Scary New Wage Data

David Cay Johnston | Oct. 25, 2010

http://www.tax.com/taxcom/taxblog.nsf/Permalink/UBEN-8AGMUZ

Now for some really scary breaking news, from the
latest payroll tax data.

Every 34th wage earner in America in 2008 went all of
2009 without earning a single dollar, new data from the
Social Security Administration show. Total wages,
median wages, and average wages all declined, but at
the very top, salaries grew more than fivefold.

Not a single news organization reported this data when
it was released October 15, searches of Google and the
Nexis databases show. Nor did any blog, so the citizen
journalists and professional economists did no better
than the newsroom pros in reporting this basic
information about our economy.

The new data hold important lessons for economic growth
and tax policy and take on added meaning when examined
in light of tax return data back to 1950.

The story the numbers tell is one of a strengthening
economic base with income growing fastest at the bottom
until, in 1981, we made an abrupt change in tax and
economic policy. Since then the base has fared poorly
while huge economic gains piled up at the very top,
along with much lower tax burdens.

A weak foundation cannot properly support a massive
superstructure, as the leaning Tower of Pisa shows. The
latest wage data show the disastrous results some of us
warned about, although like the famous tower, the
economy only lists badly and has not collapsed.

Measured in 2009 dollars, total wages fell to just
above $5.9 trillion, down $215 billion from the
previous year. Compared with 2007, when the economy
peaked, total wages were down $313 billion or 5 percent
in real terms.

The number of Americans with any wages in 2009 fell by
more than 4.5 million compared with the previous year.
Because the population grew by about 1 percent, the
number of idle hands and minds grew by 6 million.

These figures show, far more powerfully than the
official unemployment measure known as U3, how both
widespread and deep the loss of jobs was in 2009. While
the official unemployment rate is just under 10
percent, deeper analysis of the data by economist John
Williams at http://www.shadowstats.com shows a real
under- and unemployment rate of more than 22 percent.

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.

To give this some perspective, from 1992 to 2000 the
number of people earning any wages grew by 21 million,
but nine years later just 2.8 million more people had
any work.

These wage data, based on the Medicare flat tax on all
compensation, tell us only about the number of people
who earned wages and how much. They tell us nothing
about whether these individuals were underemployed, had
to work more than one job, earned fringe benefits, or
were employed at a level commensurate with their
abilities.

But they do give us a stunning picture of what's
happening at the very top of the compensation ladder in
America.

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!

You read that right. In the Great Recession year of
2009 (officially just the first half of the year), the
average pay of the very highest-income Americans was
more than five times their average wages and bonuses in
2008. And even though their numbers shrank by 43
percent, this group's total compensation was 3.2 times
larger in 2009 than in 2008, accounting for 0.6 percent
of all pay. These 74 people made as much as the 19
million lowest-paid people in America, who constitute
one in every eight workers.

The article continues with useful charts and graphs: 
http://www.tax.com/taxcom/taxblog.nsf/Permalink/UBEN-8AGMUZ

_____________________________________________

Portside aims to provide material of interest
to people on the left that will help them to
interpret the world and to change it.

Submit via email: [log in to unmask]
Submit via the Web: portside.org/submit
Frequently asked questions: portside.org/faq
Subscribe: portside.org/subscribe
Unsubscribe: portside.org/unsubscribe
Account assistance: portside.org/contact
Search the archives: portside.org/archive