How does the Annual Average Wage’s drastic increase affect you?
2021 Average Annual Wage
Washington’s 2021 average annual wage increase: second largest on record
OLYMPIA – Washington’s average annual wage grew by 7.5% in 2021 to $82,508, according to the state Employment Security Department. The strong demand for workers and hiring difficulties across different sectors drove average wage growth in 2021 to the second largest increase on record.
All industry sectors experienced average wage growth in 2021. The greatest wage growth occurred in industry sectors with large numbers of lower-wage workers, such as:
- Leisure & hospitality, up 14.2%
- Transportation and warehousing, up 7.6%
- Retail trade, up 6.5%
The average weekly wage also rose from $1,475 in 2020 to $1,586 in 2021. These figures include only those wages that are covered by unemployment insurance.
The change was driven by a 2.9% increase in the number of jobs in covered employment and a 10.6% increase in total earnings, which grew by nearly $25.7 billion in 2021. The average number of workers in Washington covered by unemployment insurance rose from 3,166,878 in 2020 to 3,257,983 in 2021 – an increase of 91,105 workers.
How the average annual wage is used
The average annual wage is used to calculate:
- Unemployment benefit claims filed on or after July 3, 2022.
- Paid family and medical leave (paid leave) benefits filed on or after Jan. 1, 2023.
- Employers’ taxable wage base beginning Jan. 1, 2023.
The state Department of Labor & Industries also uses the average annual wage to calculate worker’s compensation benefits.
The minimum weekly unemployment benefit, calculated at 20% of the average weekly wage, will increase by $22 to $317 for new claims filed on or after July 3, 2022. The maximum weekly benefit, which is the greater of $496 or 63% of the average weekly wage, will increase by $70 to $999.
About 17% of unemployment claims are currently paid the maximum benefit amount and 17% percent receive the minimum.
Paid leave benefits
Currently, the minimum paid leave benefit is $100 while the maximum paid leave benefit is $1,375. Based on an average weekly wage of $1,586 in 2021, the maximum paid leave benefit will be $1,427 for claims filed on or after Jan. 1, 2023. The minimum paid leave benefit will remain at $100.
Employers’ taxable wage base
Washington’s unemployment insurance (UI) program is an experience-based system. This means the taxable wage base is the maximum amount on which employers must pay unemployment taxes for each employee. In general, an employer’s tax rate depends on how much their former workers collect in unemployment benefits and the size of their payroll.
The Employment Security Department calculates UI tax rates for businesses and notifies employers by letter at the end of each year. This letter includes the new taxable wage base for the upcoming calendar year.
Beginning in 2023, employers will pay unemployment payroll taxes on the first $67,600 paid to each employee — up from $62,500 in 2022. Learn more about how the UI tax rate is determined for individual employers.
Table 1: Summary of how average annual wage (AAW) affects benefits and taxes