I explain where Americans are today and what most of us actually earn...from the mean and greedy CEOs to the nice and polite kindergarten teachers.
Note: In the first part of this post I explain 'average', 'median', 'mean' and 'raw' wages...and what most of us actually earn...so you'll have a better understanding of where American incomes are right now in the tragic aftermath of the Great Recession. If you're familiar with this subject, just skip to Where we are Today to see all the statistics I gathered.
About Current Reported Wages
The latest data from the Social Security Administration (SSA) shows that the national average wage index for 2010 was $41,673.83 a year before payroll taxes. The media parrots this number a lot (or something similar) all the time. It used to make me feel very bad because I struggled the very best I could for almost 40 years and thought almost everybody else was still earning much more then me.
But don't let that number that the media reports fool you.
In keeping with the term "national average wage index," the Social Security Administration often loosely refers to the basis for the index as average wages. The index is based on total compensation (wages, tips, and the like) subject to Federal income taxes, as reported by employers on Form W-2, divided by the number of tax filers.
“raw” average wage (net compensation divided by total number of workers)
was $39,959.30, according to the data from the Social Security
An "average" is just one measure. The difference between a "median" and "mean" incomes: Median income is the amount which divides the income distribution into two equal groups, half having income above that amount, and half having income below that amount. Mean income (average) is the amount obtained by dividing the total income of a group by the number of people in that group.
"median" is the wage "in the middle." That is, half of the workers earned below this level.
The table here shows that the median wage is substantially less than the
The median U.S. wage in 2010 was just $26,363 a year --- half of all workers earned below this level. As the SSA explained, "The reason for the difference is that the distribution of workers by wage level is highly skewed.”
So then, I didn't feel as near as bad as I did before. I was earning $16 an hour ($33,280 a year) as a union bartender in a Las Vegas casino (plus tips). And the cost of living was much lower than in other big cities, especially like in NYC, Boston, or San Francisco.
Let's look at an example of this reported average wage:
Imagine there are two employees working at a New York City hedge fund. If the pretty receptionist works full-time and earns the minimum wage of $7.25 an hour ($15,080 a year) and her boss, the greedy and mean CEO earns $1 million a year, the average wage in that hedge fund company would be $507,540 a year. That doesn't tell us very much, does it?
Now add two more employees into the mix of my imaginary hedge fund (pictured above). Now we also have a janitor earning $10 an hour ($20,800 a year) and a security guard earning $15 an hour ($31,200 a year). The "median income" at that hedge fund would be the two middle incomes added together = $52,000 ÷ 2 = $26,000 for a "median income". Half the employees earn more than $26,000 every year (the CEO and security guard) and half earns less than $26,000 a year (the receptionist and janitor).
The "average income" would be the total of all four incomes ÷ 4 wage earners = $266,770 a year. Neither of those two examples for the employees in that hedge fund paints a very clear picture, does it?
* As an aside, because this hedge fund is defined as a "small business" *because it has less than 500 employees, even though grosses over $ 1 billion a year in stock trades) the CEO will pay 20% less in taxes because of new legislation that was proposed. And because of the Bush tax cuts, that also means that the greedy CEO only has to pay the very same tax rate on his capital gains (15%) as will his young and pretty (and poor) receptionist earning the federally required minimum wage. This is NOT a truly progressive income tax system, and why OBama wants to tax those earning $1 million a year (like that mean and greedy CEO) 30% on everything over a million dollars a year.
Almost 66 percent of U.S. workers earned below "the average wage" because of income disparity. In other words, looking at the difference between average and median wage is two completely different ways to gauge the growing income gap. And the recession has only exacerbated the problem...and because of high unemployment.
Less than half of those who lost jobs during the recession were qualified to receive unemployment benefits.
And of those who did qualify, the Center on Budget and Priorities calculated that in the most recent year for which data is available, the average unemployment insurance recipient nationwide got a benefit that replaced less than half (47%) of his or her precious earnings (The “replacement rate” ranged from 31% to 57% in different states nationwide.)
The Bureau of Labor Statistics reports that currently there are 6.5 million Americans receiving some form of unemployment benefit for an "average" of $295 a week ($15,340 a year) before taxes (Depending on their total adjusted gross income during the tax year, they could still be subject to paying federal income tax on unemployment benefits).
About 12.5 million people are unemployed, meaning 6 million who are still counted by the Bureau of Labor Statistics receive no UI benefits at all. At least 8 million Americans have already exhausted all their unemployed benefits without ever finding work again, and they are no longer being counted by the BLS (either as "marginally attached" or as "discouraged workers", and are sometimes known as the "99ers".
The U.S. labor force is 154.6 million. According to the BLS, the U.S. now has a record 88.4 million people who are not considered part of the labor force. (The labor force "participation rate" was down to 63.6%) (See more here)
Now think about this: The government defines the poverty level as $10,890 for a single person, or $ 22,350 for a family of four. And here is what most of us earn:
- 77.3 million earned less that $26,363 a year (the bottom 50% that pays little in federal income taxes)
- 55.8 million received some form of Social Security benefits (retirees averaged $14,760 a year and those with disabilities averaged $13,332 a year). If no other income, they would be excluded from paying federal income taxes if they earned less than $25,000 a year (which is most).
- 12.5 million are unemployed, but of those, only 6.7 million currently qualified and receive unemployment benefits (average $15,340 a year)
- 7.9 million Americans were only working part time but wanted full-time work.
- 3.8 million workers earned wages at or below the Federal minimum and made up 5.2 percent of all hourly-paid workers. (A full-time minimum wage job pays $15,080 a year).
- 6 million college and high school grads have no work history at all, and also aren't being counted in the unemployment rate -- and aren't receiving UI benefits (but they could be living on food stamps and in debt with student loans).
- 636,017 were homeless last year.
- 1.4 million Americans are employed at Wal-Mart in the U.S. (average wage is slightly above $8 an hour).
- 750,000+ Americans work for McDonalds in the U.S. (average wage is slightly above $8 an hour). Like every year, McDonald's and its franchisees hired 62,000 people for temporary summer jobs in the U.S. last year after receiving more than one million applications from desperate job seekers.
- 6 million people are under correctional supervision (jail, prison, etc) in the U.S.— more than were in Stalin’s gulags.
- 50,000 are in mental institutions. Sixty years ago, the United States had 322 state psychiatric hospitals that cared for more than 500,000 patients at any given time. In the most recent figures compiled by the National Association of State Mental Health Program Directors Research Institute, from 2009, the states operated 208 hospitals that cared for fewer than 50,000 patients.)
- 100,152 died from suicide over the last three years, in part because of record long-term unemployment, foreclosures and bankruptcies. The suicide rate has gone up, and calls to the suicide hotline has increased by 33%. The annual rate is 10.7 per 100,000 nationally and 34.5 in Las Vegas. In a study conducted by the national Centers for Disease Control and Prevention, it found that in 2008-2009, some 8.3 million U.S. adults had suicidal thoughts in the previous year. About 2.2 million people reported making suicide plans in the last year. One million reported an actual suicide attempt in the last 12 months.
The Republicans and the Heritage Foundation think that the people I listed above "should put more skin in the game" when it comes to paying more for federal income taxes, rather the taxing the rich a little more (because the rich doesn't want to pay a "living wage".)
House Majority Leader Eric Cantor came out in favor of considering a tax increase on these poor people. "We’ve got to discuss that issue,” the Virginia Republican told reporters. Eric Cantor (like all Republicans) remains opposed to any tax hike on Americans of ample means. The GOP leader explains: “I’ve never believed that you go raise taxes on those that have been successful.”
One in seven seniors in America -- some 8.3 million people -- faced the threat of hunger, which rose for people age 60 and older, mainly among those who are only earning one to two times the poverty level. Not only does the GOP want to "starve the beast", but they want to starve grandma too!!!
And the GOP would tax the homeless if they could find them.Government is, and always has been, the best job creator. There are 1.7 million Americans on active duty in the military. The typical pay in the military for an enlisted 20-year-old E-2 is $37,637 a year. And there are 2.15 million who are U.S. federal employees, not including postal workers (but including radical Republican members of Congress).
And what about federal workers? Former Massachusetts Governor Mitt Romney said, "Average government workers are now making $30,000 a year more than the average
private-sector worker." WTF?!?!?!?
But wait a minute...not so says Rutgers University professor Jeffrey Keefe: "Private sector workers earned average annual wages of $55,132....greater than the $49,072 earned by public sector workers." That's $6,060 less, not $30,000 more! (I learned that Mitt Romney is a compulsive liar.)
In 2010 Economic Policy Institute published a paper by professor Jeffrey Keefe, which supplied overwhelming evidence that public-sector workers, on the whole, earn less than those in the private sector. On average, full-time state and local employees are under-compensated by 3.7%, in comparison to otherwise similar private-sector workers.
And besides, what is so outrageous about an annual wage of $55,132 anyway? Social-economic demographics of the cities and towns within the states determines these wages. $55,132 in Boston Massachusetts wouldn't go near as far as a teacher living in Springfield Massachusetts.
And from MassBudget.Org: "The issue of public and private sector wages is part of a larger economic trend in America and in Massachusetts. Over the past three decades, income growth has been much weaker than it was between the Second World War and the 1970s. Between 1979 and 2007, the gap between the richest and poorest Americans more than tripled. In 1979, the highest-income households earned 22.7 times more than the lowest-income households; by 2007, they were earning 75 times more. During this period, the average after-tax income of the these highest-income households grew by almost 5% annually while incomes of the middle- and lower-income households saw growth rates of less than 1%. When education is taken into account, public sector workers with a four-year college degree or more (60% of the public sector workforce) are paid less, on average, than private sector workers with the same level of education.
What average wages look like, from the Bureau of Labor Statistics:
- Laborers and Movers - Median Pay $10.85 per hour - $22,560 per year - Less than high school
- Firefighters - Median Pay $21.76 per hour - $45,250 per year - High school diploma or equivalent.
- Kindergarten and Elementary School Teachers - Median Pay $51,380 per year - Bachelor’s degree
- Police and Detectives - Median Pay $26.45 per hour - $55,010 per year - High school diploma or equivalent.
- Post-secondary Teachers - Median Pay $62,050 per year - Doctoral or professional degree
Mitt Romney and the Republicans want teachers with Master degrees to earn what school bus drivers earns. Maybe the GOP would prefer that bus drivers taught our children, seeing as those in the top 1% can send their kids to expensive private schools. De-funding public education is another apart of the GOP's strategy of "starving the beast".
Now look at what the big shots earn:
- Corporate CEOS averaged $12.9 million last year (Mitt Romney earned $22 million). See what the CEOs earn, those who pay $1 an hour for cheap labor in India, Mexico, and China. And they aren't ashamed at all of their excessive pay.
- Hedge fund mangers - Collectively, this privileged class of traders did quite well for itself — raking in some $22 billion in compensation, according to AR Magazine. Topping the charts in hedge fund pay was John Paulson, who reportedly earned $4.9 billion.
And these guys (and gals), these "captains of industry" and "pillars of our community", pay a lower tax rate than a typical sheet metal worker or a teacher. (Polifact rates the claim true, so Warren Buffett wasn't lying.)
One such CEO, Ted Kelly of Boston’s Liberty Mutual insurance company, loudly complained that Massachusetts taxpayers are paying excessive taxes to support government workers who get "high salaries and very rich benefits". At the time he had already been halfway through a four-year stretch that had him taking home an average $50 million per year.
In 2010, Liberty Mutual also pocketed a $46.5 million taxpayer subsidy to build a new office building in Boston while maintaining a private fleet of five corporate jets (described as their own private Air Force). Notes the Boston Globe’s Brian McGrory, Ted Kelly made “an unusual number of stops at airports near Kelly’s vacation homes.” Liberty Mutual PR staff refused earlier this month to comment on Kelly’s travel. They cited “security reasons.”
It's so odd that the ultra-rich multi-millionaires and billionaires would be so concerned about the salaries of kindergarten teachers, who are only earning a "median middle-class wage". If I were one of those mean and greedy CEOs, I was just relax and enjoy all my ill-gotten money and stop acting like a big selfish ass.