That can’t be right though… 1000 people isn’t nearly enough to drag the average income down 5k BELOW the median income in a nation of over 300 million. It should still be higher due to the long tail on the high side of incomes.
Proof: Average income in top 1% is 819k https://www.unbiased.com/discover/banking/how-much-income-puts-you-in-the-top-1-5-or-10#:~:text=To be in the top 1%25 of earners%2C you’,earn%20an%20average%20of%20%243%2C312%2C693.
Solve the weighted average:
819 * 0.01 + x*0.99 = 74.5
Where x is the remaining average. X≈66.3k, and that’s excluding the ENTIRE 1% which is over a MILLION people at least, depending on how you count it. America is big.
But I think this is only about wages right? It doesn’t take into account growth in net worth based on shares, does it?
“Income” is understood to mean wages in measurements like this.
Not sure about this. However if this was the case, income would be a pretty useless term in terms of describing financial inequality, as a lot of wealth gained would be excluded by this definition.
For the second frame of this to be true, assuming 157 million working Americans, each of the top 10 earners would be making over $150 billion a year on average. This amount is close to the net worth of the world’s richest people, and couldn’t possibly be their annual income.
edit: fixed error
What? The world’s richest people are not in the 1,5 billion dollars range. They are in the 200-100 billion dollars. And it would be surprising if they didn’t earn 150 million just from owning this amount of wealth each year.
This why statistics are so frustrating you can make them say anything.
This is why words are so frustrating, you can make them say anything.
I see lots of people are pointing out that these numbers don’t make sense. Here are some of my thoughts.
I’m not an economist so I’m probably making some very basic mistakes but…
GDP per capita is $76.3k [Google] Average household size 2.6. [Google] So GDP per household is $198.4k [Calculator]
That is the mean productivity per household.
But the median income per household is $75k [Google]
So what happens to the $123.4k of productivity (198.4k-75k) per household that isn’t paid to workers? It’s in the outliers and is asset appreciation isn’t it?
Dont know if i dont get the sarcasm. But why are you using the household size? Why is everybody in the household working fulltime? I would think the >2 household are the kids :D
Guys, stop trying to figure out the average. You guys should look for the mode (the most common income, not all income added and divided).
Edit: If anyone has the mode for american income, I’d love to hear it. I can’t find it. Just the median and average.
the mode is probably 0.
e.g. there are plenty of people with exactly 0 income. there are few people with exactly another income.
It might work a bit better if incomes were bucketed into 5k brackets before taking the mode. From there, I guess you can take the mean or median of all the incomes that comprise the bucket?
It would still always be the lowest bracket, because most people make little and few people make much.
If you look at the horizontal lines here you get 50k brackets:
https://fourpillarfreedom.com/wp-content/uploads/2018/11/ind_inc0-1.jpgThe first bracket is ~65% of the population, the second bracket ~25%, the third bracket ~5%
Yup, Wikipedia says all exponential distributions have mode 0
