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Automatic increases Development of the AWI

The national average wage index (AWI) is based on compensation (wages, tips, and the like) subject to Federal income taxes, as reported by employers on Forms W-2. Beginning with the AWI for 1991, compensation includes contributions to deferred compensation plans, but excludes certain distributions from plans where the distributions are included in the reported compensation subject to income taxes. We call the result of including contributions, and excluding certain distributions, net compensation. The table below summarizes the components of net compensation for 2011. Net compensation components for 2011 Compensation subject to Federal income taxes $6,018,898,816,536.09 Deferred compensation plan

Contributions a

Distributions b

+ 221,406,548,587.99

- 1,698,115,182.82 Net compensation 6,238,607,249,941.26 a Wages on which contributions were paid by 49,034,358 workers.

b Distributions, to the extent included in reported wages (see text above), paid to 55,262 workers. The "raw" average wage, computed as net compensation divided by the number of wage earners, is $6,238,607,249,941.26 divided by 151,380,749, or $41,211.36. Based on data in the table below, about 66.6 percent of wage earners had net compensation less than or equal to the $41,211.36 raw average wage. By definition, 50 percent of wage earners had net compensation less than or equal to the median wage, which is estimated to be $26,965.43 for 2011.