50% of All Workers Made Less than $26,000 in 2010

By Derek Thompson

Today we get our first look at American wages in 2010 based on payroll taxes reported to the Social Security Administration. David Cay Johnston picks out the most important takeaways, including:

1) Half of all workers made less than $26,364, the median wage in 2010. That means the typical wage is at its lowest level since 1999, after adjusting for inflation.


2) The number of millionaires increased by about 20 percent.

3) The size of the missing workforce is 10 million. The number of working people fell by 5.2 million since 2007. But that's not the entire job deficit, because, based on population growth estimates, 4.5 million more would have joined the workforce between 2007 and 2011. Add it up, and you get a 10-million-worker gap.

What you see in the graph above is that median pay took a nosedive after 2007, effectively wiping out all gains made in the previous eight years. The macro explanation is that the economy shrunk, and middle class jobs disappeared and were replaced with (or outlasted by) lower-paying positions that companies kept on. But the economy isn't one giant corporation. It's thousands of giant, medium-sized, and small companies in industries that lived through very different recessions. Here's a look at pay on an industry-by-industry level from our friends at PayScale.


The industries with wages growing considerably slower than the rest of the country -- the ones really pulling down the national average --  are construction (huge bubble burst), food service (an unproductive industry that requires little advanced education) and sales and retail (another unproductive industry that requires little advanced education). So one thing that's keeping wages low is the fact that the most important stimulus of the last decade blew up in our face, and another big thing is that lots of workers without college degrees don't have the skills to demand higher wages in more productive professions. I'm as astounded as Johnston about these wage numbers, but I'm less optimistic that is the kind of trend we can reverse in an election.

Update: There are some reasonable questions about how many of these workers are part-time. I don't know the answer to that question. Our official measures of part-time workers are inconsistent, but the Bureau of Labor Statistics' data on workers by hours-per-week is here. What we know: About 24 million people worked less than 29 hours a week in 2010. About 35 million people worked 34 hours a week or less in 2010

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This article available online at:

http://www.theatlantic.com/business/archive/2011/10/50-of-all-workers-made-less-than-26-000-in-2010/247059/