Scary Wage Data II -- Social Security Changes Its Numbers

By:  David Cay Johnston
Tax.com

The Social Security Administration revised its 2009 wage data on Nov.1, resulting in new data showing smaller total compensation, a smaller average and a dramatic decline in wages paid to those whose salary and bonus totaled more than $50 million.

The agency originally reported Oct. 15 that the 74 highest paid workers earned an average of $518.8 million 2009, compared to 131 making $91.2 million in 2008.

My column, and coverage of it by others, prompted internal questions about the reasons the average pay of the highest paid workers quintupled, said Mark Lassiter, a Social Security spokesman. He said the inquiry established that two individuals filed multiple W-2 forms reporting $32.3 billion of pay for work, forms the agency determined after examination were phony. The revised numbers were first reported by Ryan J. Donmoyer of Bloomberg.

Removing those bogus reports showed that the 72 remaining high wage earners averaged $84.1 million each, down $7 million or 7.7 percent from the 2008 average in nominal dollars.

Lassiter said he did not know if the filings were part of a scam or just a prank. The matter has been referred to the agency Inspector General, he said.

It was the first time the agency has ever found an error in its data, Lassiter said. There is no indication anyone at Social Security was involved in the phony W-2 filings, he said.

The phony W-2 filings also resulted in revised total compensation and average compensation.

Removing the phony W-2s reduced total compensation by $32.3 billion or 0.55 percent of all the wages, salaries and bonuses earned by Americans. The total number of people with any work was reduced by two to 150,917,733.

As a result of the revisions, the data show that the average wage in 2009 dollars declined by $457 (not $243), a 1.2 percent decline from 2008. The revision shows that since 2000 the average wage, in 2009 dollars, barely changed in real terms, increasing only $347 or 0.9 percent after nine years.

The median wage – half make more, half less -- was unchanged at $26,261. The median is $37 lower than in 2000 and $253 lower than in 2008.