The rich get richer and income inequality in America continues to grow in 2013. The wage situation improved from 2012, but it's still pretty bad. The median wage was $28,031.02 in 2013 a paltry 1.9% increase from 2012. While the ratio of median wage to average wage improved, the 110 super rich are now earning 2595 times more than average workers.
The social security administration keeps statistics on average and median wages as reported on Federal income taxes and contributions to deferred compensation plans. They use income tax data to calculate your social security benefits. Below is a chart of the average wage and median wage from 1990 to 2013.
The average wage has increased 113.4% since 1990, yet the median wage has only increased 93.3%. The reason the average wage has increased more than the median is the super rich bias the average higher. Average wages are calculated by taking the total compensation in America and dividing by the number of wage earners, whereas median means 50% of all wage earners earned that amount or less.
Most of America is still working for very little, illustrated by the below graph of wage earners by income bracket. A shocking percentage of wage earners, 14.8%, make less than $5,000 per year. Almost a quarter, 23.8%, of all wage earners make less than $10,000 per year and almost a third, 31.7%, of American wage earners make under $15,000.
The average wage within these income brackets is also telling of the real American wage slave. For those making less than $5,000 a year, the average wage is $2,041.13. For those making between $5 thousand and $10,000 the average wage is $7,407.88. That's 13.9 million people earning between $5,000 and less than $10,000 a year, right here in America. An astronomical 23.1 million wage earners made less than $5,000 per year in 2013. Overall, there were 155.8 million earning wages in 2013.
We have to wonder why the news is full of the few billionaires and their lives. Most of America has nothing to do with those very few at the top of the money heap. Those earning less than a million dollars a year is 99.9% of all wage earners. Most Americans, 52.4%, make less than $30,000 a year yet those very Americans have only have 15.3% of the total income from wages.
Below is a distribution graph, per compensation bracket, of the percentage of wage earners in that bracket (blue), vs. what the percentage of total compensation is for just that wage bracket (red). The chart shows, per wage bracket, how many people are in that wage range and what percentage of the total compensation pie they receive. We see a few people in the $250 thousand or more income categories getting way more than their fair share of the total net compensation income pie. If there was more income equality in the United States we would see the blue bars matching the red ones. Notice how the blue bars, representing workers, disappear long before the red bar, representing income does. This means the very few at the top are getting way too big of a lion's share.
To put this in perspective, the top wage bracket is over $50 million and over and 110 people are in it. This miniscule percentage of total wage earners, 0.000064%, received 0,18% of the total net compensation earned in 2013. That means as a group, these $50+ millionaires have 2595 times more money distributed to them as a population size than those earning the average wage of $43,041.39. Those making less than $5000 a year are only getting 0.7% of the total compensation pie, as a group This is income inequality in stark colors and once again the rich get richer still.
The super rich have historically been grabbing much more of the income pie and as a result they are biasing the average wage upward. For 2013 the average wage grew by 1.3%, whereas the median wage had a bounce back and increased by 1.9%. Below is a graph showing the ratio of the median wage to the average wage. In a space of two decades we see a significant downward slide in this ratio which shows income inequality increasing. In 1991 the median wage was 72.05% of the average wage. By 2013 that percentage had slide to 65.13%.
When one takes inflation into account we have another bleak story. Overall wages are barely keeping up with rising prices. The below graph shows the average and median wage adjusted for inflation. Since 1990 real average wages have increased 19.7% and the median wage has increased 8.4%. Yet this is recent with both the median and average real wage below their 2007 values. While wages are finally keeping up with overall inflation, it's barely and real wages have also not recovered from the great recession.
The bottom line here is the rich are getting richer and most of America continues to get squeezed even though in 2013 wages improved. As a trend we can see since 1990 just a never ending attack on regular wage earners in this country. The bounce back in 2013 isn't enough to make up for 30 years of a spiral down.
The Social Security Administration defines net compensation here and it does include anything subject to taxes as reported on a W-2 by employers. We like to use these statistics for they come directly from tax records and thus are probably much more accurate than other estimates.
This article is an update on 2012 wage statistics and this one, 2011 wages in America. For more details of past 2010 wage data see our popular post, wages in America, most of us are have nots and article Wage statistics pain a bleak picture.