Published in: Research | Feb. 18, 2020
By: Maurie Backman
When you look at your paycheck, are you happy with what you see? Or do you wonder if you should make more? While your industry and position largely dictate your earnings, you may want to know how your income compares to that of your peers or the general population.
Wonder no more. Here's a deep dive into Americans' earnings by factors such as occupation, age, gender, and location so you can get a sense of how your paycheck stacks up.
As of 2018, the average U.S. household income was $87,864, while the median household income was $61,937.
When the median is considerably lower than the average, it means that there are outliers on the top end. In short, a few people who make a lot of money boost the average. So $61,937 may be a more accurate representation of typical household earnings.
Here's a more in-depth breakdown of what U.S. households are making:
As you can see, 58.3% of households have incomes below the $75,000 to $99,000 range, which is where the average U.S. household income fits in. By contrast, only 29.2% of households fall above that range.
Editor's note: we aren't reporting the median and average salary in the U.S. here -- instead, we're reporting income. The U.S. Census Bureau tracks earnings (which are made up mostly of salary and wages) and income, which includes all sources of money that people bring in.
Among all racial groups, Asian Americans have the highest median income at $87,243. Here’s how income breaks down by race:
Asian Americans aren't only the fastest-growing racial group in the U.S., but also the most educated. By contrast, black Americans continue to lag in education, which ties directly to earnings. In fact, a study by the Equality of Opportunity Project reveals that black students are far less likely to obtain a high school diploma or college degree than white students whose family incomes are comparable.
The extent to which your income goes far (or not) may depend on the number of people in your household. The more bodies you need to feed and clothe, the harder it is to keep up with your expenses. Here's how U.S. income breaks down by family size:
Median income increases as family size grows, but only to a point. Past the four-person mark, household income tends to drop. Case in point: The median income for a four-person family is $94,593, but among families with seven or more people, it's $85,999. These numbers explain why so many larger families struggle financially, and why some people may be hesitant to have more than a couple of children.
Compounding the problem is the fact that 2017's Tax Cuts and Jobs Act did away with the personal exemption, which was formerly a saving grace for families with multiple dependents. Despite a higher standard deduction and numerous tax credits available to families with children, households with multiple dependents still have a hard time keeping up.
High living costs coupled with stagnant wages explain why so many households consist of multiple earners. The median income among households with a single earner is $52,557 -- among two-earner households, it's $98,586.
The need for multiple incomes often poses challenges with regard to having children. Many families can't afford child care, but they also can't afford to slash their household income in half. It's a tricky problem with no particularly good solution at present.
It's no secret that men out-earn women, even in situations where both have similar roles and qualifications. The median income among private-sector male employees is $41,944. For women, that number drops to $30,040.
Self-employed men, meanwhile, have a median income of $61,091. For women, that figure is $36,995. And that's telling, since self-employed folks often get to dictate their own rates.
Meanwhile, males engaged in private non-profit work earn a median income of $47,363. For women, that number comes in at $39,308.
The disparity exists among government workers, too. Here are the median earnings for men:
Here's what those numbers look like for women:
It's clear that closing the wage gap will take a lot of work. For now, the best women can probably do is be their own advocates and continuously research salary data for their industries to ensure that they're not being shortchanged on the basis of gender alone.
As you progress in your career, your earnings usually climb. But your earnings might also peak before declining as you near retirement.
Here's a breakdown of median U.S. income by age range:
As you can see, Americans aged 45 to 54 earn more money than both their younger and older counterparts. By contrast, workers under 25 and over 64 earn the least.
Interestingly, median income among the 65-and-over set sits at $43,696, while the average Social Security benefit today amounts to $18,036. That means a large number of retirees are, thankfully, supplementing their benefits with pension income, retirement plan withdrawals, earnings from part-time work, or other sources.
The industry you work in largely influences your earnings potential. Not surprisingly, most of the highest-paid U.S. professions require a fair amount of extra schooling and specialized training. Here are the 10 most (and least) lucrative occupations by average annual income:
It's easy to be jealous of those professionals whose earnings exceed the $200,000 mark. But remember, many of those same people are hundreds of thousands of dollars in debt from having gone to medical or dental school. Will they come out ahead eventually? Maybe. But for many people in the medical field, it takes several decades to recoup that investment.
Most U.S. workers don't earn anything close to what the 10 highest-paid professions bring in. And workers in some industries really struggle to make a livable wage. Here's how the top five occupations compare to the bottom five:
These lower-paying jobs don't require specialized education or training, so they're often a last-but-necessary resort among the non-college-educated who need work.
Geography and earnings often go hand in hand, and in many cases, you'll earn a lot more in the same industry by moving from one state to another. Here's what median income looks like on a state-by-state basis, broken down by male and female earnings:
If we count Washington, D.C., as a state, male and female workers there have the highest median earnings among all states. Otherwise, Massachusetts holds that position for men with a median income of $55,693, while Maryland pays women the most with a median income of $41,291.
Here's how median earnings look when they're plotted on a map:
You'll often command a much higher salary in a major metro area than in a smaller city or suburb. Here are the top 15 metros where full-time employees ages 16 and over earn the highest annual median income:
It's not surprising to see tech hubs like San Jose and San Francisco on this list. What is a bit surprising is to see the New York City metro absent from this list. Clearly, its large number of low-income earners cancels out its plethora of hotshot bankers and lawyers.
You might not have expected Los Alamos to be the #1 highest-earning metro area in the country, either. It also has the highest concentration of millionaires anywhere in the country. This is because of the Los Alamos National Laboratory, a high-profile lab best known for being the birthplace of the atomic bomb. Many chemists, physicists, doctors, and other highly educated scientists work at LANL, and the average salary reflects that.
Of course, it's easy to be tempted to move to one of these metros in the hopes of snagging a massive pay boost. But remember, some of these cities are among the most expensive in the country to live in, so what you might gain in earnings, you'll likely end up spending on rent and other expenses. You may be better off finding a city that’s known for high salaries and a low cost of living.
Now that you have a better sense of how much Americans earn on a national level and how those earnings break down by factors such as gender, race, age, occupation, and location, you can take a closer look at your circumstances and see if any changes are in order. Of course, you can't change your race or age, but a couple of things you can change are the industry you choose to work in and the state or metro area you choose to call home.
That said, you don't need to make such drastic changes to boost your earnings. If you're happy with your line of work and enjoy the area you live in, try learning new job skills to make yourself a more valuable employee. Doing so could result in a nice raise.
Similarly, research salary data for your industry and present it to your employer if you see that you're statistically underpaid given your position and line of work. And finally, don't hesitate to dust off your resume and see what opportunities are out there. You may find that there's a nearby company that will pay you what you're worth if your current employer won't.
And, of course, don't forget that it's not always how much money you make -- it's how you use it.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2021 The Ascent. All rights reserved.
By submitting your email address, you consent to us sending you money tips along with products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.
