Editorial
What's The Average Salary In The U.S.?
Adobe Stock / augustnmatt
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 Let’s talk salary. With all the political talk of “the one percent” versus the rest of the U.S. nowadays, understanding what the average salary for Americans actually is can be difficult. That’s because the answer to this question involves a variety of nuances — like education, industry, geographical location, and lamentably, race and gender. Plus, numbers alone do little to expose the contextual scope of one’s earnings. For instance, the U.S. Census Bureau found that the average salary in America was $56,516 in 2015, up 3.95 percent from the previous year. However, that sum would look a lot different to a young, single person than it would to the breadwinner in a family of five.

What is the average salary in America?
 

There are a variety of factors that determine a person's salary, which is why the average American salary isn't necessarily a good benchmark. But according to the United States Census Bureau in 2017, the average salary was $56,516

Let’s take a more in-depth look at a number of the nuances impacting the median income in the U.S. today:

Education

According to the latest statistics compiled by the Bureau of Labor Statistics, those with a doctoral degree in 2016 had an average weekly income of $1,664. Interestingly, those with a professional degree (which usually calls for someone to work a certain amount of time in their relevant field before receiving accreditation) slightly out-earned their doctoral peers, with average weekly earnings of $1,745. A significant dip follows, as we look at those who have obtained a master degree and earn a weekly average of $1,380. Next, bachelor degree-holders earn on average $1,156 per week, and associate degree holders earn $819. Employees who spent some time in college but received no degree earn a weekly average of $756, while high school diploma holders earn $692 per week. Finally, for those who did not receive their GED, median earnings clock in at $504 per week.

Important side note: The above Bureau of Labor Statistics data only applies to persons who’re age 25 or older, full-time workers and salary earners. Part time and hourly workers were not included in these findings, and their answers would likely alter the Bureau of Labor’s household income findings pretty dramatically.

Industry

Data USA discovered that the highest paid industry in the U.S. nowadays is Securities, Commodities, Funds, Trusts, and other Financial Investments, with average annual salaries of $121,876. Next is Software Publishing with yearly earnings of $113,947, followed by: Internet Publishing, Broadcasting, and Web Search Portals at $104,823; Oil and Gas Extraction at $102,710; and a rather convoluted category called “Other Information Services, Except Libraries and Archives, and Internet Publishing, and Broadcasting and Web Search Portals,” with yearly earnings of $99,391.

Conversely, the industries with the lowest annual salaries include: Nail Salons and Other Personal Care Services ($20,419); Child Day Care Services ($19,793); Restaurants and Food Services ($18,930); and, of all things, Bowling Centers ($18,865). Again, these findings are susceptible to substantial variation, especially where geographical location comes into play. Bartenders in The Big Apple, for example, can make upwards of 100K a year — a pretty exceptional financial picture compared to those working in Food Services in, say, Des Moines, Iowa.

Significantly, the most common industries (or those with the largest full-time workforces) have nearly no overlap with the industries found to be the highest paying. Ranking as the No. 1 most common industry sector, according to Data USA’s facts, is Restaurant and Food Services, with a workforce of 8.8 million. Elementary and secondary schools come next, employing 8.57 million people. Construction is the third most common industry at 7.7 million, followed by hospitals at 6.87 million and higher education at 4.1 million.

Geographical location

As touched on above, where you life can have a pretty substantial effect on your household profits, as salaries are often adjusted according to cost of living. For most non-executive roles, companies factor in for your location when benchmarking pay rates and salary ranges, and that extends to companies that hire employees in multiple locations, too. In fact, more often than not, your geographical location is the salary benchmark (outside of experience level, of course).

The way these calculations are normally made is through a cost-of-living adjustment (i.e. the cost of goods and services) or, slightly more commonly, by looking at a location’s cost of labor (i.e. compensation). Some companies will make these salary range adjustments on an individual basis, while others have in place separate base annual salary structures for specific places.

To get a better sense for how location impacts profits, let’s take a look at the geographical pay variations for one position, software engineer, as recorded by PayScale. The median annual salary for this position according to location is listed in descending order below:

1. San Jose-Sunnyvale-Santa Clara, California Metropolitan Area

Median salary for an entry-level software engineer: $85,800

Cost of living index (national standard = 100): 143.5

2. New York-Wayne-White Plains, New York / New Jersey Metropolitan Area

Median salary for an entry-level software engineer: $75,300

Cost of living index (national standard = 100): 177.7

3. Seattle-Bellevue-Everett, Washington Metropolitan Area

Median salary for an entry-level software engineer: $73,800

Cost of living index (national standard = 100): 120.2

4. Salt Lake City, Utah Metropolitan Area

Median salary for an entry-level software engineer: $63,500

Cost of living index (national standard = 100): 100.6

5. Houston-Baytown-Sugar Land, Texas Metropolitan Area

Median salary for an entry-level software engineer: $60,300

Cost of living index (national standard = 100): 91.9

6. Phoenix-Mesa-Scottsdale, Arizona Metropolitan Area

Median salary for an entry-level software engineer: $58,500

Cost of living index (national standard = 100): 99.6

7. Detroit-Livonia-Dearborn, Michigan Metropolitan Area

Median salary for an entry-level software engineer: $54,900

Cost of living index (national standard = 100): 98.2

8. Louisville, Kentucky / Indiana Metropolitan Area

Median salary for an entry-level software engineer: $51,900

Cost of living index (national standard = 100): 87.6

Additionally, due to more political than corporate considerations, the minimum wage can differ according to state, as well, which can impact that area’s overall median earnings. The 10 states with the very best minimum wages are: Washington D.C., Washington, New York, Massachusetts, California, Connecticut, Vermont, Arizona, Alaska, and Oregon. Though none of these states currently have a minimum wage that exceeds $11/hour (with the federal minimum wage being $7.25/hour), numerous have pledged to up their ante and increase the wage to as much as $15/hour — the rate commonly referred to as the “living wage” — by 2020.  

Race and gender

It’s appalling that, in 2017, race and gender still have a major bearing on workers’ compensation rates, but to imply otherwise would be blatantly ignoring the obvious. Racial and gender identity frequently serve to compound one another when it comes to median salary rates — meaning, while the median earnings of all women is less than that of all men, the gender pay gap becomes more pronounced as race and ethnicity are factored in, as well.

In fact, according to a 2016 wage gap analysis conducted by the Pew Research Center, the racial wage gap has not changed significantly in over 35 years. That analysis found that among both full-time and part-time workers in the U.S. and across genders, Black people in 2015 earned only 75 percent as much as white people did in median hourly wages. But while Black men earned an average of $15/hour compared to white men’s $21/hour, Black women earned less than this, at an average of $13/hour. The median earnings of Hispanic people show an even deeper disparity; while Hispanic men earn median hourly wage of $14/hour, Hispanic women earn only $12. The only group to out-earn white men was Asian men, with median hourly earnings of $24/hour. Asian women on the other hand, while enjoying a higher median hourly rate than Blacks, Hispanics, and white women, did not out-earn white men, and their $18/hour median rate showed a greater gender pay gap within their race than exhibited by any other group.

Another unexpected group the gender pay gap is worsening for? Recent college gradsThe pay gap among women and men who are just out of university is widening, according to a 2017 report released by the Economic Policy Institute. The study found that women earn $17.88 on average during their first four years post-college, while their male counterparts make $20.87 — representing a divide that’s larger than it was more than 10 years ago.

The EPI’s report did display a moderate improvement since 2015, when young women earned 83 percent of what men made (women now earn 86 percent of what men do). Moreover, Equal Pay Day — which marks the point in the year until which the average woman has to work in order to catch up in pay to what the average man made in the prior year — fell on April 4 this year, which was an eight-day improvement from last year.

We additionally recognize that some companies are making concerted efforts to close their pay gaps. For instance, Salesforce has conducted a compensation audit in order to close the wage gap among its employees, and individual women are making strides every day by asking for a raise.

Yet when we look at the bigger picture, things look more bleak. In 2000, for instance, women just out of college made 91 percent of what their male counterparts made, according to the EPI.

So why might the gap be widening now? Huffington Post reporter Emily Peck suggested that it could be the result of a growth in income inequality: “The highest-paying jobs in the U.S. are paying even better, and men are landing that work. Think Facebook engineer, Goldman Sachs analyst, etc.”  

Moreover, as Peck noted, the study didn’t take into account the types of jobs graduates are taking. Women do have a tendency to hold more of the jobs in lower-paying industries (although when analysts have accounted for these kinds of factors, they’ve still found a gender pay gap).

While we know we’ve made some progress in shrinking pay inequities in recent years, the EPI’s report is an important reminder that the pay gap is persisting — and perhaps with more force than we may have thought.

What is considered "middle class" in the U.S.?

According to Pew, middle-class households make between 67% to 200% of the U.S. median income. In 2016, those numbers were between $39,560 and $118,080.

If you’re feeling disheartened, or at least curious about whether you’re being compensated fairly, check out Fairygodboss’ salary database, where you can look up crowdsourced compensation and bonus information by employer, department and title. On this page you’ll also find Payscale’s salary calculator, which also takes into account where you live and work, thus helping you to get  a better understanding of the geographical location discrepancies discussed above.

Now that you apprehend the reality of average income in the U.S. a little better, in case you’re beginning to realize you’re overdue for an income raise — or you suspect you’re a victim of the gender pay gap — get informed so you can take action!

 

Fairygodboss

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