Average annual expenditures in 2012 (USA)

How much money are we spending per year and what are we spending it on?

Last week, I listed the top 100 occupations, along with their average hourly and annual wage. In this post, I’m going to look at our average annual expenditures.

Source: U.S. Bureau of Labor Statistics

Expenditures by category

Average annual expenditures by category (US, 2012)
Average annual expenditures by category (US, 2012)

Key takeaways:

  • More than half of our money goes to cover housing and transportation expenditures.
  • The top 5 categories combined represent over 80% of our total expenditures.
  • On average, we spend more than twice the amount on entertainment than we spend on education.
  • On average, we spend 3 times more on tobacco products and 4.5 times more on alcohol than we spend on reading.

Expenditures by age

Average total annual expenditures by age (US, 2012)
Average total annual expenditures by age (US, 2012)

The average annual expenditure per consumer unit is $51,442. As you could expect, the amount of money we spend changes with age. It starts at slightly over $30,000 and gradually increases to roughly $62,000 per year by the time we reach 50 years of age. At that point, it begins to decrease with customers older than 75 spending on average around $33,500 per year.

Breakdown: housing

Breakdown of housing expenditures (US, 2012)
Breakdown of housing expenditures (US, 2012)

Unsurprisingly, the cost of obtaining a shelter—represented mainly by mortgage interests and charges, property taxes and/or rental costs—is the single biggest item on the housing breakdown list. A distant second come the operational expenses, including utilities, fuels and services. Finally, an even more distant third on the list are the costs of furnishings and equipment.

Breakdown: transportation

Breakdown of transportation expenditures (US, 2012)
Breakdown of transportation expenditures (US, 2012)

The transportation costs are dominated by the cost of procuring the vehicles and the cost of gasoline. Together, these two items make up for around two thirds of all transportation expenditures. Interestingly, our expenditures on public transportation are almost non-existent.

Breakdown: food

Breakdown of food expenditures (US, 2012)
Breakdown of food expenditures (US, 2012)

Based on the available data, we spend more than 40% of our annual food costs on eating out. Personally, I find this fact staggering.

So, there you have it: our annual expenditures based on the latest figures from the U.S. Bureau of Labor Statistics.

Top 100 occupations in 2012 (USA)

Here are the top 100 occupations in the U.S. by number of employees as of May 2012, according to the U.S. Bureau of Labor Statistics:

# Occupation Employees
1 Retail Salespersons 4,340,000
2 Cashiers 3,314,010
3 Combined Food Preparation and Serving Workers, Including Fast Food 2,943,810
4 Office Clerks, General 2,808,100
5 Registered Nurses 2,633,980
6 Waiters and Waitresses 2,332,020
7 Customer Service Representatives 2,299,750
8 Laborers and Freight, Stock, and Material Movers, Hand 2,143,940
9 Janitors and Cleaners, Except Maids and Housekeeping Cleaners 2,097,380
10 Secretaries and Administrative Assistants, Except Legal, Medical, and Executive 2,085,680
11 General and Operations Managers 1,899,460
12 Stock Clerks and Order Fillers 1,806,310
13 Bookkeeping, Accounting, and Auditing Clerks 1,606,260
14 Heavy and Tractor-Trailer Truck Drivers 1,556,510
15 Nursing Assistants 1,420,020
16 Sales Representatives, Wholesale and Manufacturing, Except Technical and Scientific Products 1,414,030
17 Elementary School Teachers, Except Special Education 1,360,380
18 First-Line Supervisors of Office and Administrative Support Workers 1,359,150
19 Maintenance and Repair Workers, General 1,230,270
20 First-Line Supervisors of Retail Sales Workers 1,214,170
21 Teacher Assistants 1,185,700
22 Accountants and Auditors 1,129,340
23 Security Guards 1,046,420
24 Team Assemblers 1,006,980
25 Cooks, Restaurant 1,000,710
26 Personal Care Aides 985,230
27 Receptionists and Information Clerks 966,150
28 Secondary School Teachers, Except Special and Career/Technical Education 959,770
29 Business Operations Specialists, All Other 931,010
30 Maids and Housekeeping Cleaners 894,920
31 Home Health Aides 839,930
32 Landscaping and Groundskeeping Workers 830,640
33 First-Line Supervisors of Food Preparation and Serving Workers 817,600
34 Construction Laborers 814,470
35 Executive Secretaries and Executive Administrative Assistants 803,040
36 Food Preparation Workers 785,370
37 Light Truck or Delivery Services Drivers 769,010
38 Licensed Practical and Licensed Vocational Nurses 718,800
39 Shipping, Receiving, and Traffic Clerks 690,780
40 Sales Representatives, Services, All Other 672,080
41 Packers and Packagers, Hand 660,670
42 Police and Sheriff’s Patrol Officers 632,000
43 Childcare Workers 624,520
44 Middle School Teachers, Except Special and Career/Technical Education 620,900
45 Substitute Teachers 619,700
46 Automotive Service Technicians and Mechanics 596,830
47 Software Developers, Applications 586,340
48 Lawyers 581,920
49 First-Line Supervisors of Production and Operating Workers 568,820
50 Carpenters 567,820
51 Medical Assistants 553,140
52 Tellers 541,770
53 Management Analysts 540,440
54 Bartenders 538,220
55 Computer User Support Specialists 525,630
56 Electricians 519,850
57 Medical Secretaries 509,640
58 Cooks, Fast Food 504,740
59 Dishwashers 501,910
60 Industrial Truck and Tractor Operators 496,570
61 Billing and Posting Clerks 490,850
62 Bus Drivers, School or Special Client 489,750
63 Financial Managers 484,910
64 Computer Systems Analysts 482,040
65 First-Line Supervisors of Construction Trades and Extraction Workers 456,640
66 Inspectors, Testers, Sorters, Samplers, and Weighers 454,010
67 Correctional Officers and Jailers 434,870
68 Counter Attendants, Cafeteria, Food Concession, and Coffee Shop 434,220
69 Counter and Rental Clerks 432,650
70 First-Line Supervisors of Mechanics, Installers, and Repairers 421,650
71 Helpers–Production Workers 419,840
72 Dining Room and Cafeteria Attendants and Bartender Helpers 395,750
73 Cooks, Institution and Cafeteria 395,280
74 Human Resources Specialists 394,380
75 Driver/Sales Workers 394,110
76 Market Research Analysts and Marketing Specialists 392,740
77 Software Developers, Systems Software 391,700
78 Machinists 388,370
79 Bill and Account Collectors 385,890
80 Packaging and Filling Machine Operators and Tenders 367,700
81 Sales Representatives, Wholesale and Manufacturing, Technical and Scientific Products 364,830
82 Hairdressers, Hairstylists, and Cosmetologists 355,910
83 Pharmacy Technicians 353,340
84 Social and Human Service Assistants 351,400
85 Network and Computer Systems Administrators 350,320
86 Sales Managers 344,730
87 Hosts and Hostesses, Restaurant, Lounge, and Coffee Shop 341,400
88 Plumbers, Pipefitters, and Steamfitters 340,370
89 Preschool Teachers, Except Special Education 340,350
90 Managers, All Other 338,520
91 Insurance Sales Agents 336,740
92 Operating Engineers and Other Construction Equipment Operators 335,160
93 Securities, Commodities, and Financial Services Sales Agents 330,470
94 Welders, Cutters, Solderers, and Brazers 329,710
95 Computer Programmers 316,790
96 Computer and Information Systems Managers 309,740
97 Recreation Workers 309,730
98 Physicians and Surgeons, All Other 308,410
99 Postal Service Mail Carriers 305,490
100 Cleaners of Vehicles and Equipment 302,960

U.S. Bureau of Labor Statistics

How to genuinely fix the economy?


In my recent analysis of our current economic system, I identified two problems. They are:

  1. Limited natural resources. Our natural resources—including the renewable ones—are limited. Therefore, it is not possible to grow our economy forever without putting in danger our very ability to survive on this planet.
  2. Growing unemployment. Advances in productivity—including in technology—are causing the demand for labor to decrease. In the short run, this creates unemployment. In the long run, most (if not all) humans in the production processes will be made redundant.


In this post, I’m going to outline priorities for dealing with these two problems.

Priority #1: stop population growth

There is no hope of our survival on Earth without halting the population growth. It is absolutely necessary that the number of people on the planet stabilizes and doesn’t growth any further.

If we don’t stop the population growth, it is certain that we will reach a point when the cumulative needs of the population will exceed the amount of resources available.

Fortunately, this priority is sufficiently recognized by mainstream policy makers throughout the world, both locally and internationally, and there are many programs addressing it.

Priority #2: use natural resources sustainably

Sustainable use of natural resources means that their availability doesn’t diminish in time. In other words, we use only as much resources as can recuperate within a given time period.

This priority is well-recognized among policy makers internationally, however, progress is slow at best. On one hand, advances in productivity help make the use of natural resources more efficient. Furthermore, since productivity gains are seen as the primary source of economic growth, both mainstream policy makers and owners invest heavily into productivity improvements.

On the other hand, equally significant investments are made into artificially inflating the demand for products and services and into increasing the production. These types of investments have a negative effect on the availability of natural resources and usually go hand-in-hand with productivity improvements.

As a result, most actual work is spearheaded by non-governmental, grassroots organizations. Luckily, it seems that more and more people are slowly turning away from consumerism and towards more environmentally friendly approaches.

Priority #3: decouple consumption from jobs and income

Increased productivity causes unemployment. When people lack jobs, their income drops and their ability to satisfy their needs through purchases diminishes. This in turn reduces the overall demand, which negatively affects production. When production decreases, more jobs are lost and the cycle repeats itself in a self-fueled downward spiral.

The only way out of this is a new economic system in which the ability of people to satisfy their needs does not depend on the level of their income. Unfortunately, for some reason, this priority remains completely unrecognized by either the mainstream policy makers or the general public. Even among independent thinkers, there are only very few who are actively concerned with this issue.


The problems outlined in my previous post pose a tremendous challenge to our society. It is clear that the status quo has to change. The only question is, will it happen as a guided, step-by-step process from one system to another (evolution) to the benefit of everybody? Or, will it occur in form of an uncontrolled, radical, disruptive change (revolution) that could potentially endanger our very existence on this planet? I sincerely hope it’s the former.

What’s wrong with our economy?

I think most of us can feel that something is not right with our economy. But, is that something just a temporary glitch that will straighten itself out over time? Or, are we talking about an inherent flaw in the system that will ultimately bring about its own downfall? And, if the system is flawed, how serious is the problem and what can be done about it?

In this post, I’m going to try to answers these questions.

Current economic system

Let’s begin by discussing the factors that influence our current economic system.

Current economic system
Current economic system

Factor #1: population

How population impacts the current economic system
Impact of population on the current economic system

The first factor is population. Because we all have needs, we create demand simply by being. In other words, the size of the population is the primary determinant of how many products and services are required. The relationship is positive: the more people there are, the more products and services are needed.

Where there is a demand, there is also a production. The primary role of production is to supply products and services to satisfy the demand. Once these products and services are created, they are made available for consumption.

Production also creates jobs. Increased demand for products and services increases the need for production, which in turn creates more jobs. Jobs generate income that is needed to pay for the products and services. When people have jobs, they can afford to pay (more) for more products and services.

In summary, population creates demand that is met by production. Production creates jobs that puts money into peoples’ hands. People then buy and consume whatever has been produced.

Factor #2: profit orientation

Now let’s look at the next factor: profit orientation.

Profit maximization (or accumulation of capital) is the primary driving force behind economic activity within our current economic system. Owners strive to increase the return on their capital by focusing on increasing two things: demand and productivity.

Growing demand

How advertising impacts the current economic system
Impact of advertising on the current economic system

Demand can be artificially increased in a number of ways, which I collectively—and rather incorrectly—call advertising here. The word advertising by far doesn’t encompass everything that is done to artificially increase demand, but it is a word that is readily understood and well-represents the concept. In a more broader sense, we’re talking about any kind of activity that influences how people think about their wants and needs.

When demand is raised through advertising, it has a positive correlation with everything discussed under the Population factor above, except for the size of the population. In other words, as a result of advertising, the same number of people suddenly demand more products and services. This demand is met by more production, which results in more jobs, more income and higher consumption.

Improving productivity

How productivity gains impact the economy
Impact of productivity growth on the economy

The second thing capital owners try to do to increase the return on their investment, is to increase productivity. Productivity is a function of resources utilization. The aim is to produce maximum output with minimum input. Labor is one such input and there is a negative correlation between productivity and jobs. This means that increase in labor productivity—when not coupled with increased production—results in lost jobs. Consequently, when jobs are lost, income falls and consumption decreases.

Thus, somewhat paradoxically, a more efficient production results in a lesser ability of the population to satisfy their needs through consumption because their income decreased and they cannot afford to pay for all the products and services.

Factor #3: natural resources

How the current economic system impacts natural resources
Impact of the economic system on natural resources

The final factor is resources, namely natural resources.

Production of most products and services depends on the availability of natural resources, which are being depleted in the process of production.

Whenever natural resources are scarce, it pushes us to think of better ways to reduce our dependency on them, through improved productivity. Increases in productivity make the use of natural resources more efficient, but never actually increase their stock.

What’s wrong with this picture?

Problem #1: limited natural resources

If we had an access to unlimited natural resources, or knew how to create products and services without depleting the available natural resources, we could theoretically increase production—and, consequently, satisfy the needs of any number of population—to infinity. However, that is not the case (at least, not right now).

Our natural resources are limited. Therefore, there is an upper limit to how much we can use in the production process. Yes, we’re continually discovering new sources, new and better ways to extract them and more efficient ways to utilize them. But, it doesn’t change the fact that, at any given moment, there is only so much that we can take before there is nothing left.

(By the way, even so-called renewable resources are limited. The limit is imposed by the total stock available at any given moment and by the time it takes to replenish it.)

What does this mean? It means that we cannot grow our economy for ever. There will come a time when we will hit, and begin exceeding, the limit imposed by the availability of natural resources. When that happens, we will essentially start spending our own future (and that of our children). If taken too far, the end result could easily be the extinction of humanity.

One problem is, however, that we don’t really know where that limit lies. Several studies attempted to identify it, but there is no widespread consensus. Furthermore, the situation varies from one part of the globe to another. So, the urgency of this problem is not felt everywhere to the same degree.

Problem #2: growing unemployment

This one is even trickier than natural resources.

As a result of an ever-growing productivity, less and less people are needed to produce more and more products and services. The only way there can be enough of jobs for everyone is if the job losses caused by productivity gains are balanced out with jobs created by growing demand and production.

However, if you look at the impact an ever-growing production has on natural resources—and add to it the advances in technology that, slowly but surely, make human involvement in the production process obsolete—you will find it inevitable that, in the future, productivity gains will permanently outpace production growth to the point when the economy won’t be able to offer enough of jobs to its populace.

(In fact, in my post on unemployment, I’m arguing that it’s only a matter of time before we will all be unemployed.)

In the short term, this will resemble a typical economic recession. In the long term, this will bring about a total collapse of the economy.


To answer the questions posed at the beginning of this post:

This is no temporary glitch. There are inherent flaws in the current economic system and it’s only a question of time before the system will collapse and stop working, altogether.

Whether we will smoothly transit into a new economic system through peaceful evolution, or face a world-shattering revolution very much depends on how fast we are able to react and what solutions we will choose to apply.

In the next post, I will try to outline the types of solutions that will be needed to ensure that we won’t kill each other in the process of transiting from one system to another.

Thoughts on unemployment

Here’s a thought: we will all be unemployed at one point in the future!

100% unemployment rate? Sounds crazy, I know. Even I was surprised by this conclusion. But, please, bear with me as I explain my thought process…

Priority #1: profit maximization

Let’s start with business owners. All business owners have one thing in common: their desire to maximize profit.

Now, simplified, profit is the difference between money collected and money spent for delivering a product or service.

Business 101: What is profit
Business 101: What is profit

And, there are only three ways how profit can be increased:

1. Sell more units

Profit Maximization #1: Sell More Units
Profit Maximization #1: Sell More Units

2. Charge more per unit sold

Profit Maximization #2: Charge More Per Unit
Profit Maximization #2: Charge More Per Unit

3. Reduce costs per unit sold

Profit Maximization #3: Reduce Costs Per Unit Sold
Profit Maximization #3: Reduce Costs Per Unit Sold

Profit maximization requires cost reduction

Now, of the three above, the last one—reducing costs—holds the biggest potential because it allows for the biggest leverage in the marketplace. If you can produce cheaper than your competitors, you can undercut their prices and, effectively, price them out of the market. Or, you can spend the extra money on branding and advertising. Or, you can use it to acquire your competition. Or, you can do all of the above.

Therefore, it is only natural that business owners will try to reduce their costs to the best of their abilities and potential. They really have no choice. If they don’t try to reduce costs, chances are that somebody else will. Then, they will undercut their prices and ultimately push them out of the market (and, potentially, out of business). It’s how cut-throat competition got its name.

Cost reduction is essential to business survival
Cost reduction is essential to business survival

Cost reduction through reducing labor costs

Labor is usually a significant cost item among business expenses and, therefore, a frequent target for cost reductions. Cost of labor can be reduced in many different ways. For example:

  • Design processes that require less work hours.
  • Design processes that require less workers.
  • Design processes where most work is done by the cheapest workforce.
  • Carry out processes more efficiently (less time wasted).
  • Create an environment where people are happy to stay and perform well even with lower pay.
  • Move business operations to places with cheaper workforce.
  • Replace humans with technology.

Whole industries were born out of the desire to reduce the labor costs. The logical consequence of those efforts is inevitable:

  • Less and less people are needed to produce more and more goods/services.
  • Jobs move geographically to areas with cheaper workforce.
  • Jobs cease to exist because they are no longer part of the process.
  • Jobs previously carried out by humans are now performed by machines.

No humans? No problem!

If work can be done cheaper without human involvement, it will be done. It’s only a matter of time before computers will think independently and have more intelligence than the brightest of humans. Consequently, it’s only a matter of time before all humans will be replaced by machines in the production process.

When that time comes, we all will find ourselves out of jobs. Unemployed and unemployable. Forever.

What that will do to our economy (and the humanity) is a topic for another post.

Is there data to support this?

I’m always looking for new data. If you come across something interesting, please let me know by leaving a comment below.

Less people are needed to produce more goods — YES

Output per employee hour, US, Non-financial corporate sector 1947 -2012.
U.S. non-financial corporate sector productivity (1947-2012). Source: Bureau of Labor Statistics

The output per hour in all non-financial businesses in the United States, increased by 453% between 1947 and 2012. It means that the same number of employees can nowadays produce 4.5 times more goods than they were able to produce 65 years ago. It also means that instead of 9 employees in 1947, only 2 were needed in 2012 to produce the same amount of goods.

The same trend can be observed internationally:

International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends
International productivity trends in manufacturing (1950-2010). Source: Bureau of Labor Statistics

Jobs move to cheaper countries

[Currently researching]

Jobs no longer part of the process

[Currently researching]

Human are replaced by machines

[Currently researching]

What do you think?

Am I going too far in my conclusions? Is my logic flawed? Please tell me by leaving a comment below!



  • Added 2 charts showing the increase in productivity over time (output per employee).
  • Fixed minor spelling and grammar mistakes.