Nearly 25% of U.S. Households Spent Double Their Income in 2011

The United States’ lowest earners spent more than double their incomes last year, according to data released Tuesday by the Labor Department.

The bottom fifth of the U.S. income distribution — 24.4 million households — on average earned $10,074 in after-tax annual income and spent $22,001 last year, according to the Labor Department.

This percentage of households includes many retirees, who are presumably living off savings.

Many of these households may be spending more than they earn through some combination of loans from family and friends, credit cards, savings, and payday loans. The government helps a bit with an income tax credit: The average bottom-fifth household’s after-tax income is $269 higher than its before-tax income. The income accounted for includes welfare and Social Security benefits.

Many are also taking on debt. In 2010, roughly one-quarter of the poorest fifth of households held a high debt burden, or had debt service payments exceeding 40 percent of their income, according to the Economic Policy Institute.”

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