Inequality in America is not just an economic phenomenon. It has deep demographic roots — race, family structure and education.
It’s true that, as the Chart of the Month shows, median family income (adjusted for inflation) failed to reach new highs in the decade after 2000 and by 2010 had declined 8 percent from its 2000 high. But this shift in the past and prospective welfare of Americans is due to changes in family and household structure—the number of workers in a family, whether both parents are present, and education—as much as to trends in income, employment and new business opportunities.
Married with children
The highest-earning group by far is two-income married couples when both partners have college or graduate degrees. The median household income ranges from $105,000 for young families to a high of almost $150,000 for older families. These six-figure incomes compare to a median of $51,400 for all households and $75,000 for married-couple households generally. (Chart 1)
These high-earning households contrast sharply with single-parent households where the median is $30,300, 40 percent lower than for married couples and less than 60 percent of the all-households median. Education level makes all the difference. A college or graduate degree might boost a married couple’s income as much as 50 percent over the median for their respective group. Female-headed households with bachelor’s degrees or higher will have double the income of a female head of household without a B.A. For single-parent households headed by men, the education premium is large — just not quite as large. (Chart 2)
Family structure trumps race
Education counts, certainly, but family structure counts more. Married couples’ incomes are significantly higher than single-parent households’ in all education categories — with the possible exception of male-headed single parent households.
Interestingly, the gaps based on family structure and educations are larger than the gaps based on race. For married couples with children, the medians for white families ($86,800), black families ($69,800) and Hispanic families ($51,700) are not as great as the gaps based on education, which can be as much as two to one depending on degree. The income gap between married couples and single-parent households is more than two to one. (Chart 3)
Although these households are grouped by race, race per se may have little to do with the income differences. Each racial group is a mixture of different types of families and household units and education levels as well as people in different economic circumstances and earning power. Much of the difference in median income among the races can be explained by high concentrations of married couples among white households.
Note: These data are taken from “Who’s Got the Money and Where It’s Located,” from Sentier Research, May 2012. The data are based on the most recent three-year composite data file (2008, 2009 and 2010) from the American Community Survey (ACS), which consists of 3.5 million interviewed households. For simplicity, we refer to the data as “2010.”
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