Thursday, August 16, 2012
Personal Income: More Than Your Paycheck
Personal Income: More Than Your Paycheck Due 27 August 2012. Welcome to MEACHONOMICS!! Look at the graph and discuss its' meaning. What are the components of "income" according to BEA? AND.....What are they NOT telling you? IOW......What economic factors will affect the purchasing power of your paycheck?
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According to the BEA, income includes a person's salary, interest on investments, and benefits from the employer and the government. The BEA believes this is a better way to compare incomes of individuals, because labor wages are not the only income of an individual. The graph shows a slight increase in income over the years. However, that does not mean individuals have more purchasing power, because the graph does not include the inflation of goods and services. This increased personal income over the years is matched with the increased inflation over the years, so this graph can be misleading.
ReplyDeleteThe BEA includes earnings from wages, interests on investments, Social Security payments, and Unemployment insurance. Although, the BEA does not include income earned abroad. Only the Domestic incomes are included. The graph shows increase in income up until 2008. After 2008, the graph starts to decrease and then goes up after 2009. The purchasing power will not increase for us because as the paychecks go higher the prices increase as well.
ReplyDeleteThe BEA defines an individual’s total earnings from wages, interest on investments, and from transfer receipts. The bar graph from the BEA does show a general increase in personal income over the years, however, the graph neglects the cost of expenditures such as taxes, goods, services, etc., which makes the graph misleading. Because the graph does not take into account these expenditures, it fails to create an accurate depiction of the average Americans personal income. A quick glimpse at the BEA graph on personal income might suggest an increase in personal purchasing power due to the general increase in personal income. However, because the graph does not account for higher taxes, inflation rates, or the increase in costs for goods and services, which are all factors in determining one's personal purchasing power, it provides only a misleading representation of the average Americans personal purchasing power.
ReplyDeleteAccording to the BEA, the components of income include an individual’s total earnings from wages, his or her interest on investments, and other various sources, such as transfer receipts that include Social Security payments. As for the graph, it does reflect a general rise in personal income from 2002 to 2011, however it is misleading. This is because since it does not represent the inflation during that time period, it calls into question whether or not people were making more money over the years, or if the higher income is due to inflation. Also, the graph does not include tax rates or the cost of goods and services, which allows the graph to show only a part of the picture when it comes to a person’s income. So, personal purchasing power might not have increased, resulting in the graph not truly representing the normal American's income and purchasing power.
ReplyDeleteThe BEA states that income is more than just your paycheck. It also includes earnings on wages, intrest on investments, and even transfer receipts such as social security checks or unemployment. According to the graph it shows that personal income is increasing as years go on. What there not explaining is they did not factor in inflation or income earned abroad.
ReplyDeleteThe components of "income" according to the BEA are an "individual's total earnings from wages, interest on investments, and from other sources, such as Social Security payments or unemployment insurance..."
ReplyDeleteThe graph shows a rise in income, or rather, inflation from 2002 to 2011. However, I don't believe the graph is misleading or not useful. There are a few uses to the graph in how it is presented. If paired with a CPI (consumer price index), this graph can be used to its full potential. Although there's no way of showing meaning at a consumer standpoint, it can be taken advantage of as an analytic tool for business owners, etc. Although much is missing from the graph, we can still draw various conclusions from it, as said before.
The economic factors that may affect the purchasing power of paychecks are inflation, commodities, shortages/surpluses, consumer price fluctuations, etc.
According to the BEA one's income is comprised of more than just an individuals paycheck. Some of these other components include interest on investments, and things such as unemployment or Social Security. Although it is probably not intentionally misleading, the graph does fail to incorporate inflation. So, while there is a rise in income between 2002-2011, we as individuals probably don't notice any significant changes (increases) in our income due to inflation. Purchasing power does not increase because inflation causes us to spend our "extra" income on higher prices.
ReplyDeleteThe graph displays an increase of personal income over the course of 7 years. The graph fails to take into consideration the drastic changes that an economy goes through such as Economic Growth and the alternations within a Business Cycle over 7 years. For the United States, we entered a Recession in 2007 that substantially inflated the US dollar thus devaluing it to the employer. The BEA defines income as an individual’s total earnings from wages, interest on investments and other sources such as Social Security, Medicare/Medicaid, pension/insurance funds, etc. The economic factors that affect the purchasing power of the employer’s paycheck are the impact of inflation that devalues the employers dollar making their “increased income” meaningless and the more money taken out from the components listed above, all cumulates into more deductions from your pay making your paycheck smaller.
ReplyDeleteAccording to the BEA, a personal income cosnists of wages, interest on investments, and other sources but not any type of income recieved from or while in a foreign country. The graph is misleading because it does not show the inflation throughout the time period nor tax rates. The factors that will affect the purchasing power of my paycheck are inflation.
ReplyDeleteAccording to the BEA, income is calculated based on a number of components rather than just one's paycheck. Those components include an individual's total earnings from wages, interest on investments, and from other sources, such as social security or unemployment insurance. The graph shows an increase in income over the past seven years, yet it does not include income earned abroad! It's misleading because a person, while looking at thi graph, thinks people are making more money. However, they fail to recognize factors like inflation and higher taxes. Due to these factors, people do not realize their income is higher because with higher incomes come higher taxes and higher consumer prices. Also, it's misleading not to include income for abroad since many businesses have outsourced to other countries and earn significant income in those countries.
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ReplyDeleteThe graph displays a very dramatic climb in personal income from the years 2002-2011. In 2002, total personal income was right around 9 trillion dollars. It increased by 4 trillion in the year 2011 - a staggering increase. This is most likely due to factors outside of the control of the individual, such as inflation or higher tax rates. Further, it is important to note that this graph only displays domestic income, and as a result fluctuations in total income must be due to changes within our nation. Thus, inflation of costs and prices seems the likely culprit for the changes across the years. The Bureau of Economic Analysis defines income as an aggregate of earnings from wages, interest from investments, and transfer receipts, which are earnings from things like Social Security payments or unemployment insurance. As stated earlier, inflation of the dollar will be the main reason that our purchasing power will be effected.
ReplyDeleteThe BEA defines income as a sum of wages, interest, investments, and any type of financial benefits received by an employer or from the government. (such as Medicare or Social Security) Though the BEA claims to define income accurately they do not take major forms of income for some people and companies into account. The graph does not include profit one makes internationally which is indispensable in order to have accuracy. Someone who were to look at this graph would believe that the purchasing power of your paycheck has increased when in reality it has decreased. Factors like inflation, and an increase in prices of consumer products or "goods" and services play a huge role in deducting purchasing power from your paycheck but DEA doesn't identify these factors when accumulating data for their graph.
ReplyDeleteThe graph shows a summary of the personal income from 2002 to 2011, but the graph does not include income earned abroad. "The BEA defines income as an individual’s total earnings from wages, interest on investments, and from other sources, such as Social Security payments or unemployment insurance, known as transfer receipts." Prices, wages and employment, currency considerations, and availability of credit will affect the purchasing power of our paycheck. Purchasing power is a relative measure that is most relevant when analyzed for changes over time.
ReplyDeleteIn this article it says that your income does not just come from your salary but from your investments and insurance. In the article it shows a graph of the personal income from 2002-2011. From 2002-2008 personal income was on a dramatic rise and then in 2009 and 2010 it dropped and picked back up in 2011. The article does not tell us how it got to be like that and that is what i want to know.
ReplyDeleteDefined by BEA, income is "individual’s total earnings from wages, interest on investments, and from other sources, such as Social Security payments or unemployment insurance." This graph shows personal income steadily increasing over the years of 2002-2011. But what it isn't telling you is the small factors that could really make a big difference in this graph such as income from abroad that isn't included in the graph. Some people can actually make a lot from leasing homes abroad and they are taxed as much as the next person who makes as much as them but doesn't have an abroad income. Some economic factors that can affect purchasing power are employment and inflation/deflation.
ReplyDeleteJaime Caldaro
ReplyDeleteThe BEA defines income as every source of income that you receive through out the year. This includes assets, investments, Social Security, etc. It isn't your salary or yearly paychecks.The graph shows a steady increase of income until 2008. Then at 2009 it started to decrease and it has began to steadily increase up again. Something that isn't included is income earned abroad. Inflation will affect the purchasing power of your pay check, because cost will rise with surplus of money.
The BEA defines the components of income as basically any source of income that an individual has, such as earnings from wages, interest on investments, Social Security payments or unemployment insurance, with the exception of income earned abroad. The graph shows a steady rate of increase in annual income. However, it does not account for inflation and so the graph does not give a very accurate view on the actual increase in income. Things such as inflation and deflation affect the purchasing power of our paycheck.
ReplyDeleteJacob Hochman - The definition of "income" by the BEA is "an individual’s total earnings from wages, interest on investments, and from other sources, such as Social Security payments or unemployment insurance, known as transfer receipts". The graph shows what seems to be a steady increase in personal income over the course of 02' - 08' and then after a drop from 08'- 09' it increases again from 09' - 11'. This increase in income however is actually a fallacy because the graph does not compensate for inflation. The dollar from 2002 does not have the same value of a dollar from 2009. Thus to spend the same amount of money you need more of it. With inflation comes increase in minimum wage and yearly salaries so thus if inflation occurs then "income" "increases". You need a greater salary due to inflation because prices go up due to the lessening value of the dollar. This means that 3 carrots could have cost $1 in 2002 but in 2009 they were $2.50. If you think about it, the 2009 carrots are still worth 1 2002 dollar, but do to inflation, 1 2002 dollar is the equivalent of 2.5 2009 dollars. Inflation is making the value of your dollar go down so you have less purchasing power with each dollar as time goes on.
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