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Trend in the Distribution of Household Income

 

“Often because of lifestyle choices, the majority of households in the bottom half of the income curve are single-person households, single-mother households and single-father households”

Trend in the distribution of household income

Let us preface this section by clarifying something important.

There has been much talk about the increasing levels of inequality in America. For example, the top 5 percent of households have gradually grabbed a bigger share of aggregate household income. It is not a myth.

However, much of the inequality is a consequence of bad lifestyle decisions that people make. For example, more than half of all births in DC, Louisiana, Mississippi, and New Mexico were to unmarried women in 2012. Furthermore, it is not teenagers but rather women in their early twenties who are having the highest number of non-marital births.

Yet it is known that women who have a non-marital birth are less likely than other women to eventually marry. Furthermore, there are more likely to go on and have another child out of wedlock.

In America, the socioeconomic reality is that households require a standard of at least two earners – usually mother and father – to have a fair chance at positive economic mobility. An examination of never-married mothers shows that, in 2012, 46 percent of never-married mother families (with children under age 18) had income below the poverty level, according to US Census Bureau data.

Conversely, women with better educational opportunities delay childbearing, which increases their marriage prospects, and makes it more likely they will be married and financially better off when they have children in
their 30s.

In addition to this, it is now standard that a college education tremendously helps the economic mobility of individuals. The job market rewards highly educated people by giving them higher salaries and punishes less educated people by suppressing their wages.

Therefore, we also find that the majority of households in the bottom half of the income curve are households led by less educated individuals.

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