care than their counterparts outside prison walls.

BET YOU DIDN’T KNOW

Percentage of people who read for personal interest on an average day, by age…

<age 35: 12%
35 to 44: 17
45 to 54: 23
55 to 64: 35
65 to 74: 45
75 or older: 52

Source: American Time Use

4. New for 2010: Find out how American Consumers Spend their Money

Get accurate and reliable answers to your questions about American consumers from New Strategist’s books and downloadable reference tools. Much of the data in New Strategist’s references you cannot get anywhere else–including online!

  • American Attitudes: Who Thinks What about the Issues that Shape our Lives The new sixth edition of American Attitudes coaxes the results of the latest General Social Survey out of the shadows of academia and makes them readily available for researchers who want to explore Americans’ changing attitudes. Its hundreds of tables reveal what Americans think about topics ranging from gay marriage to the American Dream, how we feel about our financial status, our hopes for our children, how often we socialize and with whom, our religious beliefs, political leanings, and working conditions. Click here to see tables of contents, sample pages, and more.
  • American Generations: Who They Are and How They Live The new seventh edition of American Generations is a superior resource for researchers who want to quickly and easily compare and contrast the six living generations–iGeneration, Millennial, Generation X, Baby Boom, Swing, and World War II. Today’s world is changing rapidly and people who are as little as ten years apart in age can have very different experiences growing up, making them unlike one another in significant ways. American Generations reveals their differences and similarities. Click here to see tables of contents, sample pages, and more.
  • American Health: Demographics and Spending of Health Care Consumers The new third edition of American Health provides a comprehensive look at the demographics of health care consumers and the services they use, ranging from fish oil supplements to mammograms, from doctor visits to prescription medications. Click here to see tables of contents, sample pages, and more.
  • American Time Use: Who Spends How Long at What If you have ever wondered while watching TV why advertisers are so intent on selling snacks or sleep aids or cleaning products–or even why they spend so much money on television advertising itself–the new second edition of American Time Use has the answers. Here you can find detailed time use data for the two most important demographic characteristics for determining how people spend their time–their age and sex. Click here to see tables of contents, sample pages, and more.
For your convenience, New Strategist’s titles are available as searchable single- and multiple-user pdfs that are linked to spreadsheets of all the data tables in each book so you can do your own analysis and create PowerPoint presentations.

 

BET YOU DIDN’T KNOW

Percent change in average household spending on pets, 2000 to 2008 (in 2008 dollars): +118%

Source: Who’s Buying for Pets, 6th edition