The standard of living in the United States is high by the standards that most economists use, and for most of the 20th century, the United States was widely recognized as having the highest standard of living in the world. Per capita income is high but also less evenly distributed than in most other developed countries; as a result, the United States fares particularly well in measures of average material well being that do not place weight on equality aspects.
In the United Nations Human Development Index, which measures health, education, and per capita income levels, the United States is relatively high, currently ranking 8th. However, the Human Development Index is not considered a measure of living standards, but a measure of potential living standards were there no inequality: rather, the inequality-adjusted Human Development Index is considered the actual level of human development, taking inequality into account. On the inequality-adjusted HDI, the United States ranked 27th in 2014, tied with Poland. [4]
In 2013, the Economist Intelligence Unit's Where-to-be-born Index, which takes into account material well-being as measured by GDP per capita, life expectancy, political stability, the quality of family life based on divorce rates, community life, crime and terrorism rates, gender equality, the quality of governance, climate, and unemployment rates, ranked the United States at 16th place, tied with Germany. [5]
The OECD Better Life Index, which measures quality of life according to 11 factors, ranks the United States as 7th among 34 OECD countries.
The homeownership rate is relatively high compared to other post-industrial nations. In 2005, 69% of Americans resided in their own homes, roughly the same percentage as in the United Kingdom, Belgium, Israel and Canada. [6] [7] [8] In 2007, Americans enjoyed more cars and radios per capita than any other nation [9] and more televisions and personal computers per capita than any other nation with more than 200 million people. [10] [11]
In colonial America, the standard of living was high by 18th century standards. Americans could choose their diet from a diverse range of plants and animals from Europe and the Western Hemisphere, and this, combined with favorable weather conditions, ensured that Americans never had to deal with harvest failures. There was little exposure to epidemic diseases, and low wealth inequality, ensuring that even the poor were well-fed.
Historians have used height to measure living standards during this time as average adult heights can point to a population's net nutrition – the amount of nutrition people grew up with as compared to biological stress which can cause lower heights in adulthood, stemming from things like food deprivation, hard work, and disease. According to military records of American and European men, Americans were on average two to three inches taller than Europeans.
Average heights showed little change until the second quarter of the 19th century, with the Industrial Revolution. The growth of canals, steamboats, and railways, as well as the public school system, mass immigration, and urbanization, increased exposure to diseases. Food prices rose in the 1830s, and industrialization brought along with it growing wealth inequality and business depressions that further worsened the situations of the poor. As a result, average stature and life expectancy declined, and only rebounded from 1910 to 1950, as incomes rose, urban conditions became less crowded, and public health measures were put in place. [12]
From the 1930s up until 1980, the average American after-tax income adjusted for inflation tripled, [13] which translated into higher living standards for the American population. [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] [25] [26] [27] [28] [29] [30] [31] [32] Between 1949 and 1969, real median family income grew by 99.3%. [33] From 1946 to 1978, the standard of living for the average family more than doubled. [34] Average family income (in real terms) more than doubled from 1945 up until the 1970s, while unemployment steadily fell until it reached 4% in the 1960s. [35] Between 1949–50 and 1965–66, median family income (in constant 2009 dollars) rose from $25,814 to $43,614, [36] and from 1947 to 1960, consumer spending rose by a full 60%, and for the first time, as noted by Mary P. Ryan, "the majority of Americans would enjoy something called discretionary income, earnings that were secure and substantial enough to permit them to enter sectors of the marketplace that were once reserved for the affluent." [37] In 1960, Americans were, on average, the richest people in the world by a massive margin. [38]
During the 1960s, median family incomes increased by over 33%, while per capita expenditures on recreation and meals grew by over 40%. From 1959 to 1969, median family income (in 1984 dollars) increased from $19,300 to $26,700. [39] By 1969, 79.6% of all households owned at least one car, 82.6% owned a refrigerator or freezer, 79% owned a black and white television set, 31.9% owned a color television set, and 70% owned a washing machine. [40] Leisure time also increased. By 1970, it was estimated that the average workingman in America had 140 days off work each year. [41] US work hours fell by 10.7% between 1950 and 1979, though the decline was still around half that of Western Europe.
In 1980, the American standard of living was the highest among the industrial countries, according to the OECD. Out of the 85 million households in the United States, 64% owned their own living quarters, 55% had at least two TV sets, and 51% had more than one vehicle. In terms of possession of telephones, TV sets, school enrollments, animal protein in diets, and energy consumption, the United States was far ahead of other industrialized countries. [42] Wealthy and middle class and a majority of poor Americans had higher after-tax incomes than their counterparts almost anywhere else in the world. [38] [43] By 1985, the US per capita income was $11,727, one of the highest among industrialized countries. By the mid-1980s, 98% of all households had a telephone service, 77% a washing machine, 45% a freezer, and 43% a dishwasher. [44]
In the 1990s, the average American standard of living was regarded as amongst the highest in the world, and middle class and poor Americans were still, on average, richer than their counterparts in almost all other countries, though the gap with some European countries had noticeably narrowed. [38] [45]
In 2006, median income was $43,318 per household ($26,000 per household member) [1] with 42% of households having two income earners. [46] Meanwhile, the median income of the average American age 25+ was roughly $32,000 [2] ($39,000 if only counting those employed full-time between the ages of 25 and 64) in 2005. [3] According to the CIA the gini index which measures income inequality (the higher the less equal the income distribution) was clocked at 41.5 in 2019, [47] compared to 30.8 in the European Union [48] and 31.7 in Germany. [49]
The US has... a per capita GDP [PPP] of $42,000... The [recent] onrush of technology largely explains the gradual development of a "two-tier labor market"... Since 1975, practically all the gains in household income have gone to the top 20% of households... The rise in GDP in 2004 and 2005 was undergirded by substantial gains in labor productivity... Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade and budget deficits, and stagnation of family income in the lower economic groups. [47]
In 2014, median wealth in the United States was $44,900, which put the United States in 19th place, behind many other developed countries. [50] In 2015, median wealth in the United States was $55,775. [51]
The United States has one of the widest rich-poor gaps of any high-income nation today, and that gap continues to grow. [52] Some prominent economists have warned that the widening rich-poor gap in the U.S. population is a problem that could undermine and destabilize the country's economy and standard of living. In 2006, Alan Greenspan wrote that "The income gap between the rich and the rest of the US population has become so wide, and is growing so fast, that it might eventually threaten the stability of democratic capitalism itself". [53] In 2013, George Friedman, the head of Stratfor, wrote that the middle class' standard of living was declining, and that "If we move to a system where half of the country is either stagnant or losing ground while the other half is surging, the social fabric of the United States is at risk, and with it the massive global power the United States has accumulated." [54]
Since 1971, the middle income was above 50% of the population in the U.S. In 2015, the middle class income was 49.9% of the population. The middle class continues to shrink and standard of living continues to decrease. [55]
| Country | Austria | Belgium | Denmark | France | Ireland | Norway | Spain | Portugal | UK | United States | Israel | Canada | Russia |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Homeownership rate [6] | 56% | 71% | 51% | 55% | 42% | 77% | 77% | 85% | 64% | 69% | 69% | 68% [56] | 72% |
In 2020 Falcettoni and Nygaard wrote a paper [57] and released a policy brief [58] and a FEDS Note [59] on the standard of living across the United States of America. Motivated by the fact that economists mainly focus on income per capita in their analyses of standards of living, but that states across the United States differ along many other dimensions, they build a measure of living standards (à la Jones and Klenow 2016 [60] ) that accounts for cross-state variations in mortality, consumption, education, inequality, and cost of living. They find that per-capita income is a good indicator of the level of living standards across the United States, but that deviations can be significant for some states. They also find that the level of living standards in most states appears closer to the level of living standards in the richest state, Connecticut, than the difference in their per-capita income levels would imply. In particular, their measure highlights that high-income states benefit from higher life expectancy, consumption, and college attainment, while low-income states benefit from lower cost of living. The state with the highest living standards according to their measure is Minnesota. [61]
Finally, Falcettoni and Nygaard conclude by analyzing whether and how living standards have been rising across the United States between 1999 and 2015. They find that every state has experienced a rise in living standards, but that states differ significantly in how fast their living standards are rising. They find that the main reason for the difference in how fast living standards are rising across the United States is due to varying gains in life expectancy, consumption, and college attainment in the different states. This is a cautionary tale for economists using per-capita income growth as a proxy for how fast living standards are rising in any given state in the United States. In fact, Falcettoni and Nygaard find that per-capita income growth is only weakly correlated with how fast living standards are rising and deviations can be significantly large.
| Index | Rank |
|---|---|
| Human Development Index | 17th out of 189 pop |
| GDP (PPP) per capita | 9th out of 183 |
| GDP (nominal) per capita | 8th out of 183 |
| Where-to-be-born Index | 13th out of 71 |
| Human Poverty Index | 17th out of 19 |
Standard of living in the United States varies considerably with socio-economic status. The table below gives a summarization of prominent academic theories on the socio-economic stratification of the United States:
| Dennis Gilbert, 2002 | William Thompson & Joseph Hickey, 2005 | Leonard Beeghley, 2004 | |||
|---|---|---|---|---|---|
| Class | Typical characteristics | Class | Typical characteristics | Class | Typical characteristics |
| Capitalist class (1%) | Top-level executives, high-rung politicians, heirs. Ivy League education common. | Upper class (1%) | Top-level executives, celebrities, heirs; income of $500,000+ common. Ivy league education common. | The super-rich (0.9%) | Multi-millionaires whose incomes commonly exceed $3.5 million or more; includes celebrities and powerful executives/politicians. Ivy League education common. |
| Upper middle class [1] (15%) | Highly-educated (often with graduate degrees), most commonly salaried, professionals and middle management with large work autonomy. | Upper middle class [1] (15%) | Highly-educated (often with graduate degrees) professionals & managers with household incomes varying from the high 5-figure range to commonly above $100,000. | The rich (5%) | Households with net worth of $1 million or more; largely in the form of home equity. Generally have college degrees. |
| Middle class (plurality/ majority?; ca. 46%) | College-educated workers with considerably higher-than-average incomes and compensation; a man making $57,000 and a woman making $40,000 may be typical. | ||||
| Lower middle class (30%) | Semi-professionals and craftsmen with a roughly average standard of living. Most have some college education and are white-collar. | Lower middle class (32%) | Semi-professionals and craftsmen with some work autonomy; household incomes commonly range from $35,000 to $75,000. Typically, some college education. | ||
| Working class (30%) | Clerical and most blue-collar workers whose work is highly routinized. Standard of living varies depending on number of income earners, but is commonly just adequate. High school education. | ||||
| Working class (32%) | Clerical, pink- and blue-collar workers with often low job security; common household incomes range from $16,000 to $30,000. High school education. | Working class (ca. 40–45%) | Blue-collar workers and those whose jobs are highly routinized with low economic security; a man making $40,000 and a woman making $26,000 may be typical. High school education. | ||
| Working poor (13%) | Service, low-rung clerical and some blue-collar workers. High economic insecurity and risk of poverty. Some high school education. | ||||
| Lower class (ca. 14–20%) | Those who occupy poorly-paid positions or rely on government transfers. Some high school education. | ||||
| Underclass (12%) | Those with limited or no participation in the labor force. Reliant on government transfers. Some high school education. | The poor (ca. 12%) | Those living below the poverty line with limited to no participation in the labor force; a household income of $18,000 may be typical. Some high school education. | ||
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General:
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and rendered in a specific time period by a country or countries. GDP is often used to measure the economic health of a country or region. Definitions of GDP are maintained by several national and international economic organizations, such as the OECD and the International Monetary Fund.
Per capita income (PCI) or average income measures the average income earned per person in a given area in a specified year.
The United States is a highly developed mixed economy. It is the world's largest economy by nominal GDP; it is also the second largest by purchasing power parity (PPP), behind China. It has the world's sixth highest per capita GDP (nominal) and the eighth highest per capita GDP (PPP) as of 2024. The U.S. accounted for 26% of the global economy in 2023 in nominal terms, and about 15.5% in PPP terms. The U.S. dollar is the currency of record most used in international transactions and is the world's reserve currency, backed by a large U.S. treasuries market, its role as the reference standard for the petrodollar system, and its linked eurodollar. Several countries use it as their official currency and in others it is the de facto currency. Since the end of World War II, the economy has achieved relatively steady growth, low unemployment and inflation, and rapid advances in technology.
Avon is a town in Washington Township, Hendricks County, Indiana, United States. The population was 21,474 at the 2020 census. It is part of the Indianapolis metropolitan area.
Burrton is a city in Harvey County, Kansas, United States. It is named after Isaac T. Burr, former vice-president of the Atchison, Topeka and Santa Fe Railway. As of the 2020 census, the population of the city was 861.
Centereach is a hamlet and census-designated place in Suffolk County, New York, United States. The population was 31,578 at the 2010 census.
The poverty threshold, poverty limit, poverty line, or breadline is the minimum level of income deemed adequate in a particular country. The poverty line is usually calculated by estimating the total cost of one year's worth of necessities for the average adult. The cost of housing, such as the rent for an apartment, usually makes up the largest proportion of this estimate, so economists track the real estate market and other housing cost indicators as a major influence on the poverty line. Individual factors are often used to account for various circumstances, such as whether one is a parent, elderly, a child, married, etc. The poverty threshold may be adjusted annually. In practice, like the definition of poverty, the official or common understanding of the poverty line is significantly higher in developed countries than in developing countries.
Social class in the United States refers to the idea of grouping Americans by some measure of social status, typically by economic status. However, it could also refer to social status and/or location. The idea that American society can be divided into social classes is disputed, and there are many competing class systems.
In economics, income distribution covers how a country's total GDP is distributed amongst its population. Economic theory and economic policy have long seen income and its distribution as a central concern. Unequal distribution of income causes economic inequality which is a concern in almost all countries around the world.
Household income is an economic standard that can be applied to one household, or aggregated across a large group such as a county, city, or the whole country. It is commonly used by the United States government and private institutions to describe a household's economic status or to track economic trends in the US.
Personal income is an individual's total earnings from wages, investment interest, and other sources. The Bureau of Labor Statistics reported a median weekly personal income of $1,139 for full-time workers in the United States in Q1 2024. For the year 2022, the U.S. Census Bureau estimates that the median annual earnings for all workers was $47,960; and more specifically estimates that median annual earnings for those who worked full-time, year round, was $60,070.
Affluence refers to an individual's or household's economical and financial advantage in comparison to others. It may be assessed through either income or wealth.
Income inequality has fluctuated considerably in the United States since measurements began around 1915, moving in an arc between peaks in the 1920s and 2000s, with a 30-year period of relatively lower inequality between 1950 and 1980.
Income in India discusses the financial state in India. With rising economic growth and prosperity, India's income is also rising rapidly. As an overview, India's per capita net national income or NNI was around Rs. 98,374 in 2022-23. The per-capita income is a crude indicator of the prosperity of a country. In contrast, the gross national income at constant prices stood at over 128 trillion rupees. According to a 2021 report by the Pew Research Center, India has roughly 1.2 billion lower-income individuals, 66 million middle-income individuals, 16 million upper-middle-income individuals, and barely 2 million in the high-income group. According to The Economist, 78 million of India's population are considered middle class as of 2017, if defined using the cutoff of those making more than $10 per day, a standard used by the India's National Council of Applied Economic Research. According to the World Bank, 93% of India's population lived on less than $10 per day, and 99% lived on less than $20 per day in 2021.
The inequality of wealth has substantially increased in the United States in recent decades. Wealth commonly includes the values of any homes, automobiles, personal valuables, businesses, savings, and investments, as well as any associated debts.
Median household disposable income in the UK was £29,400 in the financial year ending (FYE) 2019, up 1.4% (£400) compared with growth over recent years; median income grew by an average of 0.7% per year between FYE 2017 and FYE 2019, compared with 2.8% between FYE 2013 and FYE 2017.
The middle-class squeeze refers to negative trends in the standard of living and other conditions of the middle class of the population. Increases in wages fail to keep up with inflation for middle-income earners, leading to a relative decline in real wages, while at the same time, the phenomenon fails to have a similar effect on the top wage earners. People belonging to the middle class find that inflation in consumer goods and the housing market prevent them from maintaining a middle-class lifestyle, undermining aspirations of upward mobility.
Israel's standard of living is significantly higher than all of the other countries in the region and equal to Western European countries, and is comparable to that of other highly developed countries. Israel was ranked 19th out of 189 countries on the 2019 UN Human Development Index, indicating "very high" development. It is considered a high-income country by the World Bank. Israel also has a very high life expectancy at birth. It is ranked 4th in UN’s Global happiness index and second in index of young people.
In the United States, poverty has both social and political implications. In 2020, there were 37.2 million people in poverty. Some of the many causes include income, inequality, inflation, unemployment, debt traps and poor education. The majority of adults living in poverty are employed and have at least a high school education. Although the US is a relatively wealthy country by international standards, it has a persistently high poverty rate compared to other developed countries due in part to a less generous welfare system.
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