Trends in Women's Wages, 1981–2015

By Purcell, Patrick J. | Social Security Bulletin, January 1, 2019 | Go to article overview

Trends in Women's Wages, 1981–2015


Purcell, Patrick J., Social Security Bulletin


Introduction

Every year, employers report their employees' wage and salary earnings to the Internal Revenue Service (IRS) and the Social Security Administration (SSA) on IRS Form W-2.1 SSA stores those earnings records in its Master Earnings File (MEF), which it uses to administer the Old-Age, Survivors, and Disability Insurance (OASDI) programs.2 For research and statistical purposes, SSA extracts data from the MEF and other administrative files each year to create the Continuous Work History Sample (CWHS). The CWHS contains earnings records for more than 3.7 million individuals, representing 1 percent of all Social Security numbers ever issued. For researchers, the large number of earnings records in the CWHS, its longitudinal structure, and its accuracy have advantages over household surveys, which consist of smaller samples, typically collect data for relatively short periods, and are subject to reporting and recording errors.

This article describes the trends in real annual wages and salaries recorded in the CWHS among women aged 25-59 from 1981 through 2015. It briefly describes the change in real annual wages and salaries for all women aged 25-59 during this period, then examines trends for individual birth cohorts in each of seven age groups: 25-29, 30-34, 35-39, 40-44, 45-49, 50 -54, and 55-59. Using a series of charts, I show how women's real annual wages changed across age groups and birth cohorts within each age group.

Data and Methods

The CWHS is an analytical master file created from 1 percent samples of the Master Beneficiary Record (MBR) and the MEF, both of which SSA uses to administer the OASDI programs. To maintain the CWHS's 1 percent sample size, each year, SSA adds the earnings records associated with a random selection of newly issued Social Security numbers. The records of deceased workers remain in the CWHS, allowing researchers to study the annual wages of entire birth cohorts over time. When needed, SSA updates the CWHS earnings records for adjustments and corrections to the MEF.

The CWHS includes data on Social Security taxable wages in covered employment since 1951.3 Covered employment refers to jobs for which employers submit payroll-tax deductions to the IRS and report annual wages to SSA to determine a worker's eligibility for Social Security benefits and the amount of those benefits. Taxable wages are earnings in covered employment equal to or less than an annually adjusted threshold amount called the taxable maximum.4 Since 1978, the CWHS has included records on annual wages in noncovered employment and earnings exceeding the annual maximum taxable amount.

This article describes results derived from the 2015 CWHS file, the most recent available when the analysis was conducted. Following the methods of Leonesio and Del Bene (2011), the earnings analyzed in this article consist of annual wages and salaries since 1981 in both covered and noncovered employment, including wages and salaries exceeding the annual taxable maximum. Earnings from self-employment are not included.5 The analysis includes only women's earnings. An earlier Bulletin article described trends in men's wage and salary earnings from 1981 through 2014 (Purcell 2018). This article focuses on ages 25 to 59 because those are the ages with the highest employment rates.6 For brevity, I refer to wages and salaries hereafter simply as "wages."

To focus on workers who had substantial wages, the analysis includes only individuals with annual wages equal to or greater than the amount needed to earn four quarters of coverage under Social Security.7 This amount ranged from $1,240 in 1981 ($2,835 in 2015 dollars) to $4,880 in 2015. Annual wages have been indexed to 2015 values by the personal consumption expenditure (PCE) index of the National Income and Product Accounts.8

In addition to excluding individuals with annual wages lower than the amount needed to earn four quarters of coverage, this analysis excludes the top 0. …

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