Editor’s note: Art Woolf is an associate professor of economics at the University of Vermont. He served for three years as state economist for Gov. Madeleine Kunin beginning in 1988.
[H]ow much do Vermonters earn? The median income married-couple family in 2017 — half earned more and half less — had an income of $83,384, according my calculations of just-released Vermont Tax Department data.
Median income was up 1.7% from 2016 in inflation-adjusted dollars. That may not seem like much but it is higher than the average growth rate over the past four decades. Relatively small growth rates compounded over time add up. Median income is nearly 25% higher than it was two decades ago, nearly one-third more than it was in the late 1980s, and 70% higher than in 1975.
Consider that in 1975 the median income married-couple in Vermont earned the equivalent of what $50,000 can buy today. And of course, there are a lot things we can buy today that didn’t exist in 1975 or were so expensive that middle class families couldn’t afford them, including cell phones, microwave ovens, cars with anti-lock brakes, fresh blueberries in February, arthroscopic surgery, VTDigger columns, and much more.
How do I square this increase in the income and standard of living of married-couple families in Vermont with the notion that the middle class has suffered stagnant wages for decades and that, indeed, the middle class is shrinking?
For one, the Tax Department numbers are for married couples. More than 50% of Vermonters live in a married-couple household — a family with two spouses. The income stagnation argument looks at all households, not just married-couple families. That certainly has its advantages, because everyone lives in some sort of household. Married-couple families are just one type of household.
But a large and growing number of households consist of people living alone. In the late 1970s, about 20% of Vermont households were people living by themselves. Today it’s more than 30%. Looking at it another way, out of the 256,000 apartments and houses in Vermont, 75,000 of them are occupied by one person.
Single-person households might be young people just starting out in their careers or widows and widowers in their golden years. As Vermont ages, that latter group is growing. But whatever age they are, and for whatever reason, single person households have lower incomes than married-couples — about two-thirds less.
With a larger share of Vermonters living by themselves, it’s not surprising that measured median household income hasn’t grown as fast as married-couples. That’s just arithmetic.
But it doesn’t mean that there’s something wrong with the economy, or that middle class incomes are stagnating or the middle class is shrinking. That an increasing share of Vermonters are living alone should be celebrated as an indication of wealth, not poverty. The average household lays out one-third of its total spending on housing, more than any other major spending category, according to the U.S. Department of Labor.
In the past, people would live with roommates to save money if they weren’t married. Young people would live with their parents until they got married (they still do in Italy). Widows and widowers would live with their children. Increasingly, those people have enough income to live by themselves.
Looking only at married couples allows us to look at economic, rather than demographic, changes. Those changes show that married couples have done well, and there’s no reason to believe that won’t continue. At the current rate of real income growth, we will find that median income for a married couple family was $85,000 in 2018, and adjusted for inflation, it will be twice as high by the middle of the next decade as it was in 1975. By the end of the 2020s, the median income Vermont family will earn $100,000 in today’s purchasing power — a level that Chittenden County has already reached.
