Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, January 17, 2019

AI Summary. Raising the top US marginal tax rate from 50% to 75% could raise 2.5% of GDP in revenue before behavioral responses, but a model of idea-driven growth estimates it would reduce innovation and lower long-run GDP per person by about 6%. Because ideas are nonrival, the model implies an optimal top rate far below traditional calculations, possibly negative.

Charles Jones National Bureau of Economic Research
Date Posted:
Is Database:
Database

Raising top marginal tax rate from 50% to 75% in the US could generate 2.5% of GDP in revenue but reduce innovation & lower GDP per person by 6% in the long run.

Does idea-driven growth lower the optimal top income tax rate?

Core argument: Raising the US top marginal tax rate from 50% to 75%, applying to roughly 10% of income, could generate 2.5% of GDP in revenue before behavioral responses, but may lower long-run GDP per person by about 6% through reduced innovation.

Raising the top marginal tax rate from 50% to 75% in the US, which applies to about 10% of income, could generate 2.5% of GDP in revenue before behavioral responses. However, this increase may reduce innovation and lower GDP per person by around 6% in the long run, negatively impacting social welfare. The nonrival nature of ideas means that reducing idea production affects everyone's income, not just the inventor's. High incomes incentivize entrepreneurs to transform research insights into consumer-benefiting products, but high marginal tax rates can diminish this effort. A model incorporating innovation suggests the optimal top tax rate is significantly lower than traditional calculations, potentially even negative, as subsidizing innovation could increase overall income more than redistribution gains. This highlights the importance of considering idea-driven growth when setting top income tax rates.

Takeaways by Macro Roundup® AI

  1. Raising the US top marginal tax rate from 50% to 75%, applying to roughly 10% of income, could generate 2.5% of GDP in revenue before behavioral responses, but may lower long-run GDP per person by about 6% through reduced innovation.
  2. Because ideas are nonrival, reduced idea production lowers everyone's income rather than only the inventor's, and high marginal tax rates can diminish entrepreneurs' effort to turn research insights into consumer-benefiting products.
  3. A model incorporating innovation suggests an optimal top tax rate well below traditional calculations and potentially negative, since subsidizing innovation could raise overall income more than redistribution gains.

model of the optimum tax rate which a new constraint, ideas. 1) new ideas drive economic growth, 2) the reward for creating a successful innovation is a top income, and 3) innovation cannot be perfectly targeted by a separate research subsidy finds that,"...For example, consider raising the top marginal tax rate from 50% to 75%. As we discuss below, in the United States, the share of income that this top marginal rate applies to is around 10%, so the change raises about 2.5% of GDP in revenue before the behavioral response. In our baseline calibration, such an increase in the top marginal rate reduces innovation and lowers GDP per person in the long run by around 6 percent...."

"...The nonrivalry of ideas is key to this result and illustrates why incorporating physical capital or human capital into the top tax calculation is insufficient. If you add one unit of human capital or one unit of physical capital to an economy—think of adding a computer or an extra year of education for one person—youmake one workermore productive, because these goods are rival. But if you add a new idea — think of the computer code for the original spreadsheet or the blueprint for the electric generator —you can make any number of workers more productive. Because ideas are nonrival, each person’s wage is an increasing function of the entire stock of ideas. A distortion that reduces the production of new ideas therefore impacts everyone’s income, not just the income of the inventor herself.....The idea creation and implementation that occurs beyond formal R&D may be distorted by the tax system. In particular, high incomes are the prize that motivates entrepreneurs to turn a basic research insight that results from formal R&D into a product or process that ultimately benefits consumers. High marginal tax rates reduce this effort and therefore reduce innovation and the incomes of everyone in the economy....Taking this force into account is important quantitatively. For example, consider raising the top marginal tax rate from 50% to 75%. As we discuss below, in the United States, the share of income that this top marginal rate applies to is around 10%, so the change raises about 2.5% of GDP in revenue before the behavioral response. In our baseline calibration, such an increase in the top marginal rate reduces innovation and lowers GDP per person in the long run by around 6 percent. With a utilitarian welfare criterion, this obviously reduces welfare. But even redistributing the 2.5% of GDP to the bottom half of the population would leave them worse off on average: the 6% decline in their incomes is not offset by the 5% increase from redistribution. In other words, unless the social welfare function puts enormous weight on the poorest people in society, raising the top marginal rate from 50% to 75% reduces social welfare.....For example, in a baseline calculation, the revenue-maximizing top tax rate that ignores the innovation spillover is 92%. In contrast, the rate that incorporates innovation and maximizes a utilitarian social welfare function is just 29%. Moreover, if ideas play an even more important role than assumed in this baseline, it is possible for the optimal top income tax rate to turn negative: the increase in everyone’s income associated with subsidizing innovation exceeds the gains associated with redistribution.....This paper considers the taxation of top incomes when the following conditions apply: (i) new ideas drive economic growth, (ii) the reward for creating a successful innovation is a top income, and (iii) innovation cannot be perfectly targeted by a separate research subsidy — think about the business methods of Walmart, the creation of Uber, or the “idea” of Amazon.com. These conditions lead to a new term in the Saez (2001) formula for the optimal top tax rate: by slowing the creation of the new ideas that drive aggregate GDP, top income taxation reduces everyone’s income, not just the income at the top. When the creation of ideas is the ultimate source of economic growth, this force sharply constrains both revenue-maximizing and welfare-maximizing top tax rates. For example, for extreme parameter values, maximizing the welfare of the middle class requires a negative top tax rate: the higher income that results from the subsidy to innovation more than makes up for the lost redistribution. More generally, the calibrated model suggests that incorporating ideas and economic growth cuts the optimal top marginal tax rate substantially relative to the basic Saez calculation.... "
Charles Jones, "Taxing Top Incomes in a World of Ideas," National Bureau of Economic Research (Preliminary), September 6, 2018, https://www8.gsb.columbia.edu/faculty-research/sites/faculty-research/files/finance/Macro%20Workshop/toptax.pdf

AI Summary. In an innovation-driven economy where ideas are nonrival and raise productivity broadly, the author estimates that top marginal tax rates above roughly 30% reduce social welfare by weakening incentives to innovate. Raising the top rate from 50% to 75% is projected to cut GDP per person by 6% long run.

Charles Jones National Bureau of Economic Research
Date Posted:
Is Database:
Database

A top marginal tax rate above 30% may suboptimize social welfare by stifling idea creation, reducing GDP & overall income. A utilitarian welfare function suggests a top tax rate of just 29% maximizes social welfare. @CharlesJones

Do high top tax rates reduce welfare by discouraging innovation?

Core argument: Raising the top marginal tax rate from 50% to 75% could reduce GDP per person by 6% in the long run while raising 2.5% of GDP in revenue, the analysis estimates.

In an innovation-driven economy, top marginal tax rates above 30% likely suboptimize social welfare by stifling idea creation, which is crucial for economic growth. Ideas are nonrival, meaning they can enhance productivity across the board, unlike physical or human capital. High marginal tax rates reduce the incentive for entrepreneurs to innovate, thereby lowering GDP and overall income. For instance, increasing the top marginal tax rate from 50% to 75% could reduce GDP per person by 6% in the long run, despite raising 2.5% of GDP in revenue. A utilitarian welfare function suggests a top tax rate of just 29% maximizes social welfare by balancing innovation incentives with redistribution. In extreme cases, the optimal rate could even be negative, as subsidizing innovation might increase incomes more than redistribution gains.

Takeaways by Macro Roundup® AI

  1. Raising the top marginal tax rate from 50% to 75% could reduce GDP per person by 6% in the long run while raising 2.5% of GDP in revenue, the analysis estimates.
  2. A utilitarian welfare function implies an optimal top marginal tax rate of 29%, balancing innovation incentives against redistribution, with rates above 30% likely suboptimizing social welfare in an innovation-driven economy.
  3. Because ideas are nonrival and raise productivity economy-wide, unlike physical or human capital, the optimal top rate could be negative in extreme cases, where subsidizing innovation raises incomes more than redistribution gains.

Stanford'sCharles Jonescorrects glaring shortcomings in theDiamond/Saez’soptimal tax analysis to show why top marginal tax rates of 30% or less likely maximize social welfare in an innovation-driven economy. Jones concludes:

Because ideas are nonrival, each person’s wage is an increasing function of the entire stock of ideas. A distortion that reduces the production of new ideas therefore impacts everyone’s income, not just the income of the inventor herself. These conditions lead to a new term in the Saez (2001) formula for the optimal top tax rate: by slowing the creation of the new ideas that drive aggregate GDP, top income taxation reduces everyone’s income, not just the income at the top. When the creation of ideas is the ultimate source of economic growth, this force sharply constrains both revenue-maximizing and welfare-maximizing top tax rates. For example, in a baseline calculation, the revenue-maximizing top tax rate that ignores the innovation spillover is 92%. In contrast, the rate that incorporates innovation and maximizes a utilitarian social welfare function is just 29%. Moreover, if ideas play an even more important role than assumed in this baseline, it is possible for the optimal top income tax rate to turn negative: the increase in everyone’s income associated with subsidizing innovation exceeds the gains associated with redistribution.

Charles Jones, “Taxing Top Incomes in a World of Ideas," National Bureau of Economic Research (Preliminary), September 6, 2018, https://www8.gsb.columbia.edu/faculty-research/sites/faculty-research/files/finance/Macro%20Workshop/toptax.pdf

"...The nonrivalry of ideas is key to this result and illustrates why incorporating physical capital or human capital into the top tax calculation is insufficient. If you add one unit of human capital or one unit of physical capital to an economy—think of adding a computer or an extra year of education for one person—youmake one workermore productive, because these goods are rival. But if you add a new idea — think of the computer code for the original spreadsheet or the blueprint for the electric generator —you can make any number of workers more productive. Because ideas are nonrival, each person’s wage is an increasing function of the entire stock of ideas. A distortion that reduces the production of new ideas therefore impacts everyone’s income, not just the income of the inventor herself.....The idea creation and implementation that occurs beyond formal R&D may be distorted by the tax system. In particular, high incomes are the prize that motivates entrepreneurs to turn a basic research insight that results from formal R&D into a product or process that ultimately benefits consumers. High marginal tax rates reduce this effort and therefore reduce innovation and the incomes of everyone in the economy....Taking this force into account is important quantitatively. For example, consider raising the top marginal tax rate from 50% to 75%. As we discuss below, in the United States, the share of income that this top marginal rate applies to is around 10%, so the change raises about 2.5% of GDP in revenue before the behavioral response. In our baseline calibration, such an increase in the top marginal rate reduces innovation and lowers GDP per person in the long run by around 6 percent. With a utilitarian welfare criterion, this obviously reduces welfare. But even redistributing the 2.5% of GDP to the bottom half of the population would leave them worse off on average: the 6% decline in their incomes is not offset by the 5% increase from redistribution. In other words, unless the social welfare function puts enormous weight on the poorest people in society, raising the top marginal rate from 50% to 75% reduces social welfare.....For example, in a baseline calculation, the revenue-maximizing top tax rate that ignores the innovation spillover is 92%. In contrast, the rate that incorporates innovation and maximizes a utilitarian social welfare function is just 29%. Moreover, if ideas play an even more important role than assumed in this baseline, it is possible for the optimal top income tax rate to turn negative: the increase in everyone’s income associated with subsidizing innovation exceeds the gains associated with redistribution.....This paper considers the taxation of top incomes when the following conditions apply: (i) new ideas drive economic growth, (ii) the reward for creating a successful innovation is a top income, and (iii) innovation cannot be perfectly targeted by a separate research subsidy — think about the business methods of Walmart, the creation of Uber, or the “idea” of Amazon.com. These conditions lead to a new term in the Saez (2001) formula for the optimal top tax rate: by slowing the creation of the new ideas that drive aggregate GDP, top income taxation reduces everyone’s income, not just the income at the top. When the creation of ideas is the ultimate source of economic growth, this force sharply constrains both revenue-maximizing and welfare-maximizing top tax rates. For example, for extreme parameter values, maximizing the welfare of the middle class requires a negative top tax rate: the higher income that results from the subsidy to innovation more than makes up for the lost redistribution. More generally, the calibrated model suggests that incorporating ideas and economic growth cuts the optimal top marginal tax rate substantially relative to the basic Saez calculation.... "

model of the optimum tax rate which a new constraint, ideas. 1) new ideas drive economic growth, 2) the reward for creating a successful innovation is a top income, and 3) innovation cannot be perfectly targeted by a separate research subsidy finds that, "...For example, consider raising the top marginal tax rate from 50% to 75%. As we discuss below, in the United States, the share of income that this top marginal rate applies to is around 10%, so the change raises about 2.5% of GDP in revenue before the behavioral response. In our baseline calibration, such an increase in the top marginal rate reduces innovation and lowers GDP per person in the long run by around 6 percent...."

Friday, January 18, 2019

AI Summary. Research estimates that 75% of business pass-through income reflects owners' labor rather than capital, indicating most top earners are "working rich" whose income stems from human capital. Firm profitability falls by up to 72.9% after the death or retirement of a top 1% owner, underscoring reliance on active management.

Matthew Smith, Danny Yagan, Owen M. Zidar, Eric Zwick National Bureau of Economic Research
Date Posted:
Is Database:
Database

Contrary to Piketty and Saez’s recent claim, new @nberpub research by Matt Smith @dannyyagan @omzidar and Eric Zwick provides persuasive evidence that a majority of top 1% and 0.1% income is labor income—chiefly business owners.

Does top business income reflect owners' labor rather than capital?

Core argument: Research attributes 75% of business pass-through income to owners' labor income, indicating that most top earners are "working rich" whose income stems from human capital rather than physical or financial capital.

Recent research indicates that 75% of business pass-through income is attributable to owners' labor income, challenging the notion that top earners primarily derive their wealth from capital. The study finds that most top earners are "working rich," with income stemming from human capital rather than physical or financial capital. This is evidenced by a significant drop in firm profitability—up to 72.9%—following the death or retirement of top 1% owners, underscoring the reliance on active management. Furthermore, firms owned by top 0.1% earners show profitability per worker more than double that of firms owned by individuals in the lower half of the top decile. The growth in entrepreneurial income is largely driven by rising labor productivity and an increasing share of value added accruing to owners, rather than changes in organizational form or firm scale. This data suggests a reevaluation of income inequality drivers, emphasizing the role of human capital in wealth accumulation among top earners.

Takeaways by Macro Roundup® AI

  1. Research attributes 75% of business pass-through income to owners' labor income, indicating that most top earners are "working rich" whose income stems from human capital rather than physical or financial capital.
  2. Firm profitability falls by up to 72.9% following the death or retirement of top 1% owners, evidence cited for firms' reliance on owners' active management.
  3. Firms owned by top 0.1% earners show profitability per worker more than double that of firms owned by individuals in the lower half of the top decile, with entrepreneurial income growth driven by rising labor productivity and a larger share of value added accruing to owners.

Contrary to Thomas Piketty’s far-fetched claim that “ is far less consequential than one might imagine,” a newNBER paperfinds “top earners are predominantly working rich,” mainly “undiversified working-age owners of midmarket firms in skill-intensive industries,” who “derive most of their income from human capital, not physical or financial capital,” and that, “Less than 13% of people in the 99.9thpercentile derive most of their income from interest, rents, and other capital income.”

“Match 83% of top 1% individuals born in 1980-1982 to their parents,” and “classif an individual as self-made if her parents were not in the top 1%,” the researchers find, “More than three out of four of these top earners did not have top 1% parents.” They authors note, “This is a conservative classification, as many children of the top 1% do not work for their parents' firms and do not receive especially large financial inheritances.”

To estimate the share of business income attributable to owners’ labor, the researchers measure the effects of owner deaths and retirements on firm profitably. They find a “-72:9% impact of top 1% owner-deaths and a noisier -92:3% impact of top 0.1% owner-deaths.” Their “preferred owner-retirement percentage impact of -82:5% … is nearly identical to owner-deaths estimate. From this, they conclude, “Three-quarters of private business profit” is “human capital income.” They caution, “We may in fact understate the working-rich share of top owners because pass-through income is not the only form of “capital" income that includes disguised wages.”

Bolstering their claim, the authors find:

Superior firm profitability is a persistent and systematic characteristic of high earners. Firms owned by top 0.1% earners enjoy profitability ($14K per worker) that is over twice as large as the profitability ($5K per worker) of firms owned by individuals in the bottom half of the top decile.

The authors note:

Our classification of three-quarters of pass-through income as labor income reverses the earlier finding in that a minority (45%) of top 1% imputed national income is labor income. Even among million-dollar earners, 71% of fiscal income and 50% of imputed national income is labor income. In the top 0.1%, labor income shares fall to the still large numbers of 69% and 46%, respectively.

Turning to growth in the share of business income, the authors conclude:

Growth in entrepreneurial income is explained by both rising labor productivity and a rising share of value added accruing to owners. In contrast, after accounting for the growth due to organizational form changes, rising firm scale in the form of employment plays no role in the growth of top entrepreneurial income. From 2001 to 2014…63% of the growth in top 1% entrepreneurial income … comes from rising labor productivity, -24% comes from lower employment, and the remaining 61% comes from a growing owner share of value added.

The authors note:

If 0% of pass-through income is labor income…a minority of top-earners are wage earners. For example, among million-dollar earners … 46.8% are wage earners in the fiscal income definition and only 34.6% are wage earners in the imputed national income definition. That conclusion reverses when classifying 75% of pass-through income as labor income. For example, among million-dollar earners, 89.2% are working in the fiscal income definition and 69.8% are working in the imputed national income definition. Even among the top 0.1% in the imputed national income series, 59.3% are working.

They explain their reasoning for using two estimates:

Fiscal income has the advantage of being directly observed on personal income tax returns, but has the disadvantage of understating top capital income because some components do not appear on personal tax returns. Imputed national income has the advantage that it sums to national income, but has the disadvantage of relying on imputation assumptions. Retained earnings ($649bn in 2014) are a substantial part of national income but do not appear on personal tax returns and thus are not in fiscal income. PSZ allocate the household share of aggregate retained earnings to individuals in proportion to the sum of the individual's observed dividends and realized capital gains. However, published IRS reports indicate that at least 25% and as much as 75% of realized capital gains are not from the sale of C-corporate stock and are instead gains from real estate and other asset sales or carried interest. This fact can explain how total realized capital gains ($732B in 2014) vastly exceeds the total household share of retained earnings ($306B in 2014). Realized capital gains are much larger than dividends and much more concentrated among top earners. Hence, imputing retained earnings in proportion to each individual's sum of dividends and 100% of realized capital gains may allocate too much retained earnings to top earners and not enough to lower earners. These competing considerations motivate the presentation of our findings in both series, likely (in our view) bounding the truth.

New NBER paper finds that contrary to the view of many liberal economist that income inequality is driven by rents most top income in the United States as of 2014 was earned:

Most top income is non-wage income, a primary source of which is private business profit. These profits accrue to working-age owners of closely-held, mid-market firms in skill-intensive industries. Private business profit falls by three-quarters after owner retirement or premature death. Classifying three-quarters of private business profit as human capital income, we find that most top earners are working rich: they derive most of their income from human capital, not physical or financial capital. The human capital income of private business owners exceeds top wage income and top public equity income. Growth in private business profit is explained by both rising productivity and a rising share of value added accruing to owners
"....Have the idle rich replaced the working rich at the top of the U.S. income distribution? Using tax data linking 11 million firms to their owners, this paper finds that entrepreneurs who actively manage their firms are key for top income inequality.Most top income is non-wage income, a primary source of which is private business profit. These profits accrue to working-age owners of closely-held, mid-market firms in skill-intensive industries. Private business profit falls by three-quarters after owner retirement or premature death.Classifying three-quarters of private business profit as human capital income, we find that most top earners are working rich: they derive most of their income from human capital, not physical or financial capital. The human capital income of private business owners exceeds top wage income and top public equity income. Growth in private business profit is explained by both rising productivity and a rising share of value added accruing to owners....

Matthew Smith, Danny Yagan, Owen M. Zidar, Eric Zwick, "Capitalists in the Twenty-First Century," National Bureau of Economic Research, January 2019, https://www.nber.org/papers/w25442

Atypical firm owned by the top 0.1% is a regional business with $20M in sales and 100 employees, such as an auto dealer, beverage distributor, or a large law fi rm.....Most pass-through business income accrues to undiversi ed, working-age owners of midmarket firms in skill-intensive industries. Specifically, an individual's pass-through income typically derives from one firm with one to three owners and amounts to a large share of her total income. The age distribution of these owners closely mirrors that of high income wage earners; in contrast, the owners of more passive forms of capital skew much older. Most pass-through business income derives from firms with $5M to $500M in sales, which operate across diverse geographies and sectors. Despite this diversity, most pro ts are earned in relatively labor-intensive industries, especially in those that demand skilled labor. In contrast, traditional C-corporations are more prevalent in manufacturing and capital intensive industries and are concentrated among larger firms. Together, these facts support the notion that most top pass-through earners better resemble the working rich, not idle owners of large stocks of accumulated non-human capital....In the first natural experiment, we use Social Security Administration records to identify non-elderly owners who died 2005{2010 and who earned over one million dollars in the year before their death.

Most top business income comes from private pass-through" businesses that are not taxed at the entity level; instead, income passes through to the owners who pay taxes on their share of the rm's income. This feature allows us to build a new dataset linking pass through firms to their owners for 11 million frms between 2001 and 2014. This dataset enables us to ask whether top pass-through income should primarily be thought of as labor income accruing to the human capital of active owner-managers or as capital income accruing to the financial and physical capital of idle owners. Consistent with the labor income view, we find that top earners are predominantly working rich rather than idle rich, and that the majority of top income accrues to the human capital of these wage earners and entrepreneurs....In absolute terms, that amounts to over 1.1M pass-through owners with fiscal income over $390K and 140,000 pass-through owners with fiscal income over $1.6M....

AI Summary. Median annual household income reached $63,554, its highest level since January 2000 and 4.3% above the January 2000 level after adjusting for inflation. The figure, measured before taxes, is 3.2% higher than a year earlier, 5.5% above its December 2007 level, and 15.4% above its post-recession low of $55,083.

Gordon Green Sentier Research
Date Posted:
Is Database:
Database

According to @GordonGreen of @SentierResearch, as of November 2018, median annual household income reached $63,554, a 4.3% increase from January 2000, adjusted for inflation.

Has median household income risen above its pre-recession levels?

Core argument: Median annual household income reached $63,554 in November 2018, the highest level since January 2000 and 4.3% above the January 2000 figure of $60,947 in inflation-adjusted terms.

As of November 2018, median annual household income reached $63,554, marking the highest level since January 2000. This represents a 4.3% increase from the January 2000 level of $60,947, adjusted for inflation. Year-over-year, the median income rose by 3.2%, and it is 5.5% higher than the December 2007 figure of $60,231, which marked the onset of the Great Recession. Furthermore, the current median is 15.4% above the post-recession low of $55,083. These figures, expressed in November 2018 purchasing power and before taxes, indicate a clear upward trend in household incomes, countering the perception that incomes are stagnant.

Takeaways by Macro Roundup® AI

  1. Median annual household income reached $63,554 in November 2018, the highest level since January 2000 and 4.3% above the January 2000 figure of $60,947 in inflation-adjusted terms.
  2. Median household income rose 3.2% year-over-year and stands 5.5% above the December 2007 level of $60,231 that marked the onset of the Great Recession.
  3. The November 2018 median household income sits 15.4% above the post-recession low of $55,083, with all figures expressed in November 2018 purchasing power and before taxes.

New Sentier numbers, median annual household income was $63,554 for November 2018. Nominally, in November, the median household income had reached it's highest point since January 2000, yet only 4.3% above that January level of $60,947 (first year in this monthly series) after adjusting for changes in prices. Year over year median is up 3.2%. and 5.5% higher than the median of $60,231 for December 2007, start of the Great Recession and 15.4% above the post-recession low point of $55,083.

All dollar figures are expressed in November 2018 purchasing power. Their income measure is before federal and state income taxes and mandatory payroll taxes.

Gordon Green and John Coder, "Household Income Trends," Sentier Research, December 28, 2018, http://www.sentierresearch.com/Charts/HouseholdIncomeIndex_UnemploymentRate_11_2018.jpg

Household Income Trends: Extended Excerpt Image 1