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/

The expensive, pre-COVID state of all parenthood in 2019.

This is where things were pre-COVID.

  • Over half of all children under 18 are in households earning $80,000 or more per year.
  • About 45% are in households earning $100,000 or more per year.
  • One third are in households earning $10,000/month or more.

This is all households with children, not just married parents.

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.