The Average Income in the USA
Income can come from a number of different sources. For many people, their main income will be from their employment, but people can also receive an income from the interest on their savings or investments, child support payments, or benefits. Average incomes in the USA can provide an insight into the state of the nation's economy.
Average incomes can be calculated in a number of different ways. Averages are often given as the mean. This is calculated by dividing the total income of the whole population by the number of people living in the USA. The average income would be the income that each person would receive if everybody earned the same amount. The mean income compares the total income generated in the country with the size of the population. When average income is calculated as mean income, the result will be raised by a small number of individuals who have very high incomes. Many people will earn less than the average income.
Of the 110,000,000 households in the United States, there are 146,000 households (or 0.1 percent of households) which have incomes of over 1.5 million dollars a year. Of these high earning households, 11,000 (or 0.01 percent of the total number of households in the US) had incomes of more than 5.5 million dollars. These households have a disproportionate effect on the mean income, helping to make it significantly higher than the incomes of many Americans.
There is significant income inequality in the USA, with a small number of households earning incomes that are much higher than the lowest earning families. This means that the mean income does not reflect the experiences of many Americans. In 2008, about 47 percent of people had incomes of less than 25,000 dollars. Twenty-eight percent of people had incomes of between 25,000 and 50,000 dollars. Thirteen percent of people had incomes of 50,000 to 75,000 dollars. About five percent had incomes between 75,000 and 100,000 dollars, while just six percent had incomes that were more than 100,000 dollars. However, many households have more than one income.
The mean or average income figure can provide some useful information, but it can also be useful to consider the median income. The median is the number that would be right in the middle if you ranked everyone's income by size, from lowest to highest. This means that half of the people in the US would be earning less than this, while the other half would be earning more. Because higher earning individuals can have a stronger influence on the mean income than people who earn less, the mean and the median will usually be different. The mean income will usually be greater than the median income.
The median US household income is 46,326 dollars. This means that half of the families in the US are living on incomes of less than 46,326 dollars while the other half are living on incomes that exceed this amount. When dual income households are considered alone, they have a median income of 67,348 dollars. There are about 110,000,000 million households in the United States, which means that 55,000,000 households have an income that is below 46,326 dollars.
Average incomes for particular demographic groups or in certain parts of the USA can differ from the national medians and averages. For example, women tend to have lower incomes, on average than men and college graduates tend to have higher average incomes than those who do not have a college degree. Certain cities and states also have average incomes that are above or below the national average, although the costs of living in different areas can also vary. In 2009, the median incomes of 29 states were below the national median household income, while they were higher in the District of Columbia and 20 other states. The median in Wisconsin was close to the national median.
If you would like to learn more about the US economy and how it relates to personal finance, you will find some more interesting facts elsewhere on the usdta.org website.