What is the difference between median salary and average salary?
Median salary and average salary often get confused. However, the difference between the two can be quite substantial. Here’s a look at the each one.
Wages have been rising in the United States as employers clammer for workers to meet consumer demand which has remained strong in spite of inflation and the Federal Reserve’s aggressive policy to tackle it. Part of that could be put down to wages rising faster than inflation.
The US Bureau of Labor Statistics reported in April that the median weekly earnings in the first quarter of 2023 was 6.1 percent higher than the same quarter last year. The Consumer Price Index for All Urban Consumers (CPI-U) over the same period by comparison gained 5.8 percent.
According to US Census’ American Communities Survey data which is collected annually, the mean salary in the United States was $69,717 in 2021. However, the average salary that year was $97,962. So, what accounts for the disparity between the two numbers.
What is the difference between median salary and average salary?
The median salary is the salary level that is in the middle, so half of the salaries are lower and half of them are higher. However, the mean, or average, is all the salaries tallied up and then divided by the number of salaries that we added up.
For example, you have two people who earn $30,000 a year, one who brings home $60,000 annually and two others who make $180,000 per year. The median salary would be $60,000, while the average salary would be $96,000.