Wages rose for the bottom 90 percent in 2016 as those for top 1 percent fell
Newly available wage data show that the annual wages of those in the bottom 90 percent grew 0.5 percent from 2015 to 2016, and did so because wage growth disproportionately favored the vast majority of wage earners. At the same time, the highest earners, those in the top 0.1 percent, saw a 6.3 percent drop in their annual wages. How is that for a change! Annual wages averaged over all workers remained basically unchanged in 2016, but the share of all wages earned by the bottom 90 percent increased in 2016, resulting in improved wages for that group. Who says reducing inequality does not matter!
These are the results of EPI’s updated series on wages by earning group developed from Social Security Administration data. These data, unlike the usual source of our wage analyses (the Current Population Survey) allow us to estimate wage trends for the top 1.0 and top 0.1 percent of earners, as well as those for the bottom 90 percent and other categories among the top 10 percent of earners.
Looking back further, the top 1.0 percent of earners certainly fared well over the 1979 to 2007 period, seeing their annual wages grow by 156.2 percent (Figure A), with those in the top 0.1 percent seeing more than double that wage growth, 362.5 percent (Table 1). In contrast, wages for the bottom 90 percent only grew 16.7 percent in that time. Since the Great Recession, we have seen very modest wage growth across the board, with wages up just 4.0 percent over the nine years from 2007 to 2016. Wages fell furthest among top 1.0 percent of earners during the financial crisis, declining by 15.6 percent from 2007-09, but then recovered fully by 2015. The fall in top 1.0 and top 0.1 annual wages in 2016 leaves both groups with wages that are below pre-recession 2007 levels. Annual wages for the bottom 90 percent, meanwhile, fell slightly after 2007 and didn’t return to their 2007 level until 2014, and then grew roughly 4 percent since then.
Cumulative percent change in real annual wages, by wage group, 1979–2016
| Year | Bottom 90% | 90th–95th | 95th–99th | Top 1% |
|---|---|---|---|---|
| 1979 | 0.0% | 0.0% | 0.0% | 0.0% |
| 1980 | -2.2% | -1.3% | -0.2% | 3.4% |
| 1981 | -2.6% | -1.1% | -0.1% | 3.1% |
| 1982 | -3.9% | -0.9% | 2.2% | 9.5% |
| 1983 | -3.7% | 0.7% | 3.6% | 13.6% |
| 1984 | -1.8% | 2.5% | 6.0% | 20.7% |
| 1985 | -1.0% | 4.0% | 8.1% | 23.0% |
| 1986 | 1.1% | 6.4% | 12.5% | 32.6% |
| 1987 | 2.1% | 7.4% | 15.0% | 53.5% |
| 1988 | 2.2% | 8.2% | 18.4% | 68.7% |
| 1989 | 1.8% | 8.1% | 18.2% | 63.3% |
| 1990 | 1.1% | 7.1% | 16.5% | 64.8% |
| 1991 | 0.0% | 6.9% | 15.5% | 53.6% |
| 1992 | 1.5% | 9.0% | 19.2% | 74.3% |
| 1993 | 0.9% | 9.2% | 20.6% | 67.9% |
| 1994 | 2.0% | 11.2% | 21.0% | 63.4% |
| 1995 | 2.8% | 12.2% | 24.1% | 70.2% |
| 1996 | 4.1% | 13.6% | 27.0% | 79.0% |
| 1997 | 7.0% | 16.9% | 32.3% | 100.6% |
| 1998 | 11.0% | 21.3% | 38.2% | 113.1% |
| 1999 | 13.2% | 25.0% | 42.9% | 129.7% |
| 2000 | 15.3% | 26.8% | 48.0% | 144.8% |
| 2001 | 15.7% | 29.0% | 46.4% | 130.4% |
| 2002 | 15.6% | 29.0% | 43.2% | 109.3% |
| 2003 | 15.7% | 30.3% | 44.9% | 113.9% |
| 2004 | 15.6% | 30.8% | 47.1% | 127.2% |
| 2005 | 15.0% | 30.8% | 48.6% | 135.3% |
| 2006 | 15.7% | 32.5% | 52.1% | 143.5% |
| 2007 | 16.7% | 34.1% | 55.4% | 156.2% |
| 2008 | 16.1% | 34.2% | 53.9% | 137.6% |
| 2009 | 16.0% | 35.3% | 53.5% | 116.2% |
| 2010 | 15.2% | 35.7% | 55.7% | 130.8% |
| 2011 | 14.6% | 36.3% | 56.9% | 134.1% |
| 2012 | 14.7% | 36.4% | 58.4% | 148.4% |
| 2013 | 15.2% | 37.2% | 59.5% | 137.7% |
| 2014 | 16.7% | 38.9% | 62.6% | 149.3% |
| 2015 | 20.7% | 43.4% | 68.3% | 156.7% |
| 2016 | 21.3% | 43.8% | 68.5% | 148.6% |
Source: EPI analysis of Kopczuk, Saez, and Song (2010, Table A3) and Social Security Administration wage statistics
There have been modest shifts in overall wage inequality between 2007 and 2016. The bottom 90 percent received the same share of overall wages, 61.1 percent, in 2016 as in 2007. The decline in top 1 percent wages coincides with a falloff in their share of total wages, declining from 14.1 in 2007 percent to 13.1 percent in 2016 (though remaining much higher than the 7.3 percent in 1979).
Change in annual wages, by wage group, 1979–2016
| Percent change | Percent change | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Average annual wages (2016 dollars) | Long-term | Great Recession | |||||||||
| Wage group | 1979 | 2007 | 2009 | 2015 | 2016 | 1979-2007 | 1979-2016 | 2007-09 | 2009-16 | 2015–16 | 2007-16 |
| Bottom 90% | $28,919 | $33,738 | $33,533 | $34,916 | $35,083 | 16.7% | 21.3% | -0.6% | 4.6% | 0.5% | 4.0% |
| Top 90th to 99th | $94,590 | $137,465 | $137,107 | $148,105 | $148,384 | 45.3% | 56.9% | -0.3% | 8.2% | 0.2% | 7.9% |
| 90%-95% | $80,211 | $107,535 | $108,541 | $115,049 | $115,337 | 34.1% | 43.8% | 0.9% | 6.3% | 0.3% | 7.3% |
| 95%-99% | $112,563 | $174,877 | $172,815 | $189,425 | $189,694 | 55.4% | 68.5% | -1.2% | 9.8% | 0.1% | 8.5% |
| Upper 5% | $144,618 | $279,689 | $256,204 | $291,614 | $287,427 | 93.4% | 98.7% | -8.4% | 12.2% | -1.4% | 2.8% |
| Upper 1% | $272,836 | $698,935 | $589,760 | $700,368 | $678,359 | 156.2% | 148.6% | -15.6% | 15.0% | -3.1% | -2.9% |
| 99.0%–99.9% | $235,646 | $464,402 | $424,716 | $481,973 | $476,156 | 97.1% | 102.1% | -8.5% | 12.1% | -1.2% | 2.5% |
| 99.9% -100% | $607,544 | $2,809,731 | $2,075,160 | $2,665,919 | $2,498,192 | 362.5% | 311.2% | -26.1% | 20.4% | -6.3% | -11.1% |
| Average | $37,273 | $49,725 | $48,417 | $51,757 | $51,713 | 33.4% | 38.7% | -2.6% | 6.8% | -0.1% | 4.0% |
Source: EPI analysis of Kopczuk, Saez and Song (2010) and Social Security Administration wage statistics
How do these annual wage trends align with other wage series? The hourly wage data presented by Elise Gould in The State of American Wages 2016 showed strong across-the-board growth in real hourly wages between 2015 and 2016. This is consistent with the annual wage increases for the bottom 90 percent, which can be attributed to the low levels of unemployment achieved in 2016. Overall average annual wages were stagnant, however, as discussed above: this is because of the fall in top-end wages. These top-end wage trends are not captured in the Gould analysis because of the limitations of the underlying data source (the Current Population Survey does not have sufficient sample size to measure wage growth for the top 1.0 percent). The fall in top-end wages can be partly explained by the 4.3 percent drop in 2016 of executive compensation (note that the drop in realized stock options get counted as W-2 wages in the SSA data used to compute the annual wage data), as reported in our latest examination of CEO pay trends. It is not yet clear what explains the fall in executive pay.
Enjoyed this post?
Sign up for EPI's newsletter so you never miss our research and insights on ways to make the economy work better for everyone.