Affluence in the United States

Affluence in the United States refers to an individual's or household's state of being in an economically favorable position in contrast to a given reference group.cite book | year = 1995 | title = Cambridge International Dictionary of English | publisher = Cambridge University Press | location = Cambridge| id = 0-521-48236-4] While there are no precise guidelines or thresholds for what may be considered affluent, the United States Department of Commerce's Bureau of the Census does provide detailed statistical data on the economic state of America's population. Income, measured either by household or individual, is perhaps the most commonly used measure for whether or not a given entity may be considered affluent. The term's usage varies greatly depending on context and speaker. Both an upper middle class person with a personal income of $77,500 annually and a billionaire may be referred to as affluent. If the average American with a median income of roughly $32,000cite web|url=http://pubdb3.census.gov/macro/032006/perinc/new03_001.htm|title=US Census Bureau, personal income distribution, age 25+, 2006|accessdate=2006-12-28] ($39,000 for those employed full-time between the ages of 25 and 64)cite web|url=http://pubdb3.census.gov/macro/032006/perinc/new03_028.htm|title=US Census Bureau, income distribution of individuals, employed full-time, year round, age 25-64, 2006|accessdate=2006-12-27] was used as a reference group, the upper middle class person with a personal income in the tenth percentile of $77,500 may indeed be referred to as affluent.cite web|url=http://pubdb3.census.gov/macro/032006/perinc/new03_001.htm|title=US Census Bureau, personal income distribution, age 25+, 2006|accessdate=2006-12-28] If compared to an executive of the Fortune 500, however, the upper middle class person would seem anything but affluent.cite book | last = Ehrenreich | first = Barbara | year = 1989 | title = Fear of Falling, The Inner Life of the Middle Class
publisher = Harper Collins | location = New York, NY | id = 0-06-0973331
] cite book | last = Thompson | first = William | coauthors = Joseph Hickey | year = 2005 | title = Society in Focus | publisher = Pearson | location = Boston, MA| id = 0-205-41365-X] Currently marketing corporations and investment houses classify those with household incomes exceeding $75,000 as mass affluent, while sociologist Leonard Beeghley identifies all those with a net worth of $1 million or more as "rich." The upper class is most commonly defined as the top 1% with household incomes commonly exceeding $250,000 annually. These two figures should be seen only as guidelines based upon the top 1% of a population because net worth exceeding 1 million may be increasingly inaccurate as an upper class indicator as the value of the dollar falls and inflation along with interest and the turn of the century's real estate boom causes more and more people to self-classify as millionaires.

The US Census Bureau offers income data by household and individual. It is to be noted that 42% of households have two incomes earners; thus making households' income levels higher than personal income levels.cite web|url=http://pubdb3.census.gov/macro/032006/hhinc/new05_000.htm|title=US Census Bureau, income quintile and top 5% household income distribution and demographic characteristics, 2006|accessdate=2006-12-28] The 2005 economic survey revealed the income distribution for households and individuals whereby the top 5% of individuals had six figure incomes (exceeding $100,000) and the top 10% of individuals had incomes exceeding $75,000.cite web|url=http://pubdb3.census.gov/macro/032006/perinc/new03_001.htm|title=US Census Bureau, personal income distribution, age 25+, 2006|accessdate=2006-12-28] The top 5% of households, three quarters of whom had two income earners, had incomes of $166,200 or more,cite web|url=http://pubdb3.census.gov/macro/032006/hhinc/new05_000.htm|title=US Census Bureau, income quintile and top 5% household income distribution and demographic characteristics, 2006|accessdate=2006-12-28] with the top 10% having incomes well in excess of $100,000.cite web|url=http://pubdb3.census.gov/macro/032006/hhinc/new06_000.htm|title=US Census Bureau, overall household income distribution, 2006|accessdate=2006-12-28] The top 1.5% of households had incomes exceeding $250,000 with 146,000 households, the top 0.12%, having incomes exceeding $1,600,000 annually.cite web|url=http://www.wsws.org/articles/2005/jun2005/mill-j08.shtml|title=New York Times quote, households with incomes of over 1.6 million|accessdate=2006-12-28] Households may also be differentiated among each other, depending on whether or not they have one or multiple income earners. While many middle-middle class households rely on two income earners to merely make ends meet,cite web|url=http://www.news.harvard.edu/gazette/2003/10.30/19-bankruptcy.html|title=Middle income can't buy Middle class lifestyle|accessdate=2006-12-28] those in the upper middle class may be able to do so on just one income. In 2005 for example, the median households income for a two income earner households was $67,000. The median income for an individual employed full-time with a graduate degree was in excess of $60,000, concluding that nearly half of those with graduate degree are able to out-earn most dual income households with one-income.cite web|url=http://pubdb3.census.gov/macro/032006/perinc/new03_028.htm|title=US Census Bureau, income distribution of individuals, employed full-time, year round, age 25-64, 2006|accessdate=2006-12-27]

Overall the term affluent may be applied to a variety of individuals, households or other entities depending on context. Data from the US Census Bureau serves as the main guideline for defining affluence. US government data not only reveals the nation's income distribution but also provides data regarding the demographic characteristics of those to whom the term, affluent, may be applied.cite web|url=http://pubdb3.census.gov/macro/032006/hhinc/new05_000.htm|title=US Census Bureau, income quintile and top 5% household income distribution and demographic characteristics, 2006|accessdate=2006-12-28]

Top percentiles

Affluence and economic standing within society is often expressed in terms of percentile ranking. Economic ranking is conducted either in terms of giving lower thresholds for a designated group (e.g. the top 5%, 10%, 15%, etc.) or in terms of the percentage of households/individuals with incomes above a certain thresholds (e.g. above $75,000, $100,000, $150,000, etc.). The table below presents 2006 income data in terms of the lower thresholds for the given percentages (e.g. the top 25.6% of households had incomes exceeding $80,000, compared to $47,000 for the top quarter of individuals).cite web|url=http://pubdb3.census.gov/macro/032006/perinc/new03_001.htm|title=US Census Bureau, personal income distribution, age 25+, 2006|accessdate=2006-12-28] cite web|url=http://pubdb3.census.gov/macro/032006/hhinc/new06_000.htm|title=US Census Bureau, overall household income distribution, 2006|accessdate=2006-12-28]

SOURCE: US Census Bureau, 2006cite web|url=http://pubdb3.census.gov/macro/032006/perinc/new03_000.htm|title=US Census Bureau, Personal income, age 25+, 2006 statistics forum|accessdate=2006-12-17]

tatus and Stratification

Economic well-being is often associated with high societal status, yet one needs to remember that income and economic compensation of any sort are first and foremost the result of scarcity and may only act as an indicator of social class. It is in the interest of society that all open positions are adequately filled with the occupant being enticed to do his or her best.cite book | last = Thompson | first = William | coauthors = Joseph Hickey | year = 2005 | title = Society in Focus
publisher = Pearson | location = Boston, MA | id = 0-205-41365-X
] As a result an occupation that requires a scarce skill, the attainment of which is often documented through an educational degree, and entrusts its occupant with a high degree of influence will generally feature high economic compensation. The high income is meant to ensure that individuals obtain the necessary skills (e.g. medical or graduate school) and complete their tasks with the necessary valor.cite book | last = Levine | first = Rhonda | year = 1998 | title = Social Class and Stratification
publisher = Rowman & Littlefield | location = Lanham, MD | id = 0-8476-8543-8
] Differences in income may, however, be found among occupations of similar sociological nature. The median annual earnings of a physican were in excess of $150,000 in May 2004, compared to $95,000 for an attorney.cite web|url=http://www.bls.gov/oco/ocos074.htm#earnings|title=US Department of Labor, annual earnings for doctors|accessdate=2006-12-27] cite web|url=http://content.salary.monster.com/articles/salary/highestpay/|title=Bureau of Labor statistics data published by Monster.com, 20 highest paying jobs|accessdate=2006-12-27] Both occupations require finely tuned and scarce skill sets and both are essential to the well-being of society. Yet, family doctors outearned attorneys and other upper middle class professionals by a wide margin as their skill-sets are deemed especially scarce. Overall, high status positions tend to be those requiring a scarce skill and are therefore commonly far better compensated than those in the middle of the occupational strata.cite book | last = Thompson | first = William | coauthors = Joseph Hickey | year = 2005 | title = Society in Focus
publisher = Pearson | location = Boston, MA | id = 0-205-41365-X
] cite book | last = Levine | first = Rhonda | year = 1998 | title = Social Class and Stratification
publisher = Rowman & Littlefield | location = Lanham, MD | id = 0-8476-8543-8
]

cquote
"...It is essential that the duties of the positions be performed with the diligence that their importance requires. Inevitably, then, a society must have, first, some kind of rewards that it can use as inducements, and, second, some way of distributing these rewards differently according to positions. The rewards and their distribution become part of the social order... If the rights and prequisites of different positions in a society must be unequal, then society must be stratified... Hence every society... must differentiate persons... and must therefore possess a certain amount of institutionalized inequality."- Kingsley Davis & Wilbert E. Moore, "Some Principles of Stratification" re-published in "Social Class and Stratification" by Rhonda E. Levine in 1998.cite book | last = Levine | first = Rhonda | year = 1998 | title = Social Class and Stratification
publisher = Rowman & Littlefield | location = Lanham, MD | id = 0-8476-8543-8
]

It is important to remember that the above is an ideal type, a simplified model or reality using optimal circumstances. In reality other factors such as discrimination based on race, ethnicity and gender as well as aggressive political lobbying by certain professional organizations also influence personal income. An individual's personal career decisions as well as his or her personal connections within the nation's economic institutions are also likely to have an affect on income, status and whether or not an individual may be referred to as affluent.cite book | last = Ehrenreich | first = Barbara | year = 1989 | title = Fear of Falling, The Inner Life of the Middle Class
publisher = Harper Collins | location = New York, NY | id = 0-06-0973331
] In contemporary America it is a combination of all these factors, with scarcity remaining the by far most prominent one, determine a person's economic compensation. Due to higher status professions requiring advanced and thus less commonly found skill sets (including the ability to supervise and work with a considerable autonomy) are better compensated through the means of income, making high status individuals relatively affluent, depending on reference group.cite book | last = Thompson | first = William | coauthors = Joseph Hickey | year = 2005 | title = Society in Focus
publisher = Pearson | location = Boston, MA | id = 0-205-41365-X
]

While the two paragraphs above only describe the relationship between status and personal income, household income is also often used to infer status. As a result, the dual income phenomenon presents yet another problem in equating affluence with high societal status. As mentioned earlier in the article 42% of households have two or more income earners, 76% of households with six figure incomes have two or more income earners.cite web|url=http://pubdb3.census.gov/macro/032006/hhinc/new05_000.htm|title=US Census Bureau, income quintile and top 5% household income distribution and demographic characteristics, 2006|accessdate=2006-12-28] Furthermore people are most likely to marry their professional and societal equals. It therefore becomes apparent that the majority of households with incomes exceeding the six figure mark are the result of an economic as well as personal union between two economic equals. Today, two nurses, each making $55,000 a year, can easily outearn a single attorney who makes the median of $95,000 annually.cite web|url=http://www.bls.gov/oco/ocos083.htm#earnings|title=US Department of Labor, median income of registered nurses|accessdate=2007-01-02] cite web|url=http://content.salary.monster.com/articles/salary/highestpay/|title=Bureau of Labor statistics data published by Monster.com, 20 highest paying jobs|accessdate=2006-12-27] Despite household income rising drastically through the union of two economic equals, neither individual has advanced his or her function and position within society. Yet the household (not individual) may have become more affluent, assuming an increase in household members does not off-set the dual-income derived gains.

Extreme affluence

:* Today there are approximately 146,000 (0.1%) households with incomes exceeding $1,500,000, while the top 0.01% or 11,000 households had incomes exceeding $5,500,000. The 400 highest tax payers in the nation had gross annual household incomes exceeding $87,000,000. Household incomes for this group have risen more dramatically than for any other. As a result the gap between those who make less than one and half million dollars annually (99.9% of households) and those who make more (0.1%) has been steadily increasing, prompting "The New York Times" to proclaim that the "Richest Are Leaving Even the Rich Far Behind." Indeed the income disparities within the top 1.5% are quite drastic. While households in the top 1.5% of households had incomes exceeding $250,000, 443% above the national median, their incomes were still 2200% lower than those of the top .01% of houseolds. One can therefore conclude that any household, even those with incomes of $250,000 annually are relatively poor when compared to the top .1%, who in turn are relatively poor compared to the top 0.000267%, the top 400 taxpaying households.cite web|url=http://www.nytimes.com/2005/06/05/national/class/HYPER-FINAL.html?ei=5088&en=f1a744d1ce38c79e&ex=1275624000&pagewanted=print|title=The New York Times, Richest Are Leaving Even the Rich Far Behind|accessdate=2007-01-02]

ee also

*Economy of the United States
*States of the United States of America by income

References

External links

* [http://pubdb3.census.gov/macro/032006/perinc/toc.htm US Census Bureau, personal income forum]
* [http://pubdb3.census.gov/macro/032006/hhinc/toc.htm US Census Bureau, household income forum]
* [http://pubdb3.census.gov/macro/032005/alttoc/toc.htm Alternate income measures forum]


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