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Average V Median wage Ireland?

Benedict

I keep seeing from Govt. figures that the "average" wage in 2020 was approx Euro 49,500 pa. and the average hourly rate is E24.50.

To my mind this is nonsense - just look up "Jobs.ie" and you will see that even 40k pa means you have to have lots of experience & qualification.

The MEDIAN wage is the one to look at - but I can't find it. Does anyone have stats on what is the median wage in Ireland (2020)?

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[Deleted User]

blanch152 wrote: »

I can't meet a friend in a company canteen.

The self-employed friend picks up the receipt and claims the expense. Revenue don't even look at it. There is no business conducted, just two old friends meeting for lunch, but I pay for my lunch, and the taxpayer (me) pays again for my lunch and his.

Say two PAYE workers and one self-employed meet for lunch. No business is discussed. All pay €15 for the lunch, but the restaurant doesn't split the bill. The self-employed person takes the receipt and claims the lunch. With the tax relief, the self-employed person gets back €20.25, so not only does the taxpayer pay for the lunch of the self-employed, but the self-employed person goes home with an extra €5.25 in their pocket (plus any travelling expenses they claim back).

You would be extremely naive if you pretended this doesn't happen.

Revenue should look at it. A business lunch is a very specific thing. He would have to pay for it and it would be business related.

The receipt is probably not enough either - the sane way to justify this is a company credit card. Lots of expenses that don’t show up on the books wouldn’t survive an audit.

Travelling expenses?

Lumen

It is certainly true that running your own company, or being self employed, gives you more opportunities to break the law.

Not much of a revelation though.

Regarding the laptop example above, salaried employees are often provided with laptops and mobile phones by their employer which the Revenue are happy for them to use for personal use.

I haven't been an employee for twenty years but have never abused the tax system. I'm not sure whether it's because I'm a saint or scared of the slippery slope. Probably a mix of both. Revenue penalities and interest are very very expensive.

Carfacemandog

HillCloudHop wrote: »

How is the average wage calculation nonsense? Of course the median wage is going to be lower.

Funny enough in the US at least (much harder to find reliable historical info for Ireland), median wages used to reliably be higher than averaged until around the 1980s or 90s.

Peregrinus

Carfacemandog wrote: »

Funny enough in the US at least (much harder to find reliable historical info for Ireland), median wages used to reliably be higher than averaged until around the 1980s or 90s.

That seems surprising. Not doubting you, but can you elaborate on how this was?

Benedict

The original aim of this thread was to highlight the rampant confusion between the terms "average" (also called mean) and "median" wage. In my experience, the belief is widespread that because the "average" full time wage in Ireland is around 49k, then if you are full time and earn less than that, you are untypical.

In fact if you earn 75% of the "average", they your pay cheque is typical.

Economist Felim O'Rourke (The Journal Apr 19) gives the example of an office where 5 people work. 4 get 30k and the boss gets 80k. The average pay in that office is 40k - even though most don't get anything like 40k.

So when politicians proudly tell us that 49k is the "average", they should add that most people don't earn within an ass's roar of that amount.

Peregrinus

Benedict wrote: »

The original aim of this thread was to highlight the rampant confusion between the terms "average" (also called mean) and "median" wage. In my experience, the belief is widespread that because the "average" full time wage in Ireland is around 49k, then if you are full time and earn less than that, you are untypical.

In fact if you earn 75% of the "average", they your pay cheque is typical.

Economist Felim O'Rourke (The Journal Apr 19) gives the example of an office where 5 people work. 4 get 30k and the boss gets 80k. The average pay in that office is 40k - even though most don't get anything like 40k.

So when politicians proudly tell us that 49k is the "average", they should add that most people don't earn within an ass's roar of that amount.

But it's also the case that most people don't earn within an asses roar of the median.

Have a look at this table of household incomes that Augeo posted in post #280 in this thread:

It's not difficult to work out that the median household income falls into the €40-60k bracket. To illustrate the point, let's assume that it's €50k.

But only 19% of housholds are in the €40-60k bracket. The other 81% of households do not earn within 20% of the median household income; they are either more than 20% below it, or more than 20% above it.

Which tells you that - for household incomes, at any rate - earning the median income, or close to it, is actually untypical. It's much more typical to earn signficantly less or signficantly more. In this table, about 46% of households earn less than 80% of the median, and about 35% earn more than 120%.

Those figures may not be quite right, because the median may not be exactly €50k, and I'm eyeballing the percentages. But the overall picture is correct. Earning at or close to the median is untypical.

Buddy Bubs

We're going to have to bring variance and standard deviation into this thread

stefanovich

Peregrinus wrote: »

But it's also the case that most people don't earn within an asses roar of the median.

Have a look at this table of household incomes that Augeo posted in post #280 in this thread:

It's not difficult to work out that the median household income falls into the €40-60k bracket. To illustrate the point, let's assume that it's €50k.

But only 19% of housholds are in the €40-60k bracket. The other 81% of households do not earn within 20% of the median household income; they are either more than 20% below it, or more than 20% above it.

Which tells you that - for household incomes, at any rate - earning the median income, or close to it, is actually untypical. It's much more typical to earn signficantly less or signficantly more. In this table, about 46% of households earn less than 80% of the median, and about 35% earn more than 120%.

Those figures may not be quite right, because the median may not be exactly €50k, and I'm eyeballing the percentages. But the overall picture is correct. Earning at or close to the median is untypical.

It gets even more complicated to understand when the lower income households are actually getting social welfare payments on top of salary and paying little to no tax.

It'd be nice to see the distribution of net spendable income + welfare across these different classes of household.

Benedict

Peregrinus wrote: »

But it's also the case that most people don't earn within an asses roar of the median.

Have a look at this table of household incomes that Augeo posted in post #280 in this thread:

It's not difficult to work out that the median household income falls into the €40-60k bracket. To illustrate the point, let's assume that it's €50k.

But only 19% of housholds are in the €40-60k bracket. The other 81% of households do not earn within 20% of the median household income; they are either more than 20% below it, or more than 20% above it.

Which tells you that - for household incomes, at any rate - earning the median income, or close to it, is actually untypical. It's much more typical to earn signficantly less or signficantly more. In this table, about 46% of households earn less than 80% of the median, and about 35% earn more than 120%.

Those figures may not be quite right, because the median may not be exactly €50k, and I'm eyeballing the percentages. But the overall picture is correct. Earning at or close to the median is untypical.

Two points - firstly, you seem to be referring to "household" incomes and not individual full time workers. Secondly - in the example I gave of the office workers, most people not only earn within an ass's roar of the median, they earn precisely the median.

It's so demoralising for workers earning a good wage to be constantly given the impression (and impression do count) that they are not up to scratch in terms of wages when in fact they may be earning more than most.

[Deleted User]

Benedict wrote: »

.............. In my experience, the belief is widespread that because the "average" full time wage in Ireland is around 49k, then if you are full time and earn less than that, you are untypical......................

I cannot accept that belief is widespread.
By definition loads earn less than the average and loads earn more.

I feel the entire thread is based on a misconception you dreamt up.

Peregrinus

stefanovich wrote: »

It gets even more complicated to understand when the lower income households are actually getting social welfare payments on top of salary and paying little to no tax.

It'd be nice to see the distribution of net spendable income + welfare across these different classes of household.

I think the chart is net household income, inclusive of earnings and transfers, so it reflects the effects of tax and SW. But I could be corrected on that.

More generally:

1. The phenomenon that Benedict points to is that earning at or close to the mean, or the median, is untypical; most people are well away from it.

2. This phenomenon depends not on how high or low the mean/median is (whichever your measuring; I'm just going to say median from now on but what I say would hold good for the mean as well); it depends on how widely distributed earnings are.

3. In a society in which most full-time workers earn broadly similar amounts, and there is relatively little career salary progression, or pay differences between different careers, etc, then more people will be at or close to the median. And vice versa.

4. So, if you think the phenomenon is a Bad Thing, then you favour a society in which earnings tend to be flattened; there's a high degree of income equality. This means that you get less differences in earnings to reflect (depending on your political point of view) (a) merit, productivity, utility, etc, or (b) privilege, good fortune or injustice, or (c) both.

5. In Ireland, distribution of gross incomes is quite unequal, by European standards, so differences in merit, productivity, utility, privilege, fortune and injustice are all well-reflected - arguably too well reflected. But the tax/social welfare system offsets this, with the result that net income equality is close to average for the EU and the OECD (with the result that the proporition of the workforce whose net income is at or close to the median is also likely to be at about the EU and OECD average). Whether this is a good thing or a bad thing depends, as I said earlier, on your political point of view.

ELM327

Buddy Bubs wrote: »

We're going to have to bring variance and standard deviation into this thread

That's kind of what the bar chart and explanation is doing in pseudo standard deviation !

Geuze

Benedict wrote: »

The original aim of this thread was to highlight the rampant confusion between the terms "average" (also called mean) and "median" wage. In my experience, the belief is widespread that because the "average" full time wage in Ireland is around 49k, then if you are full time and earn less than that, you are untypical.

Is that "belief widespread"? Nobody has ever mentioned it to me.

Geuze

Peregrinus wrote: »

But it's also the case that most people don't earn within an asses roar of the median.

Have a look at this table of household incomes that Augeo posted in post #280 in this thread:

It's not difficult to work out that the median household income falls into the €40-60k bracket. To illustrate the point, let's assume that it's €50k.

But only 19% of housholds are in the €40-60k bracket. The other 81% of households do not earn within 20% of the median household income; they are either more than 20% below it, or more than 20% above it.

Which tells you that - for household incomes, at any rate - earning the median income, or close to it, is actually untypical. It's much more typical to earn signficantly less or signficantly more. In this table, about 46% of households earn less than 80% of the median, and about 35% earn more than 120%.

Those figures may not be quite right, because the median may not be exactly €50k, and I'm eyeballing the percentages. But the overall picture is correct. Earning at or close to the median is untypical.

Be careful - earnings are not the same as incomes.

This thread is mainly about earnings, although incomes have been discussed.

Mean and median earnings will be different to mean and median incomes.

Geuze

Benedict wrote: »

It's so demoralising for workers earning a good wage to be constantly given the impression (and impression do count) that they are not up to scratch in terms of wages when in fact they may be earning more than most.

If the top of my scale is €x, I have plenty of colleagues earning up to 1.5 €x.

I do not feel that "I am not up to scratch".

Geuze

Peregrinus wrote: »

B
It's not difficult to work out that the median household income falls into the €40-60k bracket. To illustrate the point, let's assume that it's €50k.

Median household incomes, 2019

https://www.cso.ie/en/statistics/socialconditions/surveyonincomeandlivingconditionssilc/

Gross = 51,217
Disposable = 43,552

Benedict

Geuze wrote: »

If the top of my scale is €x, I have plenty of colleagues earning up to 1.5 €x.

I do not feel that "I am not up to scratch".

Of course no matter what you earn there will be those earning more and one accepts that. But the phrase "below average" has deep resonance for people and according to what we hear from politicians (check it for yourself), you're "below average" if you're earning, let's say, 40k.

In fact, if you're earning 40k, you're earning more than most ftw in the country! But that's not what we're being told.

It's a clear case of mis-information.

In his Journal article (already quoted) O'Rourke reckons that 64% of ftw earn less than the average - but not less than the median.

stefanovich

So what's the point here? Rich people are rich and need to be taxed more? Maybe the government shouldn't be so wasteful with our money.

Flat tax across the board will get rid of a lot of bureaucracy. It could be set at a level that would bring in exactly the same amount of revenue and everyone would be better off. (as per Milton Friedman)

We also need a better way of collecting tax from the self employed. So many openly admit being tax frauds. It's a perk of the job.

ELM327

Benedict wrote: »

Of course no matter what you earn there will be those earning more and one accepts that. But the phrase "below average" has deep resonance for people and according to what we hear from politicians (check it for yourself), you're "below average" if you're earning, let's say, 40k.

In fact, if you're earning 40k, you're earning more than most ftw in the country! But that's not what we're being told.

It's a clear case of mis-information.

In his Journal article (already quoted) O'Rourke reckons that 64% of ftw earn less than the average - but not less than the median.

It categorically is not misinformation. The use of the word "average" can apply to mean, median or mode. People conflate Average with Median but it's actually used as mean.

It's general poor comprehension, not misinformation, that is the cause of the problem.

ELM327

stefanovich wrote: »

So what's the point here? Rich people are rich and need to be taxed more? Maybe the government shouldn't be so wasteful with our money.

Flat tax across the board will get rid of a lot of bureaucracy. It could be set at a level that would bring in exactly the same amount of revenue and everyone would be better off. (as per Milton Friedman)

We also need a better way of collecting tax from the self employed. So many openly admit being tax frauds. It's a perk of the job.

This would be brilliant.

Benedict

stefanovich wrote: »

So what's the point here? Rich people are rich and need to be taxed more? Maybe the government shouldn't be so wasteful with our money.

Flat tax across the board will get rid of a lot of bureaucracy. It could be set at a level that would bring in exactly the same amount of revenue and everyone would be better off. (as per Milton Friedman)

We also need a better way of collecting tax from the self employed. So many openly admit being tax frauds. It's a perk of the job.

Well, the point could be made that if the message is pedalled that the streets are paved with gold - when in fact only a few streets are paved with gold - then it can lead to growing dissatisfaction and unrest. How many people bought apartments in Bulgaria in 2006 and wouldn't have if they'd known the truth?

And the truth is that the public perception of income levels is inflated.

Have a look at payscale.com and you'll see that the median wage for a solicitor is barely above what most people regard as typical workers' wage.

Most software engineers are well below average in terms of income.

[Deleted User]

ELM327 wrote: »

This would be brilliant.

If a flat tax across the board was implemented it would have to be accompanied with a tax credit so folk on €20k/annum pay next to no PAYE.
Otherwise low income folk would require some sort of SW payment or the minimum wage would need to be increased.

Will never happen, progressive tax is here to stay, undoubtedly.

stefanovich

Augeo wrote: »

If a flat tax across the board was implemented it would have to be accompanied with a tax credit so folk on €20k/annum pay next to no PAYE.
Otherwise low income folk would require some sort of SW payment or the minimum wage would need to be increased.

Will never happen, progressive tax is here to stay, undoubtedly.

Negative income tax is the solution for low earners.

I know it won't - government don't want to give up control of our money.

https://www.youtube.com/watch?v=xtpgkX588nM

ELM327

Augeo wrote: »

If a flat tax across the board was implemented it would have to be accompanied with a tax credit so folk on €20k/annum pay next to no PAYE.
Otherwise low income folk would require some sort of SW payment or the minimum wage would need to be increased.

Will never happen, progressive tax is here to stay, undoubtedly.

Flat tax with a small tax credit.

How I'd do it is just remove PAYE and PRSI, and expand USC.

Benedict

Average median salaries Ireland: (Courtesy of "payscale.com - 2021 figures)

Project Architect 43k
Solicitor 49k
Teacher 33k
Hotel Manager 36k

These are professional jobs? And the typical wage is 49k right?????

Cyrus

Benedict wrote: »

Average median salaries Ireland: (Courtesy of "payscale.com - 2021 figures)

Project Architect 43k
Solicitor 49k
Teacher 33k
Hotel Manager 36k

These are professional jobs? And the typical wage is 49k right?????

what is an average median

stefanovich

ELM327 wrote: »

Flat tax with a small tax credit.

How I'd do it is just remove PAYE and PRSI, and expand USC.

USC is very "progressive"

Benedict

Cyrus wrote: »

what is an average median

Apologies - I should have just said "median". So No 369 should read just "median".

(It's worth mentioning that the terms "average median" and "average mean" are used sometimes but I agree that just plain median and mean or average are less confusing)

blanch152

Benedict wrote: »

Average median salaries Ireland: (Courtesy of "payscale.com - 2021 figures)

Project Architect 43k
Solicitor 49k
Teacher 33k
Hotel Manager 36k

These are professional jobs? And the typical wage is 49k right?????

That is nonsense

https://www.education.ie/en/Circulars-and-Forms/Active-Circulars/cl0060_2020.pdf

No full-time teacher is on a salary of less than 37k, so the median can't be below that.

stefanovich

blanch152 wrote: »

That is nonsense

https://www.education.ie/en/Circulars-and-Forms/Active-Circulars/cl0060_2020.pdf

No full-time teacher is on a salary of less than 37k, so the median can't be below that.

Maybe people who submit their wage data to payscale are unhappy or inexperienced?