Friday, August 10, 2012

The Upper Limits Of Middle And Upper-Middle Individual Incomes 1990-2010

SocialSecurity.gov here provides comprehensive net compensation statistics going back to 1990, from which one can chart the nominal growth of individual incomes over the period.

Below I have charted both the nominal and CPI-adjusted growth in the upper income limits for middle incomes (60th percentile) and for upper middle incomes (80th percentile) between 1990 and 2010, choosing years where the income tranches ($5000 each) hit within less than 1 point of 60, or 80, percent of total earners. For the 80th percentile chart this meant stopping with the year 2007 because years after 2007 do not yet provide a clear demarcation of the 80th percentile for an income tranche within 1 point of 80 percent. For proper comparison purposes real growth in green for both is expressed in 2010 dollars.

What the charts show is that the income ceiling defining the upper limit of the middle rose over nineteen years in real terms 9.4 percent, and the ceiling for the upper middle rose over seventeen years in real terms 15.6 percent, a difference in the real rate of change of nearly 66 percent.

This is cause for much hand-wringing in some circles, where, it seems, it is rarely considered how the costs associated with acquiring the skills and credentials necessary to earn upper middle incomes have skyrocketed. Those costs have increased nearly 72 percent over the period, in real terms, consuming 70 percent of the upper-middle upper-limit salary of $50,000 in 1990 for the typical 4-year public university degree, and 104 percent of the comparable salary in 2007.