Analytics Stories

CHAPTER 6Is the Lot of the American Worker Improving?

Many political observers believe that Donald Trump won the 2016 election in large part because the lot of the “average” American worker was not improving. America has been built on the view that your children will be better off than you were. It is important to be able to determine whether the lot of the typical American is improving. As discussed in Chapter 1, “Preliminaries,” the typical value for a highly skewed data set is the median rather than the mean. In this chapter, we will use data from FRED (Federal Reserve of St. Louis website, fred.stlouisfed.org) to examine trends in the well-being of the American worker.

Is U.S. Family Income Skewed?

The data for each U.S. family's income is not available, so I cannot exactly determine the skewness of family income. I did, however, find the salaries of 2019 Major League Baseball players (see the file BaseballSalaries2019.xlsx). The salaries exhibit high positive skewness (skewness = 2.21). Therefore, we should use the median salary of $1.4 million as a measure of a typical salary. The mean salary of $4.5 million is more than triple the median! The top 4% of the players make 23% of the money, and this causes the highly paid players to greatly distort the mean salary. Since the U.S. government emphasizes median income, we will use median household income (adjusted for cost of living) as our primary measure of economic well-being.

Median Income and Politics

Whether you ...