Rising wages for workers , especially in the lower half of the labor pool, helped boost incomes in 2015 even as more workers paid taxes, new IRS data showed Friday—lending no support to Donald Trump’s contradictory claims on the campaign trail and in office that he “inherited a mess” with too few jobs and wages that are too high.
The average income on tax returns rose to $67,565, up $1,771 from 2014 once inflation is taken into account, my analysis shows.
The new data show that of the record 150.6 million tax returns, 125.3 million included wages—also a record.
Higher wages explained almost 86 percent of the total increase in adjusted gross income, the number on the last line of the front page of tax returns. All but $255 of that increase in average income was due to higher wages, data released by the IRS Statistics of Income division showed.
The median wage—half earn more, half less—began rising in 2013 after 15 years of being in the doldrums, data from the Social Security Administration showed in October.
From 2000 to 2014 the inflation-adjusted median annual wage rose by just $6. That’s right—six dollars. In 2012 the median wage was lower than in 2000, down $453 when measured in 2015 dollars.
But in 2013, the Bush tax cuts on the top 1 percent ended and their tax rates were increased amidst widespread speculation that this would damage the economy and cost jobs. Those concerns were repeated the next year when the Affordable Care Act, with higher taxes on big investors and top workers, took effect.
But that’s not what happened.
In 2013, the median wage grew by $111. That figure tripled in 2014 as the median wage grew by $332. And it more than tripled again in 2015, rising by $1,074.
This data show that much of the increase in wages went to workers making less than the median wage, which was $29,930 in 2015. The average was $46,120.
The Social Security and IRS figures, all adjusted for inflation, are broadly consistent and show rising wages and a growing number of jobs.
They differ for two reasons. The IRS measure is wages per tax return, which often means two workers, and the preliminary report only allows calculation of the average. The Social Security report is of median wages per worker.
The preliminary IRS report—which tends to slightly understate incomes reports by the most prosperous Americans, who often delay filing their tax returns from April to October because of their complex finances—shows that in 2015 the average wages per tax return with any wages (often from two people working) was $58,094, up $1,515 from 2014.
Social Security reported last fall that in 2015 a record 160.8 million people had some paid work in 2015.
At the top end, 202 people reported wages of more than $50 million — a new record. Their average income was $91.5 million each.
By the broadest measure, unemployment in 2015 was just above 10 percent. That measure, called U-6, includes people who want full-time work but can only get a part-time job and people who want work but say they cannot find any. Candidate Trump, though, said unemployment was 30, 32 or even 42 percent.
By the most widely used measure, called U-3, unemployment in 2015 was a bit above 5 percent. In 2016, it was under 5 percent.