Graphs are useful tools for breaking down complex information into readily understandable comparisons. However the simplification of a graph can also be misleading. You can place entirely unrelated information into a table then make a graph of it and people will make inferences from it because if it is in a graph, it must be related. It is important to pay attention to the X-axis, Y-axis, and then try to break down the charted lines and the information they contain within.

In the graph above, note that it is measuring the percentage change since a certain date, but then it is also adjusted for inflation. Ultimately it shows that US GDP per capita has roughly doubled since 1967, even when adjusted for inflation.  ”Per capita” is an important consideration here since this graph has three other lines in it which are not labeled “per capita”. Per capita means per person and is based off of total population. However the orange and blue lines in this graph show us measurements “per household.” A household and a person are not the same thing. According the the US Census Bureau the population of the US from 1970 to 2009 has grown by 34%. This is the number used by per capita. However the number of households in the US from 1970 until 2009 has grown by nearly 81%. If the number of US households had increased at a rate equal to the population instead of more than at double the rate of population growth, the blue line labeled “Median household income” would shift upward and align more closely with the green “US GDP per captia” line.

The blue line, whether measuring households or individuals, is still above the baseline, showing a 20% increase in real income (“real” meaning it factors inflation into the calculation). So even if all other things were held equal, the average household would be earning 20% more than a household from 1967. While that may not be equal to the increase in income for the top income earners, it is still an improvement. This number being smaller than the increase to the top 5%, but unless one can prove that the top 5% did not deserve (didn’t earn) this increase or came by it through illegal means, then the top 5% having a larger increase is simply a matter of envy.

Aside from the simple real income increases, one should factor in what the rise in GDP has caused and what measures of real wealth have improved. Income and assets are not wealth. Wealth is goods and services we desire or possess. Wealth has subjective factors. It includes a value which we as individuals place on items. Income is simply a number in dollars, which we can then use these dollars to obtain the goods or services we desire thus accumulating wealth. This is a simplification of wealth, but for these purposes it will do. Now look at the increases in wealth for the average American since 1967.

Even if real income had not increased whatsoever, real wealth has increased since 1967. “As recently as 1993, only 68 percent of all occupied housing units had air conditioning. The latest results from the 2009 Residential Energy Consumption Survey (RECS) show that 87 percent of U.S. households are now equipped with air conditioning.” (US Energy Information Administration)  Based on the the same data, 1980 numbers show that only 55% of households had either central or window/wall unit air conditioning. Having an air conditioner is surely a measure of wealth; it is something that is desired and makes life more comfortable.

In 2009 of the 113.6 million US households, 112.2 (98.8%) had a television. 88 million (77.5%) households had 2 or more televisons, and 61.9 million (55.5%) had LCD, Plasma, Projection, or LED televisions. In 1993 only 57.1% had more than one television and not a single person in the country, not even the richest few individuals, owned an LCD, Plasma, or LED television. (All data comes from the US Energy Information Administration’s Residential Energy Consumption Survey)  Similar statistics are available for refrigerators, computers, video game systems, cars (and included options), and many other factors that could be included as a measure of wealth. Many of the items commonplace in the homes of those in poverty were not even available to the most wealthy in 1967. 2005 US Department of Energy studies show that of the households below the poverty line 38% have a computer, 29% have internet access,  52% have a VCR or DVD player, and 55% own a cell phone. All measures of wealth which were inaccessible to even the wealthy in 1967. So while the numerical income of the median household income may not have drastically increased, the options and wealth of those individuals has increased dramatically.

The last line of the graph, the purple Minimum Wage line, is not a direct corollary to any of the other lines in this graph. The minimum wage is a measurement of dollars to a single hour worked. All other lines in this graph are taken on a yearly basis. It could be assumed that everyone who earns minimum wage works 40 hours a week, 52 weeks a year. But to make this assumption then the earners in the top 5% and the median household incomes should all be normalized to a 40 hour, 52 week year. However someone earning minimum wage could work two jobs at minimum wage, or be at work 100 hours per week and earn (based on current minimum wage) nearly $50,000 a year which is above the median household income. The typical minimum wage worker in the United States does not work a 100-hour work week, but instead the Bureau of Labor Statistics shows that only one-third of workers who earn minimum wage work 40 or more hours in a week and most of these minimum wage employees either rise above the minimum wage rate, or leave the job within a year.

To put this all more simply, be aware that graphs can be misleading. Always study it and break down the components of the graph before drawing any conclusions based upon it.

Comic from Calamities of Nature, typically liberal but typically funny.

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