Fun with Fake Statistics: The 5% “Increase” in Median Household Income Is Pure Illusion

The truth is the rich are getting richer and everyone else is losing ground as inflation chews through stagnant incomes. Supporters of the status quo nearly wet their pants with joy when the Census Bureau reported that real (adjusted for inflation) median household income rose 5.2% between 2014 and 2015. Too bad it was completely bogus: the supposed increase in everyone’s income is pure statistical trickery. First, the marks who fell for it: here’s the Huffington Post wetting itself with glee: Average Americans Just Got a Huge Income Boost. This headline is risibly wrong on a number of counts. Most importantly, a notch up in median household income doesn’t mean “average Americans Just Got a Huge Income Boost”: It means that half of households in 2015 earned more than $56,516 and half earned less than $56,516. It does not mean every household saw a boost in income. Please follow along as I show you how median household income works. Let’s start with a simple sample group of ten households. Household #1 earns $40,000, #2 earns $41,000 and so on, as each additional household earns $1,000 more than the previous household. Household #10 earns $49,000.

This post was published at Charles Hugh Smith on SUNDAY, SEPTEMBER 18, 2016.