American IronHorse, a Fort Worth, Texas-based luxury motorcycle manufacturer, expanded its dealership network by 18 in 2002. When the company began scouting locations, it had one major criterion in mind: areas with a large concentration of high-income households. Ultimately, it settled on San Leandro, Calif.; West Palm Beach, Fla.; Scottsdale, Ariz.; and the Indianapolis suburbs of Fisher, among other tony locales. With new dealerships located in wealthy metros, the company has confidence that its marketing pitch (which includes costly endorsements from professional race car drivers) will reach the consumers the campaign is targeting â€” those who have the means to plunk down about $30,000 for a motorcycle, says company spokeswoman OnÃ© Musel-Gilley.
Now companies like American IronHorse, which are making crucial business decisions based on income data, have a new weapon at their disposal: the first comprehensive update of American household income in a decade. With the release of data from Census 2000's long form, a detailed questionnaire that went to 1 in 6 households, businesses across the nation are getting their first, fresh look at how incomes have changed between 1990 and 2000. It's information that companies can use to locate new retail stores, determine the best product mix and craft media strategy, says Katharine Day Bremer, general manager at advertising agency Porter Novelli's Atlanta office. â€œIncome data is the price of entry,â€? she says. â€œCould these people possibly afford this product or service?â€?
In a decade that started with a recession and ended with the largest peacetime economic expansion in the nation's history, the latest income data shows that consumers can probably afford more than they did circa 1990. Median household income climbed to $41,994 in 1999, from an inflation-adjusted $39,008 in 1989. (The census measures income data for the last full year prior to the survey.) As median household income climbed, so too did the share of affluent households. Today, 12 percent of households have an annual income of $100,000 or more, compared with 4 percent a decade ago.
While most Americans were doing better at the end of the 1990s than they were at the beginning, the demographic breakdown of each income group stayed remarkably stable. For instance, despite all the hype about twentysomethings' raking in six-figure incomes from the Internet boom, the share of households headed by a person under the age of 25 who earned more than $100,000 a year was about the same in 2000 as it had been a decade before. (In 2000, there were 88,000 households headed by a person under the age of 25 that claimed a household income of $100,000 a year or more.) Indeed, far from know-it-all kids controlling the nation's wealth, nearly 6 in 10 households with an income in the six figures (or higher) are headed by a person between the ages of 35 and 54, roughly the same as it was in 1990. On the other hand, racial and ethnic minorities appear to have made some gains in income throughout the 1990s. Although the data isn't exactly comparable, due to a change in census methodology, there was slightly more diversity at the top of the income ladder in 2000 than there was at the start of the 1990s.
As you'll see in the pages that follow, the low, middle and high income groups are far from perfectly culled representative samples of the U.S. population. The lowest income group â€” the 56 million households that have an income less than $45,000 annually â€” is the most â€œdemographically democratic.â€? It includes the most representational slice of the nation's population by race, ethnic background and age. As household members climb the income ladder, they become far less like the population as a whole: They are more likely to be white, to be middle-aged and to hug the coasts. The metro areas with the largest share of affluent households include the traditional powerhouses of New York City and Washington, D.C., as well as the more scenic West Palm Beach, Fla., and Santa Barbara, Calif.
A few words about our methodology: The Census Bureau's data on household income is divided into as many as 16 separate categories, with reported annual earnings that range from under $5,000 to $200,000 and above. For this report, American Demographics created five income groups from the Bureau's 16. We've also focused on households with incomes that are more than the U.S. median of $41,994, as many businesses dedicate their marketing efforts to reaching these groups.
Readers who are interested in more details about the demographics of households with incomes that are less than the U.S. median can find them via the Census Bureau's American FactFinder, at http://factfinder.census.gov/servlet/BasicFactsServlet.
What do we mean by income?
For this report, income includes wage or salary income; net self-employment income; interest, dividends, or net rental or royalty income; income from estates and trusts; social security or railroad retirement income; Supplemental Security Income (SSI); public assistance or welfare payments; retirement, survivor or disability pensions; and all other income. What is not included in income: capital gains; money received from the sale of property (unless the recipient was engaged in the business of selling that property); the value of income â€œin kindâ€? from food stamps, public housing subsidies, medical care, employer contributions for individuals, etc.; withdrawal of bank deposits; money borrowed; tax refunds; money exchanged between relatives living in the same household; and gifts and lump-sum inheritances, insurance payments, and other types of lump-sum receipts. For more details, go to www.census.gov .