Life Below The U.S. Median

American Demographics,  Dec 1, 2002  

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If you want to find a slice of America, this is the income category to focus on. This category includes people of all ages, races and ethnic backgrounds, much like the population as a whole. However, the youngest and oldest age groups are disproportionately represented in this income group. The youngest consumers - those who are age 25 and younger and who cash entry-level paychecks - account for 4.5 million households with incomes under the U.S. median of $41,994. Seniors - age 65 and older, who are mostly out of the work force and are living on retirement savings - account for 16 million households with incomes below the U.S. median. Together, these two groups account for 37 percent of households with incomes under $45,000.

Households headed by younger people can expect to see their incomes grow as they age, says Lars Perner, professor of marketing at the University of California at Riverside. "Typically, people tend to increase in salary until they retire," he says, at which time, incomes decline. This is, in part, why many seniors have lower than average incomes. But in the coming years, seniors may see a boost in income as well, says Perner. That's because today's seniors are less likely to hold a college degree than the seniors of tomorrow, and greater education attainment should translate into increased income and earnings power over the course of their working lives.

Regardless of age, the lot of all Americans improved between 1990 and 2000. Thanks to a strengthening economy throughout the decade, the share of households with incomes of less than $45,000 dropped substantially, to 53 percent in 2000 from 70.5 percent in 1990. The drop occurred in every single state, with Utah, Colorado, Minnesota and Wisconsin experiencing the greatest percentage-point dips in low-income households. Since 2000, of course, the economy has softened, so it is likely that there are a greater number of households in the lowest income category today than there were when the Census 2000 data was gathered.

TOP 50 METROS: UNDER $45,000

Metros with the highest share of households with incomes under the U.S. median are mostly in the South and Midwest. Larger metros are home to greater numbers of people earning less than $45,000, but because more affluent people make their home in the bigger metros, the share of lower income households is lower than some might expect.

THE DEMOCRACY OF LOWER INCOMES

The demographic profile of households with incomes below the U.S. median closely resembles that of the population as a whole. Blacks and Hispanics are overrepresented, while Asians and whites are underrepresented in the under-$45,000 income group.

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