U.S. Falls to No. 15 in Average Worker Income

[one...two...tree 2,762]

By David Francis, Christian Science Monitor

"Comparisons are odious," that is, hateful, according to a popular phrase about seven centuries old. Comparison, however, is one of the tasks assigned to the Organization for Economic Cooperation and Development in Paris, an international body of 30 of the richest countries. It tries to compare its members' economic and social data, a difficult, perhaps even odious, job.

Sometime back it broadened statistically (for comparison purposes) the definition of the average workers in its member nations while trying to examine relative tax burdens. The result was "monumental," reckons Jacob Kirkegaard, an economist at the Peterson Institute for International Economics. The OECD ranked the after-tax income of the average worker in the United States as 15th among its member nations. The richest middle class, if measured in terms of the purchasing power of their income, was Britain.

That ranking would surprise most Americans, who likely consider their nation the most prosperous in the world.

In one fell swoop, OECD statisticians lowered the estimated income of the average American worker by more than 10 percent and raised average incomes of other rich nations by as much as 30 percent, notes Mr. Kirkegaard.

It may well be that the comparative US standard of living is slipping. The price of oil has risen more dramatically in the United States than in other nations because of the dollar's large devaluation.

The reason for the drop is also statistical. In the past, the OECD had been using a proxy for the middle class based on the "average production worker." This concept focused on full-time workers in the relatively declining manufacturing sector, which tends to be unionized in the US and better paid on average. The OECD's new measure is based on the "average worker," which captures all sorts of private-sector jobs including mining, utilities, construction, retail, hotel/restaurants, financial services, real estate, and other areas.

So this new system ought to provide a fairer comparison.

But 15th place?

Not likely, figures David Grubb, an OECD economist in Paris. He points out that the US and Canada included in the statistics that it sent to Paris the wages of nonsupervisory workers, and not those of higher paid supervisory workers and salaried professionals. When that statistical difference is corrected, the rank of the American middle class would move up from 15th. How far is uncertain.

In the newest OECD Economic Outlook, the average annual wage in the total economy of the US was $45,563 for 2005. That's exceeded only by Luxembourg, a wealthy banking duchy, with $50,634. Britain, Ireland, and Australia, are not far behind the US with incomes above $40,000.

The problem is that this is a measure of total wages, not just the middle class, and it includes the richest Americans whose incomes have risen enormously in recent years. Outside of Hungary, the US has the most extreme income inequality in the OECD.

Kirkegaard figures middle- and lower-income Americans are being squeezed by the flood of money going to the superwealthy. Democrats in Congress have the same view, and their tax proposals would shift the tax burden up the income ladder.

After the early 1990s, the incomes of "very well-off Americans increased much faster than those of both the middle class and the poor," figures Gary Burtless, an expert at the Brookings Institution in Washington. For example, top corporate officers got pay increases of 9.5 percent a year in the 1990s, on top of high levels to start with.

This doesn't mean that Middle America incomes have been entirely flat. An analysis by Terry Fitzgerald, an economist at the Federal Reserve Bank of Minneapolis, concludes that a "broad swath of Middle America experienced notable hourly wage gains" since 1975. In other words, children can still assume they have a better living standard, on average, than their parents did. [Editor's note: The original version misidentified the Federal Reserve Bank of Minneapolis economist.]

To reach that conclusion, Mr. Fitzgerald had to disentangle a "confusing web of data." Two data series on individual hourly wage rates showed little, or even negative, growth over the past 30 years. But labor income for the entire national economy was shown to have grown 39 percent in that time span.

To square this apparent contradiction, Fitzgerald applied to the two wage series a broader price index (personal consumption expenditures), which covers the basket of final goods and services that people consume each year. The new result: Average hourly earnings rose 10 percent, rather than declining 4 percent, from 1975 to 2005. Median hourly wages also rose 20 percent rather than 12 percent. Then he factored fringe benefits into the wage calculation, since they have become increasingly expensive and "contribute to workers' well-being."

That combination accounted for 28 percent of the 39 percent growth of total labor income. "This does not contradict the claim that wage inequality increased over this period - it did," writes Fitzgerald in a bank publication. In other words, the rich are still getting proportionately richer.

[Ban Hammer 13,346]

In the newest OECD Economic Outlook, the average annual wage in the total economy of the US was $45,563 for 2005. That's exceeded only by Luxembourg, a wealthy banking duchy, with $50,634. Britain, Ireland, and Australia, are not far behind the US with incomes above $40,000.

i'm doing twice as good as i thought

[one...two...tree 2,762]

In the newest OECD Economic Outlook, the average annual wage in the total economy of the US was $45,563 for 2005. That's exceeded only by Luxembourg, a wealthy banking duchy, with $50,634. Britain, Ireland, and Australia, are not far behind the US with incomes above $40,000.

i'm doing twice as good as i thought

What's your salary?

[Ban Hammer 13,346]

In the newest OECD Economic Outlook, the average annual wage in the total economy of the US was $45,563 for 2005. That's exceeded only by Luxembourg, a wealthy banking duchy, with $50,634. Britain, Ireland, and Australia, are not far behind the US with incomes above $40,000.

i'm doing twice as good as i thought

What's your salary?

i'm not on salary, i'm hourly. and that's why i love overtime

[one...two...tree 2,762]

In the newest OECD Economic Outlook, the average annual wage in the total economy of the US was $45,563 for 2005. That's exceeded only by Luxembourg, a wealthy banking duchy, with $50,634. Britain, Ireland, and Australia, are not far behind the US with incomes above $40,000.

i'm doing twice as good as i thought

What's your salary?

i'm not on salary, i'm hourly. and that's why i love overtime

I'm salary, but if we work overtime, we're suppose to be compensated with added time off (comp time).

[Alex+R 0]

how can you look at the average salary and think you're doing twice as well as you thought you were before? It doesn't make any sense.

edited for grammar

Edited November 15, 2007 by Alex+R

[GaryC 7]

In the newest OECD Economic Outlook, the average annual wage in the total economy of the US was $45,563 for 2005. That's exceeded only by Luxembourg, a wealthy banking duchy, with $50,634. Britain, Ireland, and Australia, are not far behind the US with incomes above $40,000.

i'm doing twice as good as i thought

What's your salary?

i'm not on salary, i'm hourly. and that's why i love overtime

Same here. My base is way above the average and the OT puts me much more above it.

I would like to see them take into account cost of living as well as taxes. Someone in japan may make more than here but everything else is much more expensive.

Edited November 15, 2007 by GaryC

[mawilson 2,133]

Puhlease.

The U.S. dollar is at an all-time low against the euro, pound and other currencies -

of course we've dropped to #15 - if you measure everyone's wealth in U.S. dollars!

The low dollar does not affect the price of domestically produced goods and our

standard of living. It makes foreigners look wealthier than they really are, but

the dollar still has the same buying power in the U.S. and the foreigners are only

"wealthier" when they come here to do their shopping.

£20,000 in Britain is NOT the same as $40,000 here, oh no sir!

[w¡n9Nµ7 §£@¥€r 123]

Average salaries mean nothing in the US. For example, $90k is good money out in the midwest. In Jersey, it barely pays the bills.

[mawilson 2,133]

Average salaries mean nothing in the US. For example, $90k is good money out in the midwest. In Jersey, it barely pays the bills.

You're exaggerating. Surely $90k pays the bills in NJ.

[w¡n9Nµ7 §£@¥€r 123]

Average salaries mean nothing in the US. For example, $90k is good money out in the midwest. In Jersey, it barely pays the bills.

You're exaggerating. Surely $90k pays the bills in NJ.

With not much left over.

[one...two...tree 2,762]

Organization for Economic Cooperation and Development

Cooperation and Development (OECD), international organization that came into being in 1961. It superseded the Organization for European Economic Cooperation, which had been founded in 1948 to coordinate the Marshall Plan for European economic recovery following World War II. The organization has 29 full members: Australia, Austria, Belgium, Canada, the Czech Republic, Denmark, Finland, France, Germany, Great Britain, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Spain, Sweden, Switzerland, Turkey, and the United States. Member countries are pledged to work together to promote their economies, to extend aid to underdeveloped nations, and to contribute to the expansion of world trade.

http://www.encyclopedia.com/doc/1E1-OrgEcCD.html

....

I'm trying to find out more details, but I'm going to assume that the salaries are adjusted across the board (all countries) or the data would be meaningless.

[Drew and Tik 0]

Average salaries mean nothing in the US. For example, $90k is good money out in the midwest. In Jersey, it barely pays the bills.

You're exaggerating. Surely $90k pays the bills in NJ.

With not much left over.

Eh, I make less than half of that and I get by (like you said, with not much left over).

You do have a point though, if I made what I make down in Texas I would have a pretty easy time getting by, as opposed to struggling to make it in New York City. I think a lot of countries are like that though. Not all of Japan is as expensive as Tokyo, not all of the UK is as expensive as London.

[one...two...tree 2,762]

Average salaries mean nothing in the US. For example, $90k is good money out in the midwest. In Jersey, it barely pays the bills.

You're exaggerating. Surely $90k pays the bills in NJ.

With not much left over.

Eh, I make less than half of that and I get by (like you said, with not much left over).

You do have a point though, if I made what I make down in Texas I would have a pretty easy time getting by, as opposed to struggling to make it in New York City. I think a lot of countries are like that though. Not all of Japan is as expensive as Tokyo, not all of the UK is as expensive as London.

Drew? I believe in Santa Monica, a police officer's salary is over $80,000. I hope you're making at least that if you work in NY.

[Drew and Tik 0]

Average salaries mean nothing in the US. For example, $90k is good money out in the midwest. In Jersey, it barely pays the bills.

You're exaggerating. Surely $90k pays the bills in NJ.

With not much left over.

Eh, I make less than half of that and I get by (like you said, with not much left over).

You do have a point though, if I made what I make down in Texas I would have a pretty easy time getting by, as opposed to struggling to make it in New York City. I think a lot of countries are like that though. Not all of Japan is as expensive as Tokyo, not all of the UK is as expensive as London.

Drew? I believe in Santa Monica, a police officer's salary is over $80,000. I hope you're making at least that if you work in NY.

Top pay here is $60,000, though there is a contract in the works right now that will maybe bump us up to $75,000 or so.

New York City is actually quite notorious in the tristate area for underpaying their police department. Recruits entering the academy only get the equivalent of $25,100 a year. Since I only have two years on the job, and not the required five and a half for top pay, I don't even make the $60,000 a year, I make much less than that and get a raise every year getting me a little bit closer.

Many of the surrounding areas have departments (Long Island) that pay upwards of $100,000 or at least something decent. Needless to say we have a retention problem and I hate to say but we also hire some people that definitely shouldn't be police officers, just so they can have enough manpower. If I wasn't going for promotional exams I would be at another department already since this job really can't pay the bills in New York City.

"Times is ruff and tough like leather."

-Wu Tang Clan