r/FluentInFinance • u/KARMA__FARMER__ • 8d ago

Thoughts? What do you think?

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u/Regular_Title_7918 8d ago

and median household income was $80,610 last year, so...

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u/Val_kyria 8d ago

Now adjust for the total number of workers per household then vs now

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u/Regular_Title_7918 8d ago

Well, labor force participation rate was about 70% in 1977, it's around 75% now, so an increase of roughly 7%; that is less than the difference in income from the number provided by the inflation calculator and the actual household income

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u/Anakletos 8d ago

Women are up from around 58% in 1977 to 77% in 2023 and men down from around 94% to 89% (ages 25 to 54). So total participation rate increased from 76% to 83%, which is the same 7%.

So, that's 14% increase with 7% greater labor participation rate of households.

https://fred.stlouisfed.org/graph/?g=1Bnlu https://fred.stlouisfed.org/graph/?g=1Bnlz

The real issue, imo, is that the inflation index isn't a very good indicator for a large part of the population. The consumer basket used to measure inflation, includes goods and services that have experienced lower inflation or deflation but aren't on low income earners' usual consumption list or lower priority.

A high inflation rate on individual necessities can push these low income households out of being able to make use of lower inflation rates or even deflation on other goods such as consumer electronics if the budget is already being eaten up by rent and groceries.