A leftist friend of mine shared this meme:
Averages are tricky like that
- The average income in the United States is 74,500$.
- Excluding the top 10 Americans, it's only 65,000.
- Excluding the top 50, it drops to 48,000$.
- Excluding the top 1,000, it drops to just 35,500$
It alleges that the average income in the United States drops by $9,500 if you exclude the ten richest Americans, $25,000 if you exclude the 50 richest, and $39,000 if you exclude the 1,000 richest.
Is this true?
This is false because the "starting" value used by the meme is the median value, not the mean, of household income in the United States (as seen in this chart Real Median Household Income in the United States, showing $74,580 for 2022)
The reductions are made as though that value was an average, not a median. While excluding outliers can change an average substantially, it affects the median only very slightly.
It also appears that the ostensible reductions from excluding the "top" earners are based on counting total wealth, not yearly income-- which is itself at least an order-of-magnitude error. The 10 highest income Americans do not average $95,000,000,000 in annual income.
From the chart Mean Family Income in the United States you can see that mean family income (as opposed to median) is actually 126,500. This is income and not wealth, but even if we are as generous as possible to the original graphic and assume we can just deduct total wealth of the top X, we see that excluding the top 10 reduces the mean to $116,000, and reducing the top 1,000 reduces to $87,000. As percentage reductions, these are much less dramatic-- and the resulting mean is still higher than the (all but unchanged) median. But remember, even these values are comparing apples (income) to oranges (total wealth)-- the total share of annual income going to the very wealthiest is much smaller.
The income of individuals is confidential; however, Propublica says they obtained secret IRS information and published the income of the top 400 individuals for 2013-2018. This is gross income before tax deductions. Generally, the list includes spousal income unless tax returns were separately filed. Propublica stated in 2022 "All numbers were adjusted for inflation".
Bill Gates $2.85B
Michael Bloomberg $2.05B
Jan Koum $1.93B
Ken Griffin $1.68B
Laurene Powell Jobs $1.57B
Jeffrey Yass $1.30B
David Siegel $1.17B
John Overdeck $1.17B
Larry Ellison $1.07B
Steve Ballmer $1.05B
Total: $15.84 Billion
The US population was 331,449,281 in 2020, so removing the top 10 would reduce the average income by $48.
Adult population was 258.3 million, so removing the top 10 would reduce the average adult income by $61.
Number of households was 126.8 million, so removing the top 10 would reduce the average household income by $125.
If the original question had instead been about wealth instead of income, one piece of the claim would be vaguely true:
Average wealth per household was $1.1M in 2022. There are around 130m households in the US in total, giving a total wealth of $143 trillion. The 10 wealthiest individuals have a combined wealth of around $1.2 trillion. So if one excludes them, the average household wealth is around 1% or $10,000 less, these $10,000 are presumably the same as quoted in the original question.
By similar computations, excluding the 50/1000 wealthiest households reduces the average wealth per household by $25,000/ $40,000. This is not too surprising if one looks at the median wealth per household, which is $141,000 (same source).
