A few caveats about the data mentioned previously:
First , the BLS data only goes to 2003. That probably doesn’t matter with this chart, which has been pretty consistent over the past 10 and 20 years.
Highest 20 percent income quintile (Wages and salaries)
Source: BLS
I also found it interesting that the top 20% of income was "only" ~$110,000. (Even extrapolating forward 2 years gives you ~$120k). That suggests to me that many white collar professionals, small business owners, and most 2 income families are in that top quintile.
Here’s a fun experiment: Ask some people you know what they actually think the cut off is to make it into the top 20%. My informal survey produced results all over the map with on this, ranging from $70 – $750k.
Next caveat: Given that the BLS data only is current to 2003, the charts on assets and liabilities (here) do not reflect the biggest price spike in Real Estate — all the increases in home owner’s equity from 2003 to present. Further, it does not reflect all of the increases in liabilities — the cash out refinancings, the additional credit card debt, the ongoing spending spree.
Last caveat: Consider how the top 1% skews the entire top 20% group. The 1% group includes all of the countrie’s Billionaires, and near Billionaires. This group has practically no debt, primary assets are their businesses, real estate, and fixed income. Equities tend to be a smaller percentage of their net worth, except where they are founders or insiders in public companies.
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See also: Are the Wealthiest Under an Increasing Financial Strain?
Barry,
Here is an even better test; ask that top 20% once it is defined if they are feeling any of the effects of inflation ex-inflation in their lives.
Furthermore ask them how they feel currently about their financial situation.
Good posts.
To be precise, $110K is the average of wages and salaries per consumer unit in the top quintile; the income floor (all sources) is $77,671 (see http://www.bls.gov/cex/2003/Standard/quintile.pdf). So you’re probably right about many, if not most, white collar professionals and small business owners cracking the top quintile; “most” two-earner families might be a stretch — I don’t think two median (individual) earners would make it… the mean from the 6/04 National Compensation Survey was $646/week (http://www.bls.gov/ncs/ocs/sp/ncbl0727.pdf).
The thing you need to look at for this analysis is the distribution of assets or wealth. You will find that this is much more skewed then the income data.
Even if you have billions in assets your income in any one year is going to be much closer to the norm.
That suggests to me that many white collar professionals, small business owners, and most 2 income families are in that top quintile.
maybe in NY/NJ, but I suspect that most of the above in the rest of the country are in the next two quintiles.
Average earnings = 30K. Women usually earn less. Then the average couple with two working earns around 60K if not less. Hence, not in the top quintile.
Along the lines of what Tom B said…. Isn’t the floor for wealthiest 5% close to 140k. I remember having a few extremely liberal friends who would go on rants about “wealthiest 5%, wealthiest 5%”, failing to realize that they and their spouses were either together or individually part of the weathiest 5%.
I won some nice bets from these people who thought the 95th percentile was > 1M.
http://www.census.gov/hhes/www/income/histinc/ie1.html
REPORTED INCOME AND WEALTH ARE TWO SEPERATE MEASURABLE NUMBERS. ONE DOES NOT MEAN THE OTHER.