How much do Vermonters earn?

A number of comments to my recent post on Vermont's economic future asked questions about how much Vermont families earn.  Rather than responding in the comments section of that post, I will use my prerogative as editor to write a post on this subject.  Here goes:

First, we have to ask what we mean by Vermont families.  Income data come in three flavors:  families, households, and individuals.  Families are two or more people who are related by blood or marriage who live under one roof.  A household is a group of people living under one roof--it could be a family or a non family household, like a group of college students, a single person, or three twenty-somethings sharing an apartment.  An individual is, well, an individual.

I prefer to look at families as a unit of observation because I think people have a good sense of what a family is.  They have less of a sense of what a household is.  And household income is more sensitive to the number of earners in the household.  And individuals are just not a good unit of observation when we're talking about how groups of people are faring economically.

Second, we want to use median, not average, as a measure.  The average is skewed by the income of the very wealthy.

Third, we also need to ask about data quality.  My favorite data set on this is the Vermont Tax Department's annual report on income taxes.  I use that data to calculate an annual series on median Vermont family income, where I define a family as any taxpayer filing as a married taxpayer filing a joint return, which is what most families do.  (Some Progressives attack my use of this measure, but it turns out to track the Census median family income estimates for 1979, 1989, and 1999 very closely.) 

I like the quality of the Tax Department data because if you underreport your income to the Tax Department, there's a penalty  (Go Directly to Jail.  Do Not Pass Go.)  When you answer the Census, you can say whatever you want with no penalty.   

The Tax Department data show median family income for 2006 was about $62,000. 

There are a variety of Census income measures.  You can use the 2000 Census, but that's getting old.  The American Community Survey reports income for the state and for Chittenden County for 2006.   All other Vermont counties are too small for the ACS to report information on.   In 2006, median family income for Vermont was $58,163.  For the US it was $58,526.  Median household income for Vermont was $47,665 and for the U.S. $48,451.  For Chittenden County, median family income was $73,967 and median household income was $54,897.  (By the way, one in five families in Chittenden County earned over $100,000.)

There is also some useful information from the Census on state median family incomes by size of family and number of earners in the family here.

What about the argument that the income increases are due solely to more people in the family working?  We don't have data on Vermont, but the Census Bureau in this release shows median incomes (real and nominal) for the U.S. for different types of families going back to 1947.   It shows that for married couple families where both spouses work, family incomes have risen from $55,000 to $79,000 since 1975 (in inflation-adjusted dollars).

Remember also, that this is only income.  It does not include the value of benefits, including pension contributions or health insurance premiums. 

Comments

[Edward Charles Ponzi Jr]

"A number of comments to my recent post on Vermont's economic future asked questions about how much Vermont families earn"

To be fair -- some of us -- in addition to asking a question or 2 ATTACKED THE VALIDITY of BOGUS BLS-based "inflation adjustments" -- and attempted to introduce data sets more in keeping with the real world lived in by us non-Hedonic humans. If you bother to investigate the work of Shadow Government Statistics -- you will find it to be scholarly and he raises mind-boggling questions about where we "think" our economy and standard of living is.

NEEDLESS TO SAY Joe Working-Class Vermonter already knows the answers to these questions without having to ask an economist or a futurist or statistics de-bugger.

-We have less industrial employment

-Much agriculture is unprofitable

-His income -- by any measure -- is currently increasing slowly -- while energy-food-stuff is skyrocketing

-For some more middle class Vermonters -- asset inflation has helped -- but that is history.

Below is from a presentation I gave to the Vermont House Ways and Means Committee (as Ponzi!)

Mr Ponzi's Household Expenses
1999-2006 (Hooverville Falls, VT)
Heating Oil--------------------------Tripled
Gasoline----------------------------Doubled
Village Taxes----------------------Doubled
German Car-----------------------Up 50%
Village House Prices------------Doubled
Medical Insurance---------------Tripled
Other Insurance------------------Up 50%
Casual Labor----------------------Doubled

[Jon Harrison]

Thanks to Mr. Woolf we have some reliable data to analyze. Thank you for using "median" as opposed to "average." Now we know exactly what we are talking about.

On its face the data would seem to show that Vermont is right in line with the nation as regards family income. However, note that the median income in Chittenden County is considerably higher than in the state as a whole. Now, I believe Chittenden is our most populous county. Because of its high population it is, in effect, overweighted when the median income for the state as a whole is calculated. In other words, Chittenden County (and a few other places, like Norwich for example) drives up the statewide, or aggregate, median income. A simpler way of expressing this would be to say that folks in the Burlington area and a few other places are doing quite well, while most of the rest of the state has a median family income significantly below that of the nation as a whole. Since we all can't move to Chittenden County (and I for one wouldn't want to, anyway), we still have an "affordability" problem in much of the state.

Let's recall that Vermonters are the most highy-taxed people in America. And, as Ponzi notes, the cost of essential goods and services has been skyrocketing. Fuel oil has more than doubled just since I moved here in 2004. So I think it's fair to say that bringing in those $15-20 an hour jobs is a minimum requirement for a healthy middle class throughout the state. Unfortunately, those jobs don't seem to be coming here. The state is beginning to look more and more like a few islands of prosperity existing in a sea of poverty.

One subset of data I'd love to see, if it exists, is the percentage of Vermont families that have at least one person working in the public sector, and what the median income of those families is. As I've pointed out before, without a healthy private sector, the tax receipts that pay public employees' salaries will eventually dry up. Did I read somewhere on this site that the State of Vermont is our number one employer? What percentage of Vermont's work force is public sector?

This is off topic, but I found it interesting that people apparently underreport their income to the Census. I understand why people tell the truth to the Tax Department, but why lie to the census taker? And why don't they exaggerate their income, as opposed to underreporting it? An interesting question from a psychological point of view.

[Mister Guy]

I think it's the state of VT first (in terms of shear numbers of people employed), then IBM, then everything else. I don't keep track of the hard numbers though, but I'm sure someone else on here can answer that.

I never give my income amount out to anyone, unless it's for a loan or housing or something like that.

Welcome to VT BTW...

[Jon Harrison]

Sure, but apparently people aren't refusing to answer the income question on the census. Instead, they're giving one arm of the government a lower figure than they're providing to another (the tax dept.). Why would they do that?

Thank you for the welcome. Although we've only been here four years, we actually got married on Lake Champlain in 1996. Before that we used to come up for a week at the end of every summer. I have a brother who's lived up here since 1988, and my wife had a great aunt who farmed in Vermont for many years.

[Jon Harrison]

Sure, but apparently people aren't refusing to answer the income question on the census. Instead, they're giving one arm of the government a lower figure than they're providing to another (the tax dept.). Why would they do that?

Thank you for the welcome. Although we've only been here four years, we actually got married on Lake Champlain in 1996. Before that we used to come up for a week at the end of every summer. I have a brother who's lived up here since 1988, and my wife had a great aunt who farmed in Vermont for many years.