A chartbook from Mar 2016

Household Expenditures 

and Income

Balancing family finances in today’s economy

The Pew Charitable Trusts

Susan K. Urahn, executive vice president

Travis Plunkett, senior director

Program team

Erin Currier, project director

Diana Elliott, research manager

Clinton Key, research officer

Sarah Sattelmeyer, officer

Joanna Biernacka-Lievestro, senior research associate

Walter Lake, senior research associate

Sheida Elmi, associate 

Sowmya Kypa, research associate

External reviewers

This report benefited from the insights and expertise of Jonathan Fisher, research associate in the University 

of California, Santa Cruz department of economics. Neither he nor his organization necessarily endorses the 

conclusions of this chartbook.

Acknowledgments

The financial security and mobility team thanks Pew staff members Hassan Burke, Samantha Chao, Rica Santos, 

Alan van der Hilst, Jonathan Moody, Sultana Ali, Jennifer V. Doctors, and David Merchant for providing valuable 

feedback on this report. We also thank all those involved for their thoughtful suggestions and production 

assistance. Many thanks also to other current and former colleagues who made this work possible.

For additional information, please visit:

economicmobility.org

1

Overview

Expenditures are a key but often overlooked element of family balance 

sheets. In measuring household financial security, significant attention is 

typically paid to income, but much less to whether those resources are 

sufficient to cover expenses. To begin addressing this gap in the policy 

discourse, this chartbook uses the Bureau of Labor Statistics’ Consumer 

Expenditure Survey to explore household expenditures, examining changes 

in overall spending and across individual categories from 1996 to 2014.1

It also details the differences in expenditures by income, with a particular 

focus on the degree to which households have slack in their budgets that 

could be devoted to savings and other wealth-building efforts. 

This analysis focuses on the working-age population, which includes survey 

respondents or their spouses who are between the ages of 20 and 60. For 

the purpose of examining differences in spending by income, the sample 

was divided into thirds.

The analysis shows that both median income and expenditures contracted 

after the Great Recession, reflecting the economic turmoil of the country. 

By examining household spending, this research helps to shed light on 

family financial security over time, and especially in recent years. Key 

findings include: 

• Overall median household expenditures grew by about 25 percent 

between 1996 and 2014, returning to pre-recession levels.2 After 

declining during and after the Great Recession, expenditures increased 

between 2013 and 2014 in particular. In 2014, the typical American 

household spent $36,800.

• Although expenditures recovered from the downturn, income 

did not. As the recovery began, median household expenditures returned 

to pre-crisis levels, but median household income continued to contract. 

By 2014, median income had fallen by 13 percent from 2004 levels, while 

expenditures had increased by nearly 14 percent. 

• Low-income families spent a far greater share of their income on core 

needs, such as housing, transportation, and food, than did upperincome families. Households in the lower third spent 40 percent of their 

income on housing, while renters in that third spent nearly half of their 

income on housing, as of 2014. Because their core spending absorbed 

so much of their income, households in the lower income tier spent 

considerably less than their middle- and upper-income counterparts on 

discretionary items, such as food away from home and entertainment.

• Although all households had less slack in their budgets in 2014 than 

in 2004, lower-income households went into the red. In 2004, typical 

households at the bottom had $1,500 of income left over after expenses. 

By 2014, this figure had decreased by $3,800, putting them $2,300 in 

the red. The lack of financial flexibility threatens low-income households’ 

financial security in the short term and their economic mobility in the 

long term. 
2

Figure 1

After a Long Recovery, Household Spending Increased by 25%, 

Returning to Pre-Recession Levels

Average and median household expenditures, 1996-2014

Notes: Data are adjusted for inflation using the Bureau of Economic Analysis’ Personal Consumption Expenditure Price Index; population is 

limited to households in which the respondent or spouse is between the ages of 20 and 60. 

Sources: Pew’s analysis of Bureau of Labor Statistics Consumer Expenditure Survey Public-Use Microdata, 1996-2014

© 2016 The Pew Charitable Trusts

Households spent more in 2014 

than they did in 1996, after 

adjusting for inflation; this holds 

whether the figures are based on 

averages (means) or medians. 

The typical household saw its 

expenditures grow by more than 

25 percent, from $29,400 in 

1996 to $36,800 in 2014. Mean 

expenditures grew 27 percent 

since 1996, rising from $43,200 

to $54,800. Much of the growth 

occurred between 2012 and 2014, 

signaling a promising recovery 

from the Great Recession and the 

housing crisis.

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

‘96 ‘97 ‘99‘98 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14

Mean dollars Median dollars
3

Figure 2

Expenditures Grew and Income Dropped Since the End of the Great 

Recession

Trends, 2004-14

Notes: Data are adjusted for inflation using the Bureau of Economic Analysis’ Personal Consumption Index; population is limited to 

households in which the respondent or spouse is between the ages of 20 and 60. 

Sources: Pew’s analysis of Bureau of Labor Statistics Consumer Expenditure Survey Public-Use Microdata, 2004-14

© 2016 The Pew Charitable Trusts

From 2004 to 2008, median 

household income grew by only 1.5 

percent,3 while median expenditures 

increased by about 11 percent. 

During that period, the expenditureto-income ratio (the percentage 

of a household’s budget used for 

spending) jumped by 9 percent. 

As the recovery began, median 

household expenditures returned 

to pre-crisis levels, but median 

household income continued to 

contract. By 2014, median income 

had fallen by 13 percent from 2004 

levels, while expenditures had 

increased by nearly 14 percent. 

This change in the expenditureto-income ratio in the years 

following the financial crisis is a 

clear indication of why and how 

households feel financially strained. 

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Expenditure-to-income ratio

Expenditure and income values, indexed to 2004

Expenditure-to-income ratio as percentage

50%

60%

70%

80%

90%

100%

110%

120%

Expenditures indexed Income indexed
4

Figure 3

A Typical Family of Four Had Higher Expenses Relative to Income 

in 2014 Than It Did Almost 19 Years Earlier

Median expenditures for households with two earners and two children, 

1996 and 2014

Notes: Data are adjusted for inflation using the Bureau of Economic Analysis’ Personal Consumption Expenditure Price Index; population is 

limited to households in which the respondent or spouse is between the ages of 20 and 60. Tax liability was calculated assuming median 

income for a family of four in 1996 and 2014. See the methodology for more information. 

Sources: Pew’s analysis of Bureau of Labor Statistics Consumer Expenditure Survey Public-Use Microdata, 1996-2014

© 2016 The Pew Charitable Trusts

For a typical family of four (two 

earners and two children), while 

median household income increased 

by about $10,000 between 1996 

and 2014, annual expenditures 

also increased by about the same 

amount, driven largely by higher 

spending for core needs: housing, 

food, and transportation. Although 

the absolute change in income and 

expenditures was similar, this family 

had less slack in its budget in 2014 

than in 1996, as its expenditure-toincome ratio grew from 71 percent to 

75 percent.

$

53,615

$

37,951

$

12,284

$

6,139 $

3,845 $

1,119 $

1,444 $

1,125

$

65,916

$

49,487

$

16,996

$

8,320 $

5,720

$

1,496 $

2,560 $

864

Expenditure-to-income

ratio: 71%

Expenditure-to-income

ratio: 75%

$0

$20,000

$40,000

$60,000

$80,000

1996 2014

After-tax income Total expenditures Housing Food

Transportation Health Entertainment Apparel
5

Figure 4

Housing, Food, and Health Care Consumed Larger Shares of 

Income in 2014 Than They Did 19 Years Earlier

Median expenditures as a percentage of income, 1996-2014

Notes: Data are adjusted for inflation using the Bureau of Economic Analysis’ Personal Consumption Expenditure Price Index; population is 

limited to households in which the respondent or spouse is between the ages of 20 and 60. 

Sources: Pew’s analysis of Bureau of Labor Statistics Consumer Expenditure Survey Public-Use Microdata, 1996-2014

© 2016 The Pew Charitable Trusts

About two-thirds of families’ 

spending goes to core needs: 

housing, food, and transportation. 

In 2014, housing obligations 

accounted for the largest share of 

household pretax income, about 

25 percent. Over the 19-year study 

period, aggregate median housing 

expenditures absorbed 21 percent of 

families’ pretax income. The secondlargest expenditure, food, typically 

consumed nearly 10 percent of 

family income, while transportation 

took 7 percent. The proportion of 

household spending that these 

categories account for has shifted 

very little over the past two decades. 

0% 

5% 

10% 

15% 

20% 

25% 

30% 

‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 

Housing and related Food Transportation Pets, toys, and entertainment Health
6

Figure 5

Lower-Income Households’ Housing Costs Grew by More 

Than 50% Over the Past 19 Years

Housing expenditures by income thirds, 1996-2014

Notes: Data are adjusted for inflation using the Bureau of Economic Analysis’ Personal Consumption Expenditure Price Index; population is 

limited to households in which the respondent or spouse is between the ages of 20 and 60.

Sources: Pew’s analysis of Bureau of Labor Statistics Consumer Expenditure Survey Public-Use Microdata, 1996-2014

© 2016 The Pew Charitable Trusts

Over the past two decades, 

spending on housing increased for 

Americans in all income tiers. In 

2014, households in the lower third 

spent much less in absolute dollar 

terms (about $9,200) than those in 

the middle or upper thirds, whose 

median housing expenditures 

reached $11,500 and $18,000, 

respectively. However, the typical 

lower-income household spent 

far more on housing as a share of 

income (40 percent) than those in 

the middle (25 percent) or at the 

top (17 percent).

$3,000

$6,000

$9,000

$12,000

$15,000

$18,000

‘96 ‘97 ‘99 ‘01 ‘03 ‘05 ‘07 ‘09 ‘98 ‘00 ‘02 ‘04 ‘06 ‘08 ‘10 ‘12 ‘14 ‘11 ‘13

Lower third Middle third Upper third
7

Figure 6

Lower-Income Renters Spent Close to 50% of Their Income on 

Rent in 2014

Percentage of income used for shelter by income third and housing status, 

2000-14

Notes: Data are adjusted for inflation using the Bureau of Economic Analysis’ Personal Consumption Expenditure Price Index; population 

is limited to households in which the respondent or spouse is between the ages of 20 and 60. For homeowners, housing costs include 

mortgage principal and interest and property taxes; for renters, they include rent.

Sources: Pew’s analysis of Bureau of Labor Statistics Consumer Expenditure Survey Public-Use Microdata, 2000-14

© 2016 The Pew Charitable Trusts

Since the start of the housing crisis 

in 2007, homeownership rates have 

declined among households in the 

middle- and upper-income tiers. 

These decreases have affected the 

rental market, as former owners 

became renters, leading to rental 

vacancy rates at historical lows 

below 7 percent.4 The diminished 

supply of rental properties 

increased the cost of rental housing 

dramatically; in 2014, renters at each 

rung of the income ladder spent 

a higher share of their income on 

housing than they had in any year 

since 2004. Although both renters 

and homeowners spent more for 

housing in 2014, notable differences 

in the proportion of household 

resources going to shelter were 

evident across income groups, with 

lower-income renter households 

spending close to half of their pretax 

income on rent. 

0% 

‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14

10% 

20% 

30% 

40% 

50% 

Lower third mortgage 

Lower third rent 

Middle third mortgage 

Middle third rent 

Upper third mortgage 

Upper third rent 
8

Figure 7

Lower-Income Families Routinely Spent a Larger Share of Income on 

Transportation Than Wealthier Families Did During the Past 15 Years

Expenditures in dollars and as a share of income, by income thirds, 2000-14

As with housing, households in 

the lower income group spend 

significantly less in absolute 

dollars, but much more as a share 

of their income, on transportation 

than did those in the middle- or 

upper-income groups. Further, 

transportation costs increased in 

recent years for households at the 

bottom, while this spending was 

more stable for the other income 

groups. Lower-income households 

spent nearly 16 percent of their 

income on transportation in 2014, 

up from 9 percent four years earlier. 

In contrast, households in the 

middle spent about 11 percent of 

their income on transportation in 

2014, while those at the top spent 8 

percent. 

Notes: Data are adjusted for inflation using the Bureau of Economic Analysis’ Personal Consumption Expenditure Price Index; population 

is limited to households in which the respondent or spouse is between the ages of 20 and 60. The data shown reflect transportation 

“expenditure outlays,” which include all costs related to owning, leasing, renting, and maintaining a vehicle for legal operation, excluding tolls; 

spending related to the use of public transportation; and principal payments, such as cash used for vehicle purchase down payments that are 

counted in other transportation expenditure categories.

Sources: Pew’s analysis of Bureau of Labor Statistics Consumer Expenditure Survey Public-Use Microdata, 2000-14

© 2016 The Pew Charitable Trusts

10%

9.2%

8.9% 9.1% 8.4% 8.7% 9.6% 9.6% 10.6%

8.8% 9.4% 10.7%

10.3%

10.7%

15.7%

10%

9.3% 9.1% 9.5%

8.3%

8.8%

9.1%

8.9%

9.8%

8.2%

8.2%

9% 9.2%

8.8%

11.2%

8.4% 8.2%

8.3%

8.1% 7.7%

7.4%

7.7%

7.5%

7.9%

6.6%

6.7%

7.1%

7.4%

7.2%

8.2%

$1,500

‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘09 ‘11 ‘13 ‘08 ‘10 ‘12 ‘14

$2,500

$3,500

$4,500

$5,500

$6,500

$7,500

$8,500

$9,500

$10,000

Upper third Middle third Lower third
9

Figure 8

Households at the Bottom Spent More on Gas in 2014 Than on All 

Transportation 19 Years Earlier

Subcategory spending by income thirds, 1996, 2004, and 2014

Notes: Data are adjusted for inflation using the Bureau of Economic Analysis’ Personal Consumption Expenditure Price Index; population 

is limited to households in which the respondent or spouse is between the ages of 20 and 60. This figure uses weighted population means 

instead of medians because the median values of all expenditures except gasoline and motor oil equaled zero for both the middle- and lowerincome households.

Sources: Pew’s analysis of Bureau of Labor Statistics Consumer Expenditure Survey Public-Use Microdata, 1996-2014

© 2016 The Pew Charitable Trusts

As the share of household income 

used for transportation increased, 

the amount going to various 

subcategories also grew. For all 

income groups, expenditures for 

gasoline and motor oil doubled 

between 1996 and 2014. For 

households in the lower third, the 

average annual cost of fuel, auto 

insurance, vehicle maintenance and 

repair, and public transportation in 

1996 averaged $2,000 a year; by 

2014, this group spent nearly $2,100 

just on fuel. These extreme cost 

increases force households to make 

difficult choices and trade-offs to 

meet core needs. 

$

918 

$

1,471

$

2,081

$

1,258

$

2,002

$

2,799

$

2,095

$

2,787

$

4,007

$

468 

$

820

$

1,215

$

413

$

660

$

1,093

$

464

$

718

$

1,133

$

461 

$

887

$

1,376

$

643

$

1,167

$

1,742

$

638

$

909

$

1,364

$

196

$

356

$

780

$

178

$

313

$

793

$

354

$

383

$

794

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

Lower

third 

Middle

third 

Upper

third 

1996 2004 2014 

Public transportation Auto insurance Vehicle maintenance and repair Gasoline and motor oil 

Lower

third 

Middle

third 

Upper

third 

Lower

third 

Middle

third 

Upper

third 
10

Figure 9

Households With More Slack in Their Budgets Spent More on 

Food and Entertainment

Food and entertainment spending by income thirds, 2014

Notes: Data are adjusted for inflation using the Bureau of Economic Analysis’ Personal Consumption Expenditure Price Index; population is 

limited to households in which the respondent or spouse is between the ages of 20 and 60. 

Sources: Pew’s analysis of Bureau of Labor Statistics Consumer Expenditure Survey Public-Use Microdata, 2014

© 2016 The Pew Charitable Trusts

$

3,380

$

4,160

$

5,200

$

867

$

1,300

$

2,600

$

672

$

1,020

$

1,960

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Lower third Middle third Upper third 

Food at home Food away from home Pets, media equipment and services, toys, and event admission 

Though systemic economic 

conditions, such as recessions 

or stock market changes, affect 

trends in consumer expenditures, 

individual households also make 

decisions about how to spend 

their discretionary dollars. In 2014, 

households across the income 

distribution spent much more 

on groceries than on eating out, 

but, predictably, those in the top 

third spent much more on food 

away from home than the other 

groups. Households at the top 

also spent more than others on 

entertainment, including pets and 

pet care, media equipment and 

services, admission to events such 

as movies or plays, and toys for 

children. Typical households at the 

top spent $380 a month on eating 

out and entertainment. Conversely, 

households in the bottom third, 

which had significantly less slack 

in their budgets, devoted very few 

resources to these two categories—

about $128 a month. 
11

Figure 10

All Households Had Less Financial Slack in 2014 Than in 2004, but 

Lower-Income Households Went Into the Red

Amount of income remaining after all expenditures by income thirds, 2004 and 2014

Notes: Data are adjusted for inflation using the Bureau of Economic Analysis’ Personal Consumption Expenditure Price Index; population is 

limited to households in which the respondent or spouse is between the ages of 20 and 60. Income is pretax, post-transfer. 

Sources: Pew’s analysis of Bureau of Labor Statistics Consumer Expenditure Survey Public-Use Microdata, 2004 and 2014

© 2016 The Pew Charitable Trusts

-$10,000

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

2004 2014

Lower third Middle third Upper third

75th percentile

Median

25th percentile

-

$

2,357

$

1,417

-

$

2,339

$

17,164

$

5,944

$

33,414

$

43,571

$

11,311

$2,144

$

57,258

$

23,624

$

5,014

$

44,915

$

11,302

$

33,956

-

$

6,938

$

840

$

25,060

Lower third Middle third Upper third

The amount of slack that families 

had in their budgets declined for all 

income groups between 2004 and 

2014. This means households had 

less income to devote to wealthbuilding investments, such as shortand long-term savings, education, 

and life insurance. In 2004, the 

typical household in the lower third 

had a little less than $1,500 left over 

after accounting for annual outlays. 

Just 10 years later, this amount had 

fallen to negative $2,300, a $3,800 

decline. These households may have 

had to use savings, get help from 

family and friends, or use credit 

to meet regular annual household 

expenditures. The typical household 

in the middle third saw its slack drop 

from $17,000 in 2004 to $6,000 

in 2014. Of note, because income 

is measured before taxes, some 

families will have had even less slack 

in their budgets than this figure 

implies.
12

Appendix A

 Demographics

1996 2014

Lower third Middle third Upper third Lower third Middle third Upper third

Median Income $14,500 $38,500 $81,000 $15,500 $39,500 $95,000

Black 21% 12% 8% 22% 14% 8%

Asian 3% 3% 3% 5% 5% 7%

White 74% 84% 89% 72% 79% 84%

Other 2% 1% 0% 2% 2% 2%

Married 30% 53% 79% 36% 45% 70%

Widowed 6% 3% 1% 4% 3% 1%

Divorced 18% 17% 10% 16% 17% 11%

Separated 8% 4% 2% 5% 4% 1%

Never married 38% 23% 9% 40% 32% 17%

Husband and wife 11% 18% 30% 15% 15% 27%

Husband and wife, plus children 13% 29% 44% 14% 22% 36%

Single parent 21% 8% 3% 14% 10% 4%

Single person or other 56% 44% 23% 57% 52% 33%

Less than high school 28% 15% 6% 14% 15% 4%

High school graduate 33% 34% 27% 28% 28% 17%

Some college or associate degree 23% 20% 19% 35% 34% 31%

College degree or greater 16% 30% 50% 23% 23% 47%

Race Marital status Family type Education

Select Sample Population Demographics
13

 Demographics

1996 2014

Lower third Middle third Upper third Lower third Middle third Upper third

Own 34% 57% 81% 45% 47% 75%

Rent 66% 43% 19% 55% 53% 25%

Manager, professional 14% 24% 44% 14% 31% 52%

Administrative support, including clerical, retail

sales, business goods/services sales, technician 31% 28% 23% 30% 27% 22%

Service industry 25% 12% 7% 35% 22% 12%

Operator, assembler, laborer 18% 22% 14% 19% 19% 13%

Precision production, craft, repair 8% 11% 11% 2% 1% 1%

Homeownership Occupation

Notes: Data are adjusted for inflation using the Bureau of Economic Analysis’ Personal Consumption Expenditure Price Index; population is limited to households in which the respondent or spouse 

is between the ages of 20 and 60. The latest occupation data shown are for 2013. 

Sources: Pew’s analysis of Bureau of Labor Statistics Consumer Expenditure Survey Public-Use Microdata, 1996-2014

© 2016 The Pew Charitable Trusts
14

Methodology

This analysis draws primarily from the Bureau of Labor Statistics’ Consumer Expenditure Public-Use Microdata 

(CEPUMD) to show current and historical trends in expenditures for American households. The CEPUMD 

consists of nonaggregated household-level data, collected by the the Bureau of Labor Statistics (BLS) and the U.S. 

Census Bureau on a quarterly basis. The CEPUMD is part of BLS’ Consumer Expenditure Survey (CE) program, 

which seeks to provide information on the buying habits of American consumers and collects data on up to 95 

percent of household expenditures, income, and demographics. These data are used by the Census Bureau as 

the source for the Supplemental Poverty Measure and to regularly revise the marketbasket of goods and services 

used to weight the Consumer Price Index.

The BLS made significant changes to the methodology and variable construction of the CEPUMD in 2004, 2005, 

2013, and 2014, which do not affect the long-term trends. However, when comparing year-to-year expenditures, 

the variance between a year with and without methodological changes may be different than expected. 

All dollar amounts have been adjusted for inflation to 2014 using the Bureau of Economic Analysis’ Personal 

Consumption Expenditure (PCE) Price Index. To ensure that results were not driven by the deflator—the method 

by which inflation was adjusted—Pew conducted the analyses using the Consumer Price Index for All Urban 

Consumers (CPI-U), Consumer Price Index Research Series Using Current Methods (CPI-U-RS), and the PCE. 

Although estimates of total expenditures from some years produced statistically significant differences, other 

years did not. However, in all years, there did not seem to be an economically significant difference. Ultimately, 

Pew researchers decided to use the PCE deflator. 

The population chosen for observation is all households in which the reference person—or, in the case of married 

households, the spouse—was age 20 to 60 during at least one of the years studied. Additionally, only households 

that provided sufficient income information to be ranked by the BLS are included in the analysis. 

The after-tax income numbers used in Figure 3 were based on calculations of estimated tax liability assuming 

median household income, using only standard deductions and exemptions listed on Form 1040 from the Internal 

Revenue Service for the years studied, and using IRS tax tables. Thus, the figure represents the maximum possible 

income tax liability for a typical family of four during these years; other factors if considered could alter the 

estimated tax liability. 
15

Variables 

Household is a consumer unit comprising all members who are related by blood, marriage, or legal arrangement; 

a person living alone or sharing quarters with others who are not financially dependent on each other; or two or 

more people living together who share income to pay for any food, shelter, or other expenses. 

Food includes all household spending for food consumed at and away from home. 

Housing includes all expenditures for shelter, utilities (fuel oil, electricity, water, etc.), property taxes, mortgage 

interest, repairs, maintenance, rent, insurance, and other costs related to occupying a dwelling.

Rent includes only monies used to pay for rental of a housing structure.

Mortgage includes mortgage principal payments, mortgage interest, and property taxes.

Transportation includes all costs related to owning, leasing, renting, and maintaining a vehicle for legal operation, 

excluding tolls, and spending related to the use of public transportation. 

Health care includes expenditures for health care, health insurance premiums, medical services, prescriptions, 

and medical supplies.

Entertainment includes fees for admission, electronics purchases (such as TVs, radios, portable audio players, 

etc.), and spending related to pets, playgrounds, and other forms of entertainment not specified.

Apparel includes all clothing items, footwear, and accessories, and the materials to make both, as well as costs 

related to storage and cleaning. 

Income is the total money earned by the household before taxes as well as inflows from social benefits, including 

alimony, child support, Social Security, life insurance, sales of securities, pensions, worker compensation, and 

other sources during the 12 months before the interview date. Except where otherwise noted, income figures are 

pretax, post-transfer.
Endnotes

1 Walter Lake (2015), Kiwi & Cassava Version 3 [Computer software], Washington, https://github.com/Kiwi-den-den/KIWI.git.

2 This chartbook follows the lead of the Bureau of Labor Statistics in referring to consumer units interchangeably as households and families. 

However, not all consumer units are families. The BLS definition of a consumer unit is: “(1) All members of a particular household who are 

related by blood, marriage, adoption, or other legal arrangements; (2) a person living alone or sharing a household with others or living as 

a roomer in a private home or lodging house or in permanent living quarters in a hotel or motel, but who is financially independent; or (3) 

two or more persons living together who use their incomes to make joint expenditure decisions. Financial independence is determined by 

spending behavior with regard to the three major expense categories: Housing, food, and other living expenses. To be considered financially 

independent, the respondent must provide at least two of the three major expenditure categories, either entirely or in part.” 

3 In 2004, the Consumer Expenditure Survey started to include income data produced using multiple imputations. This change in methodology 

allowed the BLS to better capture income data when the respondent did not provide or refused to provide information on one or more sources of 

income. The result of the methodical change is an increase in household income, which may explain in part the steep increase in income and the 

decrease in the expenditure-to-income ratio. Some caution should be exercised when comparing income values before 2004 with those after 

2004. However, other nonrelated data sets, such as the U.S. Census Bureau’s Table H-8, Median Household Income by State: 1984 to 2014, 

also indicate that median household income increased by 2.3 percent from 2003 to 2004 and by 6.9 percent from 2004 to 2005. Therefore, 

this analysis assumes that median household income did increase but that the magnitude of that growth indicated in the Consumer Expenditure 

Survey may reflect a combination of the improved data collection methodology and the actual increase. 

4 U.S. Census Bureau, “Annual and Quarterly Charts of Rental and Homeowner Vacancy Rates and Homeownership Rates,” accessed Oct. 13, 

2015, http://www.census.gov/housing/hvs/data/charts.html.

The Pew Charitable Trusts is driven by the power of knowledge to solve today’s most challenging problems. Pew applies a rigorous, analytical 

approach to improve public policy, inform the public, and invigorate civic life. 

Contact: Sultana Ali, communications officer

Email: sali@pewtrusts.org

Project website: pewtrusts.org

For further information, please visit: 

economicmobility.org