Wages in America and the Death of the American Dream

The United States Social Security Administration recently published its wage statistics for 2023 and, given the rapid increases in the cost of living since 2020, the numbers are rather sobering.

  

Here is a table showing the distribution of compensation earned by Americans into different bands along with the number of Americans earning that amount and the cumulative number of Americans earning that amount or less:

The raw average wage (total net compensation divided by the total number of wage earners) is as follows:

 

$10,660,992,637,403.90/173,670,935 = $63,932.64

  

According to the table, in 2023, 67.6 percent of American workers had net compensation less than or equal to the raw average wage.  With median being defined as "a value or quantity lying at the midpoint of a frequency distribution of observed values or quantities, such that there is an equal probability of falling above or below it", the median American wage was $43,222.81 in 2023.

  

According to FRED, median usual real weekly earnings have not increased since the first quarter of 2020 as shown here:

 

The compounded annual rate of change in median real weekly earnings has looked rather pathetic going all the way back to 1980:

Thanks to GOBankingRates, we have an idea of how much the "American Dream" costs United States households on an annual basis in each state of the union.  The analysis includes the following household expenditures/costs:

  

1.) Annual mortgages payments

 

2.) Annual childcare expenses

 

3.) Automobile expenses

 

4.) Groceries

 

5.) Health care

 

6.) Utilities

 

7.) Education

 

8.) Pets

 

9.) Discretionary spending

 

10.) Savings

 

The true cost of the American Dream in the five most expensive states (family of four with one car and a pet):

 

1.) Hawaii - $260,734

 

2.) California - $245,723

 

3.) Massachusetts - $242,982

 

4.) Washington - $209,416

 

5.) New Jersey - $207,462

 

The true cost of the American Dream in the five least expensive states (family of four with one car and a pet):

 

1.) Mississippi - $109,516

 

2.) Arkansas - $116,511

 

3.) Kentucky - $116,815

 

4.) Alabama - $117,924

 

5.) West Virginia - $120,559

  

Needless to say, a median income family earning $43,222.81 annually is far from having the ability to live the ever elusive American Dream even in the states with the least expensive lifestyles.

  

The American Dream is on life support.   Until wages increase to the point where household earnings start to catch up to the rapidly expanding cost of living, this situation will continue to worsen, making American households even more vulnerable to economic downturns: