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Source: Credit Card Expert

Category: Digital Media, Wages & Income

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

43 Responses to “1% vs. Average American”

  1. MayorQuimby says:

    Average net worth is not $121,000 by any stretch of the imagination.

    First, you have to subtract debt from net worth.

    Secondly, if you divide population into M2 you get $31K in existence per capita.

    After debt is taken off net worth is far lower than even that.

    Numbers are off.

  2. MayorQuimby says:

    ADD:

    NOW you should feel poor!!!

  3. jsp9999 says:

    What is net worth in this 121K figure? Does it include primary home? Wouldn’t it be more accurate to say liquid net worth excluding essential properties like residence, cars, etc? Also a median probably is a better indicator than average or mean.

  4. Concerned Neighbour says:

    Agree with MQ, that net worth figure seems way too high, especially after the housing bust. Also agree with jsp that median net worth is more meaningful.

    I was surprised to see one percenters hold any credit card debt. Is it not worth their time to pay it off?

  5. rootless says:

    MayorQuimby:

    Average net worth is not $121,000 by any stretch of the imagination.

    First, you have to subtract debt from net worth.

    Now, I don’t know whether the numbers are right, but net worth already includes debt by definition, doesn’t it?

    Net worth = assets – liabilities

  6. teraflop says:

    Office cleric? What’s this, holy typists?

  7. BillG says:

    I think they’re looking at household net worth. And their numbers are pretty close to what I’d seen in the past for that. I looked up the methodology one time for one of these calculations (I believe it came from the census) and they included everything except the PV of your pension and social security. Not sure exactly how this organization is getting their numbers though.

    And I also don’t get the credit card debt for the 1%. Do these folks just get much lower rates than the rest of us or is this how much they rack up in a month before they pay off the bill?

    I caught the office cleric thing too. Maybe the sharia law threat isn’t total nonsense if every office has to have its own cleric.

  8. zell says:

    Credit card debt: the 1% runs up that amount monthly and pays it off monthly. That is only a hint as to the difference in standard of living.

  9. KJMClark says:

    This is all skewed. What we would care about is the average of the 99%, not the average, since we know that the average is skewed by the 1%. Even within the 1%, there’s a skewed curve of income/wealth. It’s probably some fractal thing – the 99% is to the 1% what the .99% is the .01%, and the .99% is to the .01% what the .0099% is to the .0001%.

    When they say income, it would help if they specified “household” or “personal”. Likewise for net worth, etc.

    For some of these things, it would be interesting to know what the bottom of the 1% has/does.

    This country’s so messed up.

  10. GeorgeBurnsWasRight says:

    I’m reminded of my freshman sociology class, hundreds of students, on the first day the professor asks “How many of you are upper middle class?”. Every single person raised their hands. Professor explained distribution of wealth percentages, commented that the university offered a fair number of need-based scholarships to families with lower incomes. He asked the question again. Everyone still raised their hands. Nobody thought their parents were wealthy (including my roommate, who owned over 200 pairs of pants, over 400 pairs of shoes, said it would be too difficult to count how many shirts he owned, and had no idea how to do laundry because the maid came to our room every week to drop off his clean clothes and pick up the dirty ones.) And nobody thought their parents were even merely middle class, much less below “middle” middle class, not even the kids in the dorm who you knew not to ask to kick in when a group bought a pizza.

  11. Joe Friday says:

    The $121,000 seems high because it is an average (‘per capita’ is no better, it is also an average).

    Once again, the classic example is that you and Warren Buffett are in a room. The average net worth (as well as the per capita net worth) of everyone in the room is about $25 billion (or whatever half of Buffett’s is now since he has given away a lot). That figure does not accurately reflect the net worth of either of you.

    And don’t EVEN get me started on “Household Income”, as it is a measure of NOTHING.

  12. auden5 says:

    If you ever want to deal with a statistical nightmare, try attaining reliable average and median net worth figures. Below are a smattering of net worth numbers, all vastly different:

    From Boston Globe (2009, Jenn Abelson, “The Loss Generation”): 35 and under group: $76,400 (average)

    From All Financial Matters (2006): 35 and under group: $14,200 (median) $73,500 (average)

    From WSJ (2004, Kelly Greene, “Golden Years”): 34 and under group: net worth of $7,240, including home equity.

    So just for the 35 and under age group, we have net worth numbers ranging from $7,240 to $76,400.

    It’s difficult to analyze the average person’s net worth because most of the data comes from informal surveys. In a way, it’s like asking people how many times they have sex–chances are, they’re going to focus on the good times and give you a higher number.

    In any case, CNN’s money calculator indicates that most people making $120K a year have a $301K median net worth. When you examine the retirement account numbers below, a $301K net worth seems high, but perhaps not so unusual for a two-income family on either coast who bought their home more than ten years ago.

    According to EBRI, “More than half (56.4 percent) of those owning at least one IRA had less than $25,000 in them in 2008.”

    The average IRA account balance in 2008 was $54,864. Because the EBRI IRA database can aggregate multiple accounts held by one individual, the new EBRI analysis also finds the average IRA individual balance (all accounts from the same person combined within the EBRI IRA database) was significantly higher, at $69,498.

    The median IRA account balance was considerably less: $15,756 per account and $20,046 per individual. Median levels mark the mid-point (half above and half below) and are less affected by outlier data.

    Elsewhere on EBRI, they report that at “year-end 2007, the average account balance in the EBRI/ICI database was $65,454, compared with $61,346 at year-end 2006. 401(k) account balances varied with participant age, tenure, and salary. Individuals with account balances of less than $10,000 were primarily young workers or workers with short job tenures. In contrast, those with account balances in excess of $100,000 were primarily older workers or workers with longer job tenure.”

    Median 401k balances are harder to come by. According to EBRI and the Investment Company Institute, at the end of 2007, someone in his/her 50s making $60,000 – $80,000 had a median 401k balance of $160,324 and someone in his/her 50s making $80,000 – $100,000 had a median balance of $226,266.

    It appears almost all Americans have most of their net worth in their homes.

  13. techy says:

    I thik we all know about the top .001%.

    I am Interested to get the stats on bottom 10-15%, so far their medical bills are taken care by medicaid and medicare dont know what they will do when that is taken away from them?

  14. Molesworth says:

    I don’t quite believe the stat on credit card debt.
    I’m guessing the $13k of cc debt of 1% is their current balance, ready to be paid off in full on due date.
    No self respecting 1%er would pay 13-28% interest on cc debt they can easily pay off.

  15. G3 says:

    Doubt average American’s net wealth is 121K. If so, the average American family’s net wealth will be 300K (2.6 persons per family). Seems very wrong.

  16. G3 says:

    OK. Take back my “average wealth” comment. It could be true.

    But average wealth does not mean a thing. The median FAMILY wealth is about 50K. Which can only mean how big a wealth gap there is in this country.

  17. Frilton Miedman says:

    The “Average American income” is misleading, I’m not sure if that incorporates the 1% or if it refers to households, but it’s definitely not personal income for the median.

    The average median personal income is $26,000, average median HOUSEHOLD income is $51,000.

    More importantly, 90% of American HOUSEHOLDS make $32,000 or less..

    As a small business owner, I heavily depend on those 90% of households making $32K for my livelihood, ironically, my higher income clients tend to be more frugal, they want better prices regardless what taxes they pay.

    It really puts Mitt Romney and his understanding of everyday Americans into perspective knowing he makes $57,000 per day and pays less than 14% , while a family living in less than he makes in 1-1/2 to 2 days pays 25% or more.

    Also important to note, most of us commenting on this forum do not fall into the 90% of households whom live on less than $32,000, it’s only natural that some of us will have more of a “Romney” bias, according the Plato’s allegory….we derive what we understand of the world according to what and who surrounds us.

    It’s almost funny listening to knuckleheads like Romney, Cantor or Ryan try to brainwash me that lower taxes for themselves and their friends will somehow get my customers to spend more.

  18. theexpertisin says:

    If the anti-1% zealots don’y quit making asses of themselves, they will be a prime reason for a Republican landslide in November. Of course, they can’t help themselves.

    If I were running the Republican campaign, I’d be giving them more satchel bags of money through intermediaries than Soros, unions and the Democratic Party combined.

  19. LiberTea says:

    As long as we’re heaping a guilt trip on the upper 1%,

    why don’t we compare the average American to the Average citizen of the world,
    so that the Average Americans can feel guilty, too.

  20. teraflop says:

    BillG, I was thinking Sharia too. Strange. Guess the office cleric will be saying stuff like this: “Infidels! Swaps valuations are NOT, I repeat, NOT EVER going to be discounted.”

  21. storhund says:

    Question to Frilton Miedman (like the name by the way): if a median income is the midpoint in a sample size (ie.half the sample size is higher and half lower) and you get $51,000, than how can 90% of that same data set be at $32,000 or less? I’m not a statistics expert but I don’t think it works. I do agree with your politics, however!

  22. A7L-B says:

    Another non-fact: 10% of Americans own stock? It was over 55% of households in 2008…

    Is the reposting of misleading information in the public interest? Some think not…

  23. Frilton Miedman says:

    storbund, median is not mean (simple) average.

    Mean is the actual average, median is the middle number.

    Put 100 people in a room,

    One makes $1 million per year,
    5 make $500K per year,
    5 make $50K,
    20 make $30K and
    64 make $10K –

    Total income for all 100 = $4,990,000

    The median salary for that room is $50K, even though the majority make only $10K.

    The total income for all 100 is $4,990,000, the mean (simple) average is $49,900, even though 74% make less than 30K.

    To theexpertisin, I really appreciate your example of Plato’s allegory, most of us are starting to realize there are other walls in the cave, or at the very least that it might be a good idea to see who’s casting the shadows.

    If that makes no sense to you, don’t worry, it never will.

    To LiberTea, I have an idea, where it’s usually groups like Heritage Foundation, or Fox Network who conjure up f-cking stupid idea’s like “there are poor kids starving in Africa – so don’t complain just because you’re only feeding your kids one meal a day”, I have great idea -

    If you really think Americans should gauge their standings by third world, diseased, starving nations instead of expecting actual “trickle down” as fraudulently promised for three decades….maybe you should just move to Africa, prove us all wrong…kay?.

  24. bear_in_mind says:

    Would love to see this infographic with some cleaned-up stats… have to agree with the crowd that some of these numbers don’t pass the smell test, but the overall drift of it is on-the-money.

  25. ezrasfund says:

    Another back of the envelope calculation:

    300,000,000 people X $120,000/person = $36 trillion in total assets for US citizens

    If you think $36 trillion is about right (stock market+real estate+private companies+liquid assets+offshore assets+odds and ends – foreign owned domestic asset?) you have your answer.

    A much more important comparison, as pointed out above is the average for the 1% vs the average for the other 99% (not for the 100%).

    And I must add my current soapbox rant on why the 1% would be well advised to pay a bit more in taxes rather than bring us to a self-fulfilling prophesy of “class warfare.” They need not worry that we will ever be faced with a truly egalitarian society as those exist only in utopian fantasies.

    There is general law of numbers known as the Pareto principle, or the 80–20 rule, the law of the vital few, which states that, for many events, roughly 80% of the effects come from 20% of the causes. Vilfredo Pareto observed in 1906 that 80% of the land in Italy was owned by 20% of the population; he developed the principle by observing that 20% of the pea pods in his garden contained 80% of the peas. [Thanks, Wikipedia] A common rule of thumb in business that “80% of your sales come from 20% of your clients”. Likewise in general 20% of the population controls 80% of the wealth.

    The problem arises when that 20% begins to control 85% of the wealth. And some would suggest that it would be far better if that 20% of the population only had 75% of the wealth.

    [Remember that the 80/20 rule has nothing to do with the fact that 80+20=100. It could also be stated as the 64/4 rule or the 50/1 rule in that it also suggests that 1% of the people will generally control about 50% of the wealth.]

    While some may have difficulty juggling these numbers the effect on most people, the 80%, is quite clear. If their share goes from 15% to 25% of the wealth it has increased by 66%, while the wealthiest 20% have seen a decrease in their share from 85% of the pie to 75% of the pie, about a 12% bite.

    This is a convoluted way of saying that a small adjustment in our tax rates will have a minor effect on the wealthy, but a much greater beneficial effect on the vast majority of citizens. This is not class warfare but an attempt to keep our communities healthy for everyone’s benefit. The alternative eventually leads to the guillotine.

  26. dougc says:

    Life isn’t fair, never has been and never will be….Get over it.

  27. constantnormal says:

    What is the lowest income and net worth to be counted among the 1%?

  28. Frilton Miedman says:

    dougc Says:
    March 23rd, 2012 at 9:02 am
    “Life isn’t fair, never has been and never will be….Get over it.”

    Words of wisdom often spoken by third world dictators.

  29. dougc says:

    Or realists

  30. Frilton Miedman says:

    The founding fathers didn’t fit that description of “realist”, they got silly, dressed up like injuns and tossed the property of a monarch into Boston harbor….rambling on about silly concepts of freedom, equal opportunity and “all men are created equal”.

    It’s time for Americans to remind this government whom it serves, time to stop this Fascist movement before we no longer can….a lesson learned from the Wiemar nnd Hitlers gradual takeover of Democracy by use of fear and outrage over rumors of Communist plots.

    Reaganomis founder, Craig Paul Roberts states it may take an outright revolt to get money and special interests out of our government, I hope he’s wrong.

    It’s vastly ironic that the founder of Reaganomics regularly lambasts the Neocon/Fascist movement, yet all the while the Neocons continue to cite Reaganomics as their rationale.

  31. Piper says:

    Instead of bagging on the 1% shouldn’t we be working towards being one?

    Make yourself a better person instead of dragging others down to your level is a much better way to go. I am guessing here but I would say that 80% of the 1% is multi-generational wealth earned over decades and passed down through generations. It used to be that when a dad and son were walking down the street and the big man in town drove by in his fancy car the dad would say to his son. That’s Mr. Johnson you should work hard in school spend your time and money wisely and you can be like him.
    Today the popular action is to pick up a stone and throw it at the guy because he has done better than you.

    That is a sad reality of our society we cures toughs who are “better” than our self out of jealousy and a lack of self-worth. I would bet that every dime of the 1%ers wealth comes from taking risk and putting forth the effort 99% of you wouldn’t do.

  32. dougc says:

    Life wasn’t fair in 1783, if you were an Indian, black or a woman or even a white male that didn’t own property. Our dem ocracy evolved and now has devolved into a corporatocray and complaining will not change it. You have 2 political parties that are complicit and you can’t throw the bums out. Craig Robertts is right but i am too old to lead or follow.

  33. Frilton Miedman says:

    douge, that’s where you’re wrong, complaining after Dred Scott, complaining about Federalism and it’s similarities to monarchy is what affected change then, it’s already begun to affect change now thanks to OWS, and media pundits with the balls to speak out, like Dylan Ratigan….and our own Barry Ritholtz.

    If MLK hadn’t stood up an spoke out in the 60′s, blacks would still be in the back of the bus, if college students hadn’t protested in the 70′s, Women would still be household servants.

    If we accept the status quo now, we’ll be third world in less than a few years, the bulk of our populace arguably already is.

    The cost per citizen just for healthcare comes to over $15,000 each, the median salary is $26,000.

    Meanwhile, health insurance executives make 8 figure salaries, politicians filibuster reform to boost their own stock portfolio’s and over 40,000 Americans die every year for lack of funds just to get a checkup.

    No one has yet to break out a calculator and simply ask how someone who makes $26,000 can afford $15,000 for an essential life and death service….or why our system is two times more expensive than anywhere else in the world, yet ranked lowest of industrialized nations.

    Meanwhile, Ryan proposes cutting those services, rather than impede on what he calls a “free market”.

  34. Greg0658 says:

    thanks Frilton .. really – I mean it like that word means .. no double talk .. Thanks …
    almost dislike pointing out / but why does one type seem to take up weapons while another uses words more ..
    K. D. Lang “Constant Craving” (Grammy’s 1993 Live Performance)
    http://www.youtube.com/watch?v=hiiMSOh7vRY&feature=related

    why ? because the song is true .. destruction has to cheat odds because there are 10X more folks wanting it Right

  35. Frilton Miedman says:

    Greg, I betcha you can relate to my retrospective musing over 2010′s campaign platforms of “get rid of big government”.

    I’m a lilly white heterosexual, Libertarian married man, the ongoing regime have me scared shitless that I could see some type of mandate that requires I bring my family to church every Sunday and if I’m caught speaking badly about “conservative ideals” I could be detained for life as a terrorist.

    I guess getting rid of “big government” went to the same place that “trickle down” went,

    Just please, don’t arrest me, tell me what God to worship, what standards to adhere to and how I’m allowed to dress and what I can’t say….I’ll be obedient, I promise, Heil Koch!…Heil ALEC!

  36. storhund says:

    Frilton:

    First, your room only has 95 people but I get the concept.
    I guess I’m getting confused because you use the term “average median.”

    The average median personal income is $26,000, average median HOUSEHOLD income is $51,000.

    I thought average = mean and median is something else (the midpoint in a sample). I think I get what you are saying though; the very top of the income curve is skewing the average income picture. Most workers and households in the country don’t make a lot of money.

  37. Frilton Miedman says:

    I know storbund, I caught that after I posted, but figured the point got across. (damn, we need an edit feature here)

    In my specific example, median and mean worked out to about the same, but exemplified how it’s possible for 90% of households to earn less than $32K while median household income is $51K.

    In terms of the multiplier, another example of current disparity puts it into real perspective.

    The total wealth of the top 400 households is greater than the total wealth of the bottom 50% of the population.

    400 Americans are worth more than 150 million Americans, I have no problem with that, but for the consideration in terms of economic math…and the need for tax & fiscal policy that reflects this reality.

    To understand what that means in terms of consumption, simply figure out what percentage of the personal wealth a household making $32K spends to survive and compare the percentage in wealth the top 400 consume.

    You might remember the movie “Brewsters Millions”. (gawd I miss Richard Pryor)

    The top 400 who own more than the bottom 50%, representing 150 million Americans, cannot possibly consume 375,000 times the dollar amount he bottom 50% consumes, it’s not physically possible for Warren Buffet to spend the same percentage of his wealth that I do, just paying my monthly bills.

    Warren knows this.

    Using that simple math, as wealth disparity grows, consumption & economic growth drops….this is explained in Milton Friedman’s Permanent Income Hypothesis, it’s part of why he suggested a Negative Income Tax to stabilize consumption.

    A Negative Income Tax, for all intents and purposes, is welfare….a “social” entitlement.

    Kinda funny, how we only hear the more convenient portions of Friedman’s theories from Neocons….who firmly believe that complete & total Social Darwinism is the ultimate “free market”, with absolutely no consideration to monopoly, or the ultimate Dictatorship, Oligarchy, or Monarchy that complete Social Darwinism leads to…..so much for “we the people”.

    Don’t even get me started on how Hayak turned down Charles Koch’s offer to move to the U.S. for fear of losing his government medical benefits in Austria in 1972 …Hayak, who’s the grandaddy of “get rid of government programs”, was too afraid of losing his own social entitlements to live by his own standards here in America.

    Another strong believer in Social Darwinism was Hitler, the very foundation of Fascism is the strong belief in complete Social Darwinism.

    As a Libertarian, I find this a hell of a lot more disturbing than any “government takeover” or “death panel” the Neocons have promoted over the last few years.

    What scares me most, with the level of control individuals like the Koch brothers now exercise over our government, it may already be too little too late to undo the damage done since Reagan.

  38. ezrasfund says:

    Thank you, storhund, for attempting to clarify this. Frilton has made an important point with a valid example, but has totally misused the terms.

    The median is the middle of the sample, half make more money, half make less money.

    The mean is the statistical term for the average, add up all the incomes and divide by the number of people in the sample.

    The very important point is that one extremely wealthy person can totally change the average or mean, but not the median which is probably a better measure. That is why we usually speak of median income not average income.

    This is also why “there are liars, damned liars, and statisticians” as it is easy to get a radically different answer by changing the terms that few people bother to understand.

    Which begs the question, why don’t you people take 30 seconds and google your way to Wikipedia so you know what the hell you are talking about?

  39. Frilton Miedman says:

    Ezra, I only now caught the original typo in my first post above, “average median” was never intended, I meant median alone. ( I recall typing “average”, and then realizing I meant median, apparently I forgot to erase “average” and left it “average median”)

    Nonetheless, got the point across….who’s on first?

  40. ezrasfund says:

    Sorry to sound intolerant. One of my pet peeves is folks who ask questions on message boards and blogs that they could quickly answer themselves via Google and Wikipedia. Another is that once you post something on a blog like this you can’t edit your own obvious mistake.

  41. Frilton Miedman says:

    Ezra, the edit thing is driving me crazy, I have fat fingers accompanied with bad eyes.

    Not to mention, it would be outstanding if ?BR could covert to some type of Message Board or indexing protocol so we could actively continue discussion without having to keep separate browsers open.

    Blogs were intended as a web log, a diary, not for coherent in-depth discussions.

  42. Greg0658 says:

    its a bit scary what an aligned tribe mindset will try – & thru babysteps achieve – with today & tomorrows techmech.

    Is Your New HDTV Watching You?
    http://hdguru.com/is-your-new-hdtv-watching-you/7643/
    (with infrared ccd? beyond that?)

    Behind Closed Doors (Charlie Rich)
    http://www.youtube.com/watch?v=XdJJmgcsREA