Have you ever wondered what’s the average salary in the US or what it takes to make the top 1%? Perhaps you want to know whether your salary is close to the national average or that you’re earning a fair wage.
But learning what’s a good salary in the US, or at least one that’s higher than that of half the population may surprise you.
And how much you’re compensated on average each month varies with age and education. A quick look at the wage distribution in the US across age group or education level will, in fact, confirm it.
Average income reported in 2021
The US Census Bureau releases its annual report on household income every year during the month of September. It presents information on income and poverty in the United States based on the Current Population Survey Annual Social and Economic Supplements (the CPS ASEC survey).
The Census measures household income by surveying a sample of people 15 years and older on the amount of income received in the preceding calendar year from various sources. These sources include earnings, interest, dividends, veteran’s payments, rents, etc. and exclude certain income sources such as capital gains.
It reports data on household, family and personal or per capita income. Here’s how each term is defined:
- Household: A household consists of all the people who occupy a housing unit and can be related or unrelated.
- Family: A family is a group of two people or more (one of whom is the householder) related by birth, adoption, or marriage and living together.
- Personal: Any household member 15 years old and over.
These income figures are calculated as a median and an average (or mean). They’re all measures of central tendency in numbers. Here’s the difference between them:
- Median: Is the midpoint of a data sample. The median is calculated by listing all data points in ascending or descending order and simply picking the entry in the middle of that list.
- Average or mean: The term is used interchangeably, and it’s calculated as the sum of all values in a sample divided by the total number of values.
Average reported income figures in the US are larger than their median counterparts because the income of the very wealthy influences the average.
Median income figures in the US
Median household income: The US Census Bureau states in its annual report that in 2019 the median household income was $68,703, an increase of 6.8% from the prior year, which was $64,324. Both were records for their respective years. These figures come out to an average of $5,725 per month in 2019 and $5,360 per month in 2018.
The figures above can be interpreted this way: in 2019, half the households in the US had an income of less than $68,703 and the other half had more than that amount.
Median family income: The median family income in the US was $86,011 in 2019, increasing 7.4% from $80,071 in 2018. This figure has been increasing steadily since 2014 when it was $72,027.
Median personal income: The Bureau also reported that in 2019 the median personal or per capita income in the US was $35,977, marking an increase from the prior year. The number reported in 2018 was $34,317
Average income figures in the US
Average family income: The report also revealed that the mean or average family income in 2019 was $116,735, up from $107,966 in 2018. These figures include the incomes of the very wealthy and skew the average number higher. That’s why you’ll often see people quoting the median when discussing household income.
Average personal income: In 2019, the average personal income, also known as per capita income, was $54,129, up 7.4% from $50,413 in 2018.
Distribution of household income
The following table highlights the distribution of household income by range and the percentage of households falling in that range for 2019.
|Range||Percent of US Households|
|$15,000 to $24,999||8.0%|
|$25,000 to $34,999||8.3%|
|$35,000 to $49,999||11.7%|
|$50,000 to $74,999||16.5%|
|$75,000 to $99,999||12.3%|
|$100,000 to $149,999||15.5%|
|$150,000 to $199,999||8.3%|
|$200,000 and over||10.3%|
Household income dispersion
The table below shows household income percentiles for 2019. One way to read the table is as follows: Half the population made less than $68,703 in 2019.
Average wage index or AWI
One alternative to using Census data to understand how much money Americans earn on average is to use information from the Social Security Administration (SSA). The SSA produces an Average Wage Index or AWI in its calculation of national average wages.
The AWI is linked to changes in average wage data and includes compensation that would be reported in a W-2 by an employer, including wages, tips and the like and is subject to federal income taxes.
It also includes contributions to deferred compensation plans, but excludes taxable distributions from retirement plans. The SSA uses this index to calculate retirement benefit payments.
The average wage index in 2019 was $54,100, and in 2018 it was $52,146 or an increase of 3.75%. The AWI shows that average wages in the US, in fact, have been increasing every year since 1985, except for 2009 when they fell by 1.51%. The following table highlights the AWI and the average wage per US worker using raw data from the SSA.
Each year, the AWI is calculated by taking the prior year’s value and multiplying it by the percentage change in average wages over the same period. The SSA does this to decouple benefits from inflation and tie them instead to wage levels.
How much do you need to be in the top 1%
To be in the top 1 percent of earners in the United States in 2019 you had to earn more than $250,000. Actually, it was closer to $287,000 or more, using interpolated figures from the SSA.
The exact ranges are as follows:
- Earning $250,000.00 to $299,999.99 puts you in the top 1.11% in 2019
- Earning $300,000.00 to $349,999.99 puts you in the top 0.81% in 2019
The top 10%
To make it to the top 10% of wage earners in the US in 2019 you needed annual earnings of around $102,500.
The salary range provided by the SSA is $100,000.00 to $104.999.99
The median 50%
The median wage in the United States, that is, the wage that put you in the top 50% of the population in 2019 was $34,248 a year. That’s 4.3% higher than the $32,838 required in 2018.
So what is a good salary in the US? If you made more than $34,248 in 2019, you were ahead of half of your fellow Americans. This is based on data from the SSA.
Median income for households by age
Overall, people tend to earn more as they mature and accumulate work experience. Median income increases steadily and peaks at the 45 to 54 year old bracket according to US Census data (see table below.)
Past the age of 55, incomes start to drop off and fall even further as folks enter retirement age. As explained elsewhere in this article, average wages are higher than median wages because high wage earners influence the average.
The data below is for the householder or person who owns or rents the household surveyed by the US Census while gathering income information.
|Age Group||Median Income||Average Income|
|15 yr and over||$68,703||$98,088|
|15 to 24 Years||$47,934||$59,979|
|25 to 34 Years||$70,283||$88,931|
|35 to 44 Years||$88,858||$115,938|
|45 to 54 Years||$92,221||$125,803|
|55 to 64 Years||$75,686||$109,321|
|65 Years and Older||$47,357||$73,288|
|65 to 74 Years||$56,632||$84,153|
|75 Years and Over||$37,335||$58,684|
Average household income by education
The table below highlights that people with a better education make more money, in general. As the table illustrates, on average, six-figure incomes become prevalent for people with a college degree or higher.
|Education Level||Median income||Average Income|
|Less than 9th grade||$30,355||$43,403|
|9th to 12th grade (no diploma)||$31,326||$45,424|
|High School Graduate (includes equivalency)||$48,708||$65,798|
|Some College, No Degree||$61,911||$83,303|
|Bachelor's Degree or More||$108,646||$144,213|
The above information is based on US Census data for each householder.
The wealth gap continues to widen
Despite the fact that American incomes have been rising over the past few years, the wealth gap between lower, middle and upper income earners continues to grow.
According to the Pew Research Center, upper income families were the only income tier able to build on their wealth from 2001 to 2016. This is due to the fact that upper income families derive a larger percentage of their wealth from financial assets.
It’s easier to understand this dynamic when you realize that the S&P’s long term average annual return is 9.8%. What are the chances that you get a salary increase of 9.8% every year? Exactly.
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