How the Other Half Lives

There’s an old statistician joke about the statistician who drowned wading a river with an average depth of six inches. It comes to mind when comparing the  “average” American’s wealth against that of citizens of other countries . A 2013 comparison of per capita wealth in 20 “advanced” economies showed Americans had an “average” net worth of $301,000, good enough for fourth internationally.  Switzerland was first on that scale – not all Swiss bank accounts are held by foreigners. But America was 19^th on the median net worth scale, at $45,000. Only Israel was lower, and its average net worth was also low. Interestingly, Australia was first in median net worth and second in average net worth. They are doing something right there.

Average net worth just counts wealth, and is influenced heavily by the wealth of people like Warren Buffett, Bill Gates, and, I suppose, Donald Trump. Median net worth is literally the egalitarian standard. It measures the half-way point at which as many people make less as there are people who make more. In this case, it means about 157 million Americans have less than $45,000 in net worth. The difference between $301,000 and $45,000 says a lot about the American economy. For one thing, it says something about how well those baby-boomers reaching retirement age are really prepared to retire. They aren't. It also says how limited that glittering life style that seems the norm on TV actually is among Americans in general. People with a $45,000 net worth do not buy $45,000 cars or $500,000 houses. For another, the U.S. spread between average and median wealth is by far the largest among “advanced” nations. We are doing something wrong here.

But the actual picture is much worse than that. In a recent analysis of Federal data by CNNMoney of spending patterns by the bottom 30% of the U.S. population, the “poor” –  numbering 92 million in 2010 and almost 100 million now, have average annual incomes of $14,000 (including subsidies)  – less than the typical urban “living income” of $15,000. They spend 182 percent of their incomes just to keep afloat, and consequently have negative savings and high debt loads. They spend on average 72 percent of income on housing, 28 percent on food and 28 percent on transportation. As you will have already noted, that adds up to well over their income, without consideration of things like clothes and medical care. More than 17 percent of Americans –that’s over half of that bottom 30 percent, or about 53 million people – said in the survey they had lacked money to buy food at some time in the previous year. These are the people Kansas wants to prohibit from going to the movies. The legislators shouldn’t worry – the poor can’t afford that any more. The 100 million people treated like dirt by the legislators are more than the entire population of the U.S. when the Constitution was enacted, yet “promoting the general farewell” for them is never part of the legislative agenda. The typical “one-percenter” whose desires set the agenda has never even had a conversation with one of the 30 percent.

Those in the middle of the income picture – the middle class –seem to fare not much better. The survey reveals they earn $54,000 on average but can save only about $6,000 per year after living expenses, not a good basis for planning retirement. Meanwhile the top 30 percent have incomes substantially in excess of living expenses and continue to have an average of one-third their income disposable.

The question remains of how legislators, in Kansas and in Washington, D.C., can remain so oblivious to the state of 100 million Americans. Ideology has blinded them to the situation of the actual people they serve. The top one percent nationwide amount to slightly over 3 million people, yet legislators act as though they are the only ones worth legislating for. For each one “worthy” citizen, there are 24 they ignore.  Then they are shocked, shocked, when the 24 begin to protest. As protests grow, they will have only themselves to blame. Ted Cruz was recently quoted as saying that the first thing one had to lose on going into politics was a sense of shame. His and other’s success at that is obvious.