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That's an outrage! A scandal! A... never mind.

November 02, 2010

David Cay Johnston at Tax.com, October 25, 2010:

The number of Americans making $50 million or more, the top income category in the data, fell from 131 in 2008 to 74 last year. But that’s only part of the story.

The average wage in this top category increased from $91.2 million in 2008 to an astonishing $518.8 million in 2009. That’s nearly $10 million in weekly pay!

You read that right. In the Great Recession year of 2009 (officially just the first half of the year), the average pay of the very highest-income Americans was more than five times their average wages and bonuses in 2008. And even though their numbers shrank by 43 percent, this group’s total compensation was 3.2 times larger in 2009 than in 2008, accounting for 0.6 percent of all pay. These 74 people made as much as the 19 million lowest-paid people in America, who constitute one in every eight workers.

Back in 1994, when the top category the government reported on was $20 million or more of compensation, only 25 people were in that rarefied atmosphere, and their average earnings came to just under $45 million in 2009 dollars.

What does this all mean? It is the latest, and in this case quite dramatic, evidence that our economic policies in Washington are undermining the nation as a whole.

Ryan J. Donmoyer of Bloomberg News, November 1, 2010 (via the TaxProf):

The Social Security Administration asked its inspector general to investigate how a $32.3 billion mistake skewed its statistics on 2009 wages in the U.S.

Two people were found to have filed multiple W-2 forms that made them into multibillionaires, an agency official said yesterday. Those reports threw statistical wage tables out of whack and, in figures released Oct. 15, made it appear that top U.S. earners had seen their pay quintuple in 2009 to an average of $519 million.

The agency yesterday released corrected tables that showed the average incomes of the top earners, in fact, declined 7.7 percent to $84 million each.

Oops.

David Cay Johnston reports on the correction here. Update: He also responds with a comment to this post.

It was still funny, David. It's not the job of every blog post to provide complete context for everything; that's what links are for, and I linked to both your original post and your admirably prompt correction. As John Riggins once wisely said, whether or not he remembered it, "loosen up. You're too tight."

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Comments

Joe, your post misrepresents what I accurately reported.

My column focused on the drops in total, average and median compensation and the facts that median pay in 2009 was lower than in 2000 and that ever 34th person who had work in 2008 had no work in all of 2009.

The top 74 earners data, which I accurately presented, was all the way down in the 17th paragraph.

When Social Security said its data was wrong I quickly reported the revised data. I would have had the new data out Monday at the same time as Bloomberg except I teach for three hours at the end of the day, so I posted first thing Tuesday morning.

There is no oops here, except by the government. Social Security referred to bogus W-2 filings to the Inspector General.

But for my work citing the official numbers the government probably would not have discovered its errors.

Years from now someone who came across this dataset -- which as best I can tell no one but me has analyzed for publication going back years -- would have relied on it. By then the underlying records might not be available. In that case we would have bad data permanently in the record.

So...
only because my work drew attention to this official report did the government figure out that it had posted bad data.

Significantly, the corrected data only add to the major points I made at the top of my column -- total and average compensation were down even more than I originally reported. But no one reading your column would know that, or what the focus of my column was, because you did not produce a rounded commentary.

I saw the erroneous stats repeated in Bob Herbert's NYTimes op-ed, which was the Times' most-e-mailed article earlier this week (http://www.nytimes.com/2010/11/02/opinion/02herbert.html?ref=bobherbert). I didn't see any mention in online comments on the column of the SSA's correction, so I e-mailed both Herbert and the letters page to point it out. That was four days ago, and I've received no reply nor seen any acknowledgment or correction yet. And, yes, David, I did note that you accurately reported the SSA's erroneous data and promptly corrected it in Tax Notes when the government revised it. I'm sure you're wondering, as I am, (a) why someone submits $32 billion in incorrect/phony W-2s and (b) why the SSA doesn't notice it to begin with. My guess is it's a clerical error by whoever filled out the W-2s. Probably, the individuals in question didn't pay Medicare tax on that amount, which should have been a tip-off.

Some of us believe in keeping the record accurate; its a matter of integrity, not tightness.

In the Internet Age not paying strict attention yields awful dividends as mendacious and cowardly pick up items from honest websites like yours and then hurl invective from the safety of their noms d'Internet.

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