Numerous factors have either a direct or indirect impact on the average income of Americans. As you might expect, some jobs pay more, whereas some pay less. For instance, information technology IT generally offers higher salaries than other popular domains.
Therefore, there are industry averages for each niche of work. Source: Payscale , Payscale. Despite this aspect, people living in expensive areas, such as San Francisco or New York, can generally expect a higher income since it is mandatory when ensuring that employees can sustain their lifestyle.
Therefore, the average wage in the US is considerably lower when compared to these high-income areas. Higher prices lead to higher salaries, according to economic laws, yet a higher salary in a high-income location will not generally buy you a better quality of life, given the high prices for all products and services.
This helps us better understand the average income in the USA compared to the rest of the world. Source: Statista. Experience and skill are some of the best-known factors that influence national income averages. Entry-level salaries are generally lower. Despite this aspect, pay increases flatten out following 15 years of experience, unless employees manage to be promoted to managerial positions.
Source: MeasuringU. The US Census Bureau generally offers two main averages: the mean income and the median income. The mean: It sums up all the income and divides it by the number of people who have reported their earnings. Keep in mind that this is the median income, meaning that it is not your usual mathematical average since that would considerably push the numbers up due to the incredibly large amounts of money earned by the richest US citizens.
Do keep in mind that the average family income represents the amount earned by families consisting of at least two people who live in the same household at the same time. Compared to , this average income has increased by 7. The answer to this question is quite complicated, given the complex taxation framework that operates in the United States.
Because of this, it is yet again important for us to apply the median formulas to help determine a credible average paid in taxes. Firstly, it is important for us to agree on what a good salary actually represents since there are numerous conflicting opinions on this matter.
First off, good is above average and should be enough for people to cover living expenses, food, transportation expenses, utilities, apparel, and credit payments, while leaving a little wiggle room for savings and occasional purchases. Therefore, a good salary is certainly higher when compared to the average salary in America.
Similarly, a good salary depends on the area you live. Of course, the median household income also varies considerably.
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.
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. 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.
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Search Icon Click here to search Search For. Credit Cards Top Picks. Banks Top Picks. Looking for a place to park your cash? Brokers Top Broker Picks. Robo Advisor and Crypto Picks. Mortgages Top Picks. Compensation practitioners generally prefer to benchmark against the median salary, as it is considered more neutral than the average.
However, knowing if the average is above or below the median, and by how much, can help HR pros understand the overall shape of the salary distribution. For instance, an average salary that is much higher than the median salary indicates that there are probably a few employees earning significantly more than the overall group. Download our white paper to further understand how organizations across the country are using market data, internal analytics, and strategic communication to establish an equitable pay structure.
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