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Wednesday, August 16, 2017

Who's The Average Person?

A letter in Tuesday's Alaska Dispatch News says:
"I refer to the phenomenon of the disappearance of affordable homes.  The average person is no longer able to afford a home."
The US Census Bureau data says that 60% of people in Anchorage lived in owner occupied homes between 2011 and 2015.

The same Census chart shows the median household income in Anchorage for that same period was $78,326.  (I'd note that median is the number in the very middle from highest to lowest.  There should be as many people above the median as below it.  It's not an average where a small number of very rich people could offset a lot of very poor people to have a misleading 'average income'.)

The per capita income was $36,920.  They define that to be the mean income of every man, woman, and child.  So, this number is the 'average' and is not the 'middle' number.  Obviously, adults earn a lot more than do children, though in Alaska, Permanent Fund Dividend checks mean the average child here probably earns more than they do in other states.

I'm guessing the letter writer thinks of herself (and maybe the people she knows) as 'average persons.'  But the way I read this, the average person is the typical person, the one that is like most of the others.  So 60% living in owner owned homes means to me that the average person can afford a house.  I realize that the people in the homes include children and spouses.  And if we simple look at adults, the percent living in owner occupied homes is probably lower.  But more than half of all people in Anchorage, during that recent time period, did live in owner occupied housing.

The same chart listed 8.7% of people in Anchorage as living in poverty.

This is not to say that working for a living is what it used to be.  It's not.  It used to be pretty easy - if you were white and male - to earn a good living, live decently, and afford things like buying a house. But a lot of people who start off with very little - many immigrant families for example - are willing to work very hard, live frugally, and save money to buy a home.  A lot of people who grew up comfortably seem not willing to give up the life style they've grown up with, but aren't earning enough money to maintain that lifestyle.  It's a shock when they find that not only aren't they keeping up, they are falling into debt.

Part of the problem is that more and more of the income of businesses is going to the higher levels of management and less and less is going to the workers.  Statista.com offers this chart comparing the US gap to other countries:

Click on Chart to enlarge and focus or go to Statista


And here's a Seattle Times article on the subject.  The subtitle of the article is:
"The average CEO earned 20 times the average worker pay in 1965. Now S&P 500 CEOs make 335 times the pay of their average employee."
 So while it appears to me that 'the average person' in Anchorage can afford to buy a house (or at least lives in an owner occupied house) it's also true that the hefty PFD cut Alaskans got will impact the 'average Alaskan' worker much more than it will the oil and other large corporate executives.

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