Median wages and the great stagnation

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The Social Security Administration released data on U.S. wages and payroll in 2010 this week, and the news isn't good for most of the working class or middle class.

Though the average wage of a single earner stood at $39,959.30 per year, that number was skewed by those at the very top of the survey - the 93,725 earners who took home more than $1 million annually. That top sliver - a fraction of a fraction of the top 1 percent - collectively took home $224.6 billion , or about $2.4 million per top earner.

The median wage for the 150 million workers surveyed in 2010 was just $26,363.55 per person. For comparison, the poverty line for an average 4-person household is set at $22,350, while the line for a single person living alone comes in at $10,890.

When one end or the other of a set becomes skewed, averages become extremely misleading. The $40,000-per-year figure seems reasonable until you realize that just over 66 percent of all workers come in under that number. As the SSA states, "by definition, 50 percent of wage earners had net compensation less than or equal to the median wage."

In more prosperous times, it might have been safe to assume that the average 4-person household contained two wage earners, but with U-6 unemployment at a seasonally adjusted rate of 16.5 percent in September, that's far from certain. It looks like half of all American families are a single layoff away from living in poverty.

In the meantime, the major banks earnings are boosted by an accounting quirk called the debt value adjustment, which means that their earnings rise if their creditors perceive their debt as riskier, and thus less valuable, TheStreet reports.

When two facts like these are set against each other, is it any wonder that the occupations in Zuccotti Park, Dewey Square and Grant Park continue to gather momentum?

GDP growth or decline is basically irrelevant - indeed, average wage growth is irrelevant - if half of all American workers can barely sustain a family above the poverty line.

[Via Ezra Klein at The Washington Post ]

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: News Headlines , Economy , US Markets

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