Wage Compression is Real, Household Income Edition

For 2020 (2019 earnings), rounded to the nearest thousand. And these are household incomes, not individual earnings or family incomes, so this includes all your single-os living by themselves or unrelated folks living with a bunch of roommates (a remarkably tiny % for the amount of press and attention it gets, but people would wonder so I thought I’d mention it).

Top 1% starts right at 531k.

Top 2% starts at 387k.

Top 3% starts at 329k.

Top 4% starts at 296k.

Top 5% starts at 270k.

I’ll just drop some knowledge here: most of the over 6 million households in the top 5% do NOT have doctors or lawyers or MBAs in them. In fact, the percentage you’re guessing is probably the percentage that are from a tech background. It’s diverse career-wise in this rare air, but the spin is that more education yields more bucks.  This is where it breaks down. Tech breaks things, especially returns to education.  This has been true for closing in on 30 years.

You can also see the drop-off happens pretty rapidly.  Each percentage point represents a bit more than 1 million households (about 1.25 million, give or take). But wait, it gets worse!

Top 6-10% starts at 201k (top 10%) and ends at 251k (top 6%). We’ve gone from a single percentage point drop representing tens of thousands less income to each percent representing a roughly 10k drop.

So anyway household income of 200k lands you right at the edge of the top 10% of households in 2020.  And we’re still raining married tech papas all over the place. And here’s where I drop some more knowledge: high earning men aren’t marrying high earning women for the most part.  What happens in DC pretty much has stayed there, and that’s a few thousand couples.  We’re also bringing in more administrative jobs. The tales of 200-300k superintendents obscure that those levels of earning are just a handful of administrative jobs.

Anyway this is the top 10%. Let’s look at the bottom of the top 25%.

Top 10-25% starts at 124k (top 25%) and ends at 201k. This is where a lot of what normal people would call “middle class” is. This is two pretty good jobs, one very good job and one part-time or low-paying one, or one very good job, etc. The top 25% of households is about 31-32 million strong in 2020, somewhere around there. There’s plenty more in the second quartile, but at the same time the bottom of the top quartile (75th to 94th percentiles) has a wage range spanning barely 100k. From 124k to 251k covers MOST of America’s highest earning households, nearly 26 million of them. This is just a few thousand dollars’ difference in each percentile.

And then we come to the second highest quartile.
Top 25-50% starts at around 68k (50th percentile) and ends at 124k. In 2020, this quartile, which ends at the median household income, doesn’t even span 60k across two dozen percentiles! 31-32 million households with just a couple thousand separating any given percentile. This is what wage compression looks like. When you consider the sheer amount of education demanded but incomes remain cramped in such a narrow little range, it’s appalling.

What this does is leaves people in a position where they can’t easily just ask for more money or fewer hours. That’s why wage compression is a problem.

And while 68k is still the median household income, we’re a year or so away, if that, from it not being as high as the 25th percentile for married parent households. We’re very close to 75k being the top of the BOTTOM quartile among the very group producing the overwhelming majority of the children.

numbers from https://dqydj.com/household-income-percentile-calculator/

Married couple household income breakdown as of 2019

This is the universe, as the Census Bureau likes to say, of all married couples, so these numbers include married people with no kids at home or no kids at all. So this represents about 58 million families.

  • Nearly 1 in 4, or over 13 million married couples, had household incomes of 100-149k in 2019
  • 11%, or about 6.6 million married couples, had household incomes of 150k-200k in 2019
  • 1 in 7, or over 8 million married couples had household incomes of 200k or more 2019
  • About 10% , or a bit under 6 million married couples had household incomes of 35k or less in 2019
  • 1 in 3 , or about 19 million married couples had household incomes of 50k-99k in 2019
  • 9%, or around 5 million married couples had household incomes of 35-49k

As you can see,  we now have nearly half of married couples with household incomes above 100k.  In 2015 it was less than 40%.

We’ve lost about 1 million married couples earning 50-100k since 2015.

In 2015 we had about 1 in 4 married couples making 50k or less.  Now it’s less than 1 in 5.

Now all of this is pre-COVID data, but the early returns, so to speak of family incomes in 2020 are not showing hefty income drops for married couples.


Fast facts about married parent income compared to all households (2019 numbers).


Less than 8% of all households making under 50k/yr are married with under-18 kids.

About 20% of all households making 50-99k/yr are married with under-18 kids.

About 30% of all households making 100-149k/yr are married with under-18 kids.

About 33% of all households making 150k/yr or more are married with under-18 kids.

Lost percentage at the very bottom and the tippy top. Wage compression continues apace.

Source: 2019 ACS data on household income in the past 12 months.