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The Social Security Department just released its calculations for the national average wage index (AWI).This is all compensation (wages, tips etc.) subject to federal income tax, and is gathered from reports by employers and W2 forms.
Here’s how they do it:
First they find something called “net compensation,” which they define as contributions to deferred compensation plans, but excluding certain distributions from plans where the distributions are included in the reported compensation subject to income taxes.
In 2010 it was $6,009,831,055,912.11.
Then they divide that number by the number of wage earners in the U.S. That’s 150,398,796 people. The number you get, is $39,959.30.
According to their data table (which you can see here), 66.2% of wage earners make netted less than or equal to $39.959.30. A raw average.
They calculated the median of that raw average to be $26,363.55— and that’s the net compensation of 50% of Americans.
Now, we decided to take that a step farther and put that $26,363.55 into a calculator that the Wall Street Journal made called “What per cent Are You?”
It said that making $26,363.55 puts you in the bottom 33%.
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