Average and median pay, and why the gap matters

The mean wage is the sum of wages divided by the number of employees. The median wage is the value that splits the population into two equal halves.

In a symmetrical distribution, the two coincide. The wage distribution is not symmetrical: it stretches upwards, which puts the mean above the median in every country with data.

This asymmetry has a simple cause: a wage cannot fall below zero, and the minimum wage in practice sets a floor, whereas no limit caps the top of the scale. Most employees therefore earn less than the mean, which often comes as a surprise when that figure is presented as a typical wage.

A growing gap between mean and median signals increasing concentration at the top of the distribution, information that neither figure provides on its own.

That is why statistical publications generally accompany these two values with deciles, which describe the full shape of the distribution rather than a single point. The ratio of the ninth to the first decile is the most commonly published measure of dispersion.

The mean is sensitive to extreme values, the median is not. A rise concentrated on a few very high earnings moves the mean without changing the median.

This is why analyses of living standards favour the median, and why the monetary poverty line is defined as a fraction of median income.

The mean nonetheless has uses the median cannot serve. Multiplied by the number of employees, it gives the total wage bill, useful for public finances and social contributions, whereas medians cannot be added up.

Published figures differ depending on whether they cover the private sector, the public sector or both, full-time employees or all jobs, and whether they include bonuses and profit-sharing. They differ again depending on whether they are expressed gross or net, monthly or annually.

These choices of scope account for most of the gaps between figures circulating at the same time, more than differences in statistical method.

International comparisons require conversion at purchasing power parity and consistent treatment of social contributions, whose split between employer and employee varies greatly.

A gross wage compared between two countries with different social protection systems therefore does not measure the same thing, as international bodies point out in their methodological notes. A benefit funded by contributions in one country may be funded by taxation or private insurance in another, and the advertised wage says nothing about it.