The Wage Disparity is (Not Quite) Worse Than You Think (Updated)

Jeremy Gantz

Updated with wage figures corrected by Social Security Administration

Thank goodness for David Cay Johnston, the former New York Times and current Tax Analysts’ columnist who this week reported on some very disturbing news hiding in plain site. He noticed some shocking stats released by the Social Security Administration (SSA) on October 15, stats that went entirely unnoticed by all media:

One out of every 34 Americans who earned money in 2008 earned nothing in 2009. What this means, Johnston writes, is that U.S. underemployment and unemployment is worse than we are generally told — around 22 percent, all told. Fewer people are working (you know this), but those that are on average are making less than before (you probably didn’t know this):

Only 150.9 million Americans reported any wage income in 2009. That put us below 2005, when 151.6 million Americans reported wages, and only slightly ahead of 2004, when 149.4 million Americans held at least one paying job.

For those who did find work in 2009, the average wage slipped to $39,269, down $243 or 0.6 percent, compared with the previous year in 2009 dollars.

The median wage declined by the same ratio, down $159 to $26,261, meaning half of all workers made $505 a week or less. Significantly, the 2009 median wage was $37 less than in 2000.

As Johnston details in the excellent GRITtv interview above, the recent downward pressure on wages was simultaneous to shocking increases in pay among the very wealthiest Americans, as Johnston writes: The number of Americans making $50 million or more, the top income category in the data, fell from 131 in 2008 to 74 last year. But that’s only part of the story.

The average wage in this top category increased from $91.2 million in 2008 to an astonishing $518.8 million in 2009. That’s nearly $10 million in weekly pay!

UPDATE 11/11/10: David Cay Johnston kindly alerted me to the SSA’s recent wage data correction. It was the first time the agency has ever found an error in its data, apparently. 

That mega-rich cohort of 74 Americans who saw their income quintuple between 2008 and 2009? Well, that sharp income rise didn’t actually happen. The corrected figures are more in line with what you’d expect during a deep recession, as Johnston wrote at Tax​.com on November 2:

Mark Lassiter, a Social Security spokesman … said the inquiry established that two individuals filed multiple W‑2 forms reporting $32.3 billion of pay for work, forms the agency determined after examination were phony. …

Removing those bogus reports showed that the 72 remaining high wage earners averaged $84.1 million each, down $7 million or 7.7 percent from the 2008 average in nominal dollars.

But the new (and less scary) picture of America’s plutocrats doesn’t contradict Johnston’s main point; to the contrary, it underscores it. Every 34th worker in 2008 had no work in 2009, and the average wage fell even more across those two years in real dollars ($457, or 1.2%).

But as scary as the recession has been, the truly scary trend covers the last 30 years of delusional trickle-down economic policies. Fewer people were earning $10 million each week last year, but the fact remains that immense amounts of wealth continue to accrue at the top of America’s wage scale while most tread water.

While America’s average wage bumped up slightly between 2000 and 2009 (increasing $347 in real dollars, Johnston, writes), the country’s median wage has declined during the last decade. In 2009 it was $26,261 — $37 lower than in 2000, and $253 lower than in 2008. As the Washington Post reported in January, in perhaps the most depressing piece of journalism to ever beckon in a new year, it truly was a lost decade for American workers. If only the SSA could correct that.

Jeremy Gantz is a contributing editor at the magazine. He is the editor of The Age of Inequality: Corporate America’s War on Working People (2017, Verso), and was the Web/​Associate Editor of In These Times from 2008 to 2012.

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