What Should You Be Earning?
In honor of Labor Day, we made a little tool—based on our project inequality.is—that shows how much you would be making if wages had kept pace with productivity, a key indicator of an economy working for all.
Economic inequality is a real and growing problem in America. Since the 1979, workers are working more, making more goods, and not reaping the rewards of their increased productivity. Instead, CEOs and executives—the top 1% of earners—now take home 20% of the nation’s income.
But it doesn’t have to be like this. Growing inequality isn’t an inevitability—it was created. It’s the result of intentional policy decisions on taxes, trade, labor, and financial regulation. But that’s the good news: if inequality is not inevitable, then it can be fixed.
Take a look, and share with your friends. And remember that American workers should be earning more than we are. To do something about it, visit inequality.is.
What should you be making?
Americans' wages have lagged further and further behind productivity gains since the late 1970s, but it wasn’t always this way. After World War II, our pay rose with productivity—the more we made, the more we were paid. Today, the gap between American workers’ productivity and their wages is at an all-time high. What could you be making if wages had grown with productivity?
If wages had kept up with productivity over the last three decades, your pay would be closer to:
To calculate where a person falls in the wage distribution, we use annualized hourly wages to create ventile cut-offs (5th percentile, 10th percentile, 15th percentile, etc.) within the wage distribution. Based on the user's salary, we find a percentile by linearly extrapolating between the closest ventile cut-offs. Since we annualize wages (multiplying hourly wages by 2,080), part-time workers will find the most appropriate comparison by inputting salary as if they are full time.
To predict wages if overall economic inequality had not increased since 1979 (i.e., if wages had kept up with productivity, as they did in the three decades after World War II), we apply productivity growth to 1979 wage ventiles.
For more information on EPI’s data methods, see Methodology for measuring wages and benefits.
Sources: Wages from Bureau of Labor Statistics (BLS) Current Population Survey Outgoing Rotation Group (1979 and 2017). Net productivity data from EPI analysis of BLS Labor Productivity and Costs data.
Last updated March 1, 2018