Most families in Massachusetts are below average, and the number of below-average families seems to grow with every passing decade.
That may sound like a paradox — a twisted version of the joke about Lake Wobegon, where all the children are above average — but when it comes to household income, it happens to be true. Nearly 65 percent of households in Massachusetts earn less than the average statewide income of $102,000, up from 57 percent in 1980.
How can this be? It’s all about rising inequality. Over time, as the richest families in the state have pulled away from the rest, they’ve artificially raised the average income — though not in a way that benefits average families.
To understand what’s going on, imagine yourself in a local pizza shop, surrounded by a dozen middle-income families earning between $50,000 and $150,000. In this environment, the average income would be about $100,000, and it would provide a decent guide to the economic reality of the diners. Sure, some would fall below average, and others above, but everyone in the restaurant would be within rough striking distance of this average income.
Now imagine that Jeff Bezos walks in and orders a pizza. Suddenly, the average household income in the pizza place jumps from $100,000 to more than $2 billion, a figure divorced from the actual economic experience of these families. And everyone in the restaurant — save Bezos — now is classified as below average.
Something like this pizza shop scenario is playing out across Massachusetts. The rising fortune of top earners has skewed the statewide income distribution in a way that has left more and more residents below average. Indeed, the entire United States is suffering this same fate, drifting ever further from a world where half of us are above average and half below.
It’s true, as well, for various racial and ethnic groups. White households in Massachusetts are more likely to find themselves below average today than they were in 1980. As are black and Hispanic households. In fact, 80 percent of black families and 83 percent of Hispanic families now earn less than the statewide average.
To get around this weird “everyone is below average” problem, data crunchers sometimes focus on a different number: median income. The median isn’t distorted by inequality. It tells us what people have to earn in order to fall in the dead middle of the income ladder. By definition, half of all households are below the median, and half above.
But the trouble with looking exclusively at median income is that it hides inequality because it’s mathematically blind to the fact that households in the middle are much closer to the working poor at the bottom than they are to the deep-pocketed families at the top.
So maybe it’s time to focus more on the overall average and use it to clarify the effects of inequality in Massachusetts and across America.
Every year, more of us qualify as below average.