What Is Going On

I saw an interesting graphic the other day. It was called “Where Does The Money Go” on visualgraphics.com. I found it interesting for several reasons. First, it is based on 2007 statistics from the U.S. Department of labor, and it showed the average income of a “consumer unit” with 1.3 wage earners and 2.5 people making $63,091 annually. Average is a slippery term, as there are 3 different types of “average” , mean, median, and mode. Mode is the easiest to understand, just add the highest and the lowest and divide by 2. I believe the graphic must be based on mean average, which is add all the numbers together and divide by the total number of statistics you are analyzing. This would skew the numbers upward given the distribution of wealth in this country. A better picture is provided by the median average income reported by the Census Bureau in September of 2010, showing $49,777 as the average income. Median average is the number in the middle, as many people are above that figure as are below it.

I also noted the graphic showed $2,853 spent on healthcare. This confused me no end, as I spent over $5200 on insurance premiums while working for a Fortune 300 company. This was just the premiums, it did not include any health expenditures, as I never received my cards and could not use the insurance at all. Further, I had recently researched healthcare costs in the United States, and the figure for 2009 is $8,047 per person. You read that right – over eight thousand dollars spent on healthcare for every man, woman, and child living in the United States.

Now let's look at taxes. The graphic showed spending at $49,638 per consumer unit, so I had to assume taxes were $13453, or roughly 21%. Yet the Congressional Budget Office reports the median tax rate at 31.6%, which would be $19937. So using government figures, this consumer unit should spend $18598 on healthcare (the cost was only $7439 per capita in 2007), leaving $24556 for all other expenditures, or roughly 38% of total income. That's about $472 a week, for food, housing, clothing, utilities, transportation, savings, education, and entertainment. Given the 2006 average mortgage payment was $1,687 and the average car payment is $479, that leaves nothing for anything else, and a negative balance of $136 a month for homeowners, although rent was only $890 on average, so renters had $175 a week for all their expenses. While it can be done, it isn't easy.

What do we learn from all this? First of all, statistics are unreliable. It is possible to prove statistically just about anything, even a logical fallacy. Second of all, We pay far too much for healthcare and taxes in this country. Third, the government can't solve the problem, as the different departments cannot even agree on what the actual figures are, much less develop a workable solution. Finally, nothing will change unless action is taken, since doing the same thing the same way and expecting different results is the definition of insanity. I have no idea what needs to happen, all I can do is sound the alarm. I just hope someone who can come up with a solution takes notice and is moved to act.