Maarthandam

If you’ve seen those two visuals, you’d now have an idea of how the wages have grown and what lies beneath their growth

From 2008 to 2022, the average annual wage for the bottom 90% of earners increased only from $36,402.7 to $40,844.6, reflecting a modest growth of about 12.5%.

While inflation and cost of living pressures have continued to rise, this group has faced limited wage growth, which has made it difficult for many to keep up with rising expenses.

How Wages grew by each bracket

Wage Stagnation for the Bottom 90%: From 2008 to 2022, the average annual wage for the bottom 90% of earners increased only from $36,402.7 to $40,844.6, reflecting a growth of about 12.5%, also hinting at potential stagnation.

Growth in Higher Income Brackets: In contrast, the top 5% of earners saw their average wages rise from $298,954.8 in 2008 to $344,667.5 in 2022, a growth of approximately 15.3%. This highlights a growing disparity between lower and higher earners.

Significant Surge for the Top 0.1%: The average wage for the top 0.1% skyrocketed from $2,554,123.1 in 2008 to $2,817,435.6 in 2022, marking a substantial increase. This stark contrast emphasizes the widening gap between the highest earners and the rest of the population.

Top 0.1% Privilege

High-income individuals derive a significant portion of their wealth from stocks and other investments rather than wages alone. Stocks provide both dividend income and capital gains, enabling steady financial growth over time. Unlike fixed wages, which may stagnate, investments in equities allow these individuals to participate in the expanding value of companies and the broader economy.

Stocks also act as a hedge against inflation. As prices rise, companies often pass on higher costs to consumers, which can increase their revenues and, subsequently, stock prices. This dynamic allows high-income individuals to maintain or grow their purchasing power, even during periods of economic instability.

Additionally, many high-income earners invest in dividend-paying stocks, where payouts often increase with company profits. These dividends can provide a reliable and growing source of income that adjusts to inflation over time, further insulating them from its impact.

Their diversified portfolios, including stocks, real estate, and commodities, offer additional protection, ensuring that rising costs do not erode their overall wealth.

Risks that <90% ile face

The Bottom 90% face significant financial risks primarily due to their reliance on wages as their sole source of income. In times of economic downturns or layoffs, their earnings are directly impacted, unlike the Top 1%, who benefit from diversified income streams such as investments and business profits. This leaves the majority vulnerable to job insecurity and stagnant wages.

Inflation poses another major challenge for the Bottom 90%, as they spend a larger proportion of their income on necessities like food, housing, and healthcare.

With limited savings and minimal access to assets like stocks or real estate, they cannot hedge against rising costs effectively. In contrast, the Top 1% hold inflation-resistant assets that grow in value over time, preserving their purchasing power.

Economic shocks, such as sudden unemployment or medical emergencies, can devastate the Bottom 90%, who often lack adequate savings or emergency funds. High debt burdens further compound their financial vulnerability, as rising interest rates can lead to long-term financial strain. The Top 1%, on the other hand, are insulated from such risks due to their wealth and access to low-cost borrowing options.

Change not expected anymore

For the bottom 90% of earners, the prospect of significant change in wage growth seems increasingly unlikely. Despite gradual increases over the past 14 years, their average annual wages have remained relatively stagnant.

With inflation consistently outpacing wage growth, many in this group struggle to maintain their standard of living. The lack of substantial wage increases, combined with rising costs of essential goods and services, suggests that without a fundamental shift in economic policy or labor market conditions, the trend of slow growth may continue.

The barriers to meaningful wage increases—such as the erosion of union power, automation, and stagnant job markets—make it seem less likely that the bottom 90% will experience the type of income growth needed to bridge the widening wealth gap.

Data Sources

https://www.epi.org/data/#?subject=wagegroup

Mandatory Citation as Required by data source – Economic Policy Institute, State of Working America Data Library, “[Wages for Top 1.0%, 0.1% and Bottom 90%],” 2024.

Citation 1 – The average annual wages by wage group are taken from Social Security Administration (SSA) wage statistics (1991 – present) and Kopczuk, Saez, and Song (2007).