Yesterday, we looked at how our expenditures vary by income, and an important question came up: Do the income figures include government assistance programs? The answer is mostly yes.

Image by the author.

The chart above shows the percentage of total income by source for consumer units at different income levels. Income includes benefits from programs such as Social Security, the Supplemental Nutrition Assistance Program, and Unemployment Insurance. It excludes benefits that are paid directly to a service provider, such as Medicaid or Housing Choice Vouchers, but those amounts are also excluded on the expenditures.

The major source of income that is not accounted for here, or in yesterday’s graphs, is refundable income tax credits. That mechanism helps close the gap between after tax income and expenditures slightly for lower income households, but there is still, on average, a significant shortfall that must come from a nongovernmental source.