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Median Income in America: What is the Average Salary in The US?

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How much money do you earn? Asking this question to people yields a variety of different responses. You’ll hear everything from a direct figure, to “not enough,” or “that’s none of your business.”

So, what does the average American earn, and where are you on the national scale on income earners? There’s plenty of data to show that the average savings of the population are meager, with a large percentage of millennials and Gen-X’ers have zero net-worth and no savings.

However, income and savings are two very different concepts. If a person has no savings, they could still have a high salary, but more expenses. Understanding your spending habits plays a role in your savings and income, but we’ll save that for another post.

In this article, we’re going to unpack the average American income using data available from reliable sources. We’ll also discuss the current state of the economy, and how it affects wage growth into the future. Finally, we’ll provide you with a pragmatic solution to increase your annual income.

The Data

Certain government agencies track public financial information about all US households. These institutions are interested in calculating median wage figures across broad demographics nationally.

The Social Security Administration (SSA) – This intuition tracks all earners that contribute to Medicare and Social Security programs. Therefore, the SSA has access to information such as wage statistics.

The US Census Bureau (USCB) – This institute provides information on the Current Population Survey (CPS), as well as the Annual Social and Economic Supplements (ASEC).

How These Systems Work

The key take away here is that the SSA collects actual wage data, and the Census Bureau estimates values from conducting surveys. Another essential difference between the data they provide is that the USCB collects household data, while the SSA collects individual data.

According to data from the US Census Bureau in 2018, median household income in the United States was $63,179, a steady increase from 2017s figure of $61,372.

The SSA Average Wage Index (AWI) – The SSA calculates the national average wage index using compensation subject to Federal income taxes, reported by taxpayers on their W-2 Forms. The data accounts for sources of income as well, such as wages, commissions, and tips. However, this index doesn’t account for a household’s entire annual income.

Instead, the AWI is a measure of how much taxpayers earn at their job or through their business activities. This index does not account for investor returns that produce income, such as capital gains and dividends.

A quick clarification on the SSA numbers – The system produces two “average wage” figures.

The first figure is the average wage, and the second is a calculation that uses the previous year’s number, multiplied by the annual percentage change in average salaries.

According to data from the SSA, average wages in 2017 were $48,251.57, using the first method of calculating actual data. The second number, calculated by multiplying the previous year’s average by the annual change in wages, comes to $50,321.89. That’s a difference of more than $2,000 in the results from both calculations.

Who are the 1-percent?

This fact might come as a surprise, but the top 1-percent of income earners in the United States earn $250,000 per year. Sure, $250,000 per annum is a healthy salary to be taking home to the family, but we bet you were expecting a far higher figure.

If you’re curious about how rich the rich really are, take these statistics into mind.

  • As of 2018, there were 205 American households out of 165,438,239, that have wages above $50-million. This fact makes these households part of the top 0.0000000123913-percent. In 2016, there were only 143 with this level of income.
  • There are nearly 750-million households that earn more than $1-million in income annually.

Of course, these figures don’t account for the profits from other investments made by these elite households.

Middle-Class America – The 50-Percent

We’ve all heard the stories about how middle-class America is shrinking away as the global economy slows down. However, it may surprise you to learn that more than 50-percent of earners make more than $29,999.99 per year. The number of taxpayers earning under $30,000 per year, accounts for more than 48-percent of the United States population.

The 2018 Poverty Guidelines suggest that and family of four bringing in an annual household income of less than $25,100, is under the poverty line. These figures are $28,870 in Hawaii and $31,380 in Alaska.

US Census Data for Median Household Income

The 2018 Census data has a slightly different organization to the SSA. Since the Census Bureau calculates household income, the census tries to establish a broader range based on demographics and locations across the nation.

Both sets of data help establish an idea of the real figure for national average income. The Census Bureau calculates median household income at $63,179 in 2018, with the mean household income being $90,021.

Median Income for Households, Listed by Age

Here is the Census data for median household incomes by age groups, see where you line up on the table.

  • 15 – 24: $43,531
  • 25 – 34: $65,890
  • 35 – 44: $80,743
  • 45 – 54: $84,464
  • 55 – 64: $68,951
  • Under 65: $71,659
  • Over 65: $43,696

When we look at this income average, it’s sobering when we compare it with the national savings average, and net worth data.

How Does Education Affect Average Income?

Do people with a degree earn more than those that only have a high school education? Yes, the figures undeniably show that skilled professionals with degrees are among the nation’s top earners. However, it fails to take into account unemployment rates of people that have qualifications, loads of student debt, and no job opportunities.

The 2014-figures available show the following numbers;

  • Less than a high school diploma – $488 per week, or $25,376 per year.
  • High-school diploma – $668 per week, or $35,776 per year.
  • Some college or an associate degree – $761 per week, or $39,572 per year.
  • Bachelor’s degree or higher – $1,193 per week, or $62,036 per year.

The data shows that you’re far more likely to be financially successful if you have a degree. There’s also a significant income gap between those people that finish college, and those that drop out of school.

However, education is not always a clear indicator of financial success and high income. There are dozens of jobs that make annual incomes of more than $100,000, without the need for an undergraduate degree.

Why the Recovery Failed Middle-Class America

The data shows a steady decline in wage growth since the onset of the financial crisis in 2008. With economic contraction occurring, the Federal Reserve launched a massive stimulus package known as TARP and QE. The Fed pumped new money and credit into the financial system to rescue the banks and save global financial markets.

The idea behind the programs was to stimulate lending at the consumer level, making the consumer responsible for pulling the United States away from recession. However, the banking industry had other plans, and it continued to restrict lending conditions across the board in the wake of the crisis.

Instead, the largest investment banks and wealthiest investors took advantage of easy credit, with zero interest rates. The rich got richer, and incomes in the top 10-percent steadily started to pull away from middle-class incomes, producing a wealth gap.

Politicians state that the rising stock market and increases in property prices are signs of an economic recovery. In reality, the rise in the stock market is only a sign of investors gorging themselves on free money. Property prices are not an accurate indicator of wealth and prosperity, as most homeowners have a mortgage, not an income-producing asset.

As a result of the decline in the real economy, people are finding it harder to find work. Many businesses are having to close their doors in the wake of the trade war with China. The cost of living continues to rise at rates that exceed wage growth, and Americans find it harder to keep up with rising prices and stagnant wages.

The middle-class is shrinking in America, with more families falling under the poverty line. The official data does not include rising consumer inflation, which is far above the official 2-percent figure. More families enter poverty every year in the United States, and rates of homelessness are rising nationwide.

The Issue of Rising Student Debt

There are more than a few reasons why average income data no longer makes any sense. If the data shows that Americans are earning more than ever before, why are they struggling to get by? Why do more millennials live with their parents until their late thirties? Why are millennials slow at marrying and forming households, and why is the national savings rate so low?

These questions all require answers to understand the real economic situation across the country and how it relates to income.

Many high-school leavers take the opportunity to go to college. More than 3.7-million Americans go to college each year. Along with admittance to the university, comes a student loan. The US government guarantees student loans, making them an inescapable form of debt.

High Paying Jobs without College Degree

Read: 14 High Paying Jobs ($100k+) Without a College Degree

If the student fails to repay the debt and goes bankrupt, the Federal government does not write off the loan. Instead, the person is liable for the money they owe the government, for the rest of their life. The average student loan size in America is $36,000, with some students leaving with as much as $120,000 in debt.

Leaving school with debt is fine, as long as you have a way to repay the money. However, many graduates choose fields where jobs are hard to find. American universities are graduating more people in the behavioral sciences than they are in the STEM fields.

As a result, college graduates are finding it harder to find work and end up taking low-income jobs to support the need to pay their student debt. The jobs figures may show that there’s low unemployment. However, the reality is that most of the new jobs come from people starting work in minimum wage positions, such as bartenders and baristas.

As a result of being able to find high-paying jobs, and having crushing levels of student debt, it’s no wonder more millennials are struggling to start their lives. With $1.6-trillion in student loans floating around the US economy, it’s not surprising that some politicians are calling for the cancellation of all student loan debt.

The Economy and Average Incomes into the Future

The state of the economy does not show much sign of improvement in the future. We can expect the middle-class to continue to shrink away as the wealth gap continues to divide the American people into two classes, the rich and the poor.

While income data may continue to show signs of increasing year-on-year, the results in the broader economy speak a far different tale. Some economists believe we are currently in a period of “stagflation,” where real wages don’t rise, but the cost of living continues to increase.

Every American earning around the national income average should take steps to make more money, and start a savings program.

Wrapping Up – Increase Your Income to Survive

The only way to ensure your family survives in periods of economic uncertainty is by increasing your income. If you’re finding it challenging to meet your financial commitments at the end of the month, then you need to bring in more money.

There are two solutions to bringing in more income; finding a higher-paying job, or taking on more work in your spare time. If you want to earn more money by getting a better job, you need to improve your skillset. Do all you can to learn the skills you need for your new career by using free mediums like YouTube to enhance your knowledge base.

If you like your chosen career, then try and find ways to earn more money on the side. The digital age offers you plenty of opportunities to make money from home in the evenings and on weekends. Sign up with a freelancing site, or use apps to help you save money on your shopping.

Articles to Help You Make Money Online on the side

Whichever strategy you choose, the key takeaway is that by increasing your income, you keep you and your family away from falling under the poverty line.

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Oliver Dale is Editor-in-Chief of MoneyCheck and founder of Kooc Media Ltd, A UK-Based Online Publishing company. A Technology Entrepreneur with over 15 years of professional experience in Investing and UK Business.His writing has been quoted by Nasdaq, Dow Jones, Investopedia, The New Yorker, Forbes, Techcrunch & More.He built Money Check to bring the highest level of education about personal finance to the general public with clear and unbiased reporting.oliver@moneycheck.com


Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank or credit card issuer and have not been reviewed, approved or otherwise endorsed by any of these entities.


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