Econintersect: The Bureau of Labor Statistics (BLS) released the results of their Consumer Expenditure Survey this past week, dated September 2012. A rather astounding result was that the lower two quintiles (lowest 40%) of all households spent more than they had in after-tax income.
The average in the bottom quintile spent $2,244 more on food and housing than their total income. The next 20% on average spent all but $293 of their annual income on food, housing and transportation. Econintersect graphics follow the Read more break.
It may be that some of these were retiree households who were living off savings. This has been suggested by the Huffington Post in the following discussion of the bottom 20%:
The bottom fifth of the U.S. income distribution -- 24.4 million households -- on average earned $10,074 in after-tax annual income and spent $22,001 last year, according to the Labor Department.
This percentage of households includes many retirees, who are presumably living off savings.
Econintersect thinks this is too dismissive of the poverty burden on the younger age demographics. It is a fairly straightforward analysis to look at the bottom 40%, for which the entire group shows average expenses greater than income.
The Census Bureau reported that in 2010 only 21.5% of householders were 65 and older. In 2011 the estimate was 22.1%. But the Census Bureau reported earlier this year that the median household income for householders 65 and older was $33,118. This puts the median income in the middle quintile of the new survey (by a $6,000 margin), so it seems that significantly less than half of the 65 and older households could be in the two lower income quintiles.
A reasonable estimate is that the lowest two quintiles contain considerably more than 36 million households that are not 65 and over out of the more than 48 million households in those two lowest groups. Significantly less than 25% of the lower 40% could possibly be 65 and older households.
There are poverty problems for seniors, but it is not valid to attribute a significant portion of the low income problem to those 65 and older. There are more than 75% of the lowest 40% household incomes that are for households headed by someone under 65. That is more than 36 million households.
- Table 1. Quintiles of income before taxes: Average annual expenditures and characteristics, Consumer Expenditure Survey, 2011 (U.S. Census Bureau)
- Bottom Fifth of Americans Spent Double Their Incomes in 2011 (Bonnie Kavoussi, Huffington Post, 26 September 2012)
- Table 62. Households by Age of Householder and Size of Household: 1990 to 2010 (U.S.Census Bureau)
- Historical Income Tables: Households (U.S. Census Bureau)