Here’s how much everyone would get if everyone in the world got an equal salary:
Accounting for age demographics, retirement, and global economic statistics, the salary everyone would receive is $7,933.38 each year.
This number assumes that stay-at-home parents also receive equal pay, so the average household income would be $15,866.76.
Many assumptions are baked into these numbers.
So if you want to learn all about what an equal salary amounts to for each one in the world, then this article is for you.
Let’s jump right into it!
How Do You Even Go About Calculating Equal Salary for Everyone in the World? (2 Methods)
It’s an interesting idea, for sure, but can we actually figure out something like this?
The honest answer is sort of.
We can definitely use real-world data to figure out how much money there is, how many people there are, and how much everyone would get paid if all salaries were the same.
In fact, I’m going to walk you through those calculations (math, I know, but I promise it won’t be bad).
The problem is that this hypothetical world is drastically different from the real world.
Such a salary system would completely change the global economy, and by margins that no one can reasonably predict.
So, we can’t really say what that would look like.
We can only come up with estimates using numbers from the real world.
Even with those limitations, it’s an interesting idea, and you might be surprised by the average salary.
For a little context, the median annual income across the world is $850 (USD).
That means that half of all people in the world make less than this number, and half make more.
Other interesting – and eye-opening – facts about incomes and salaries all over the world include the following:
- Countries like Chile and Mexico have average incomes of approximately $7,000 USD. Average income is calculated by dividing the country’s total income by its total population
- Switzerland has the highest median income: $60,288 USD. In comparison, the U.S. median income is $50,233 USD.
- Luxembourg has the highest gross national income per capita: $63,978 USD. Again, in comparison, U.S. has the gross national income per capita of $47,320 USD. According to Wikipedia, the “GNI per capita is the dollar value of a country’s final income in a year, divided by its population.” It’s the average income of a country’s citizens before taxes.
- And finally, less than $2 per day is what 3 billion people in the world live on.
You’ll see that the number we come up with would be a huge pay raise for the majority of people in the world, but it would be a devastating pay cut for anyone living in the richest 20 countries in the world.
One more quick note: all of the money discussed today will be in USD.
#1 World Population
The first thing we need to do is figure out how many people are in the world.
As of November 2022, the UN estimated that there were over 8 billion people on earth
That’s a lot of people.
Now, we could pay literally every person in that world the same salary, but that doesn’t make perfect sense.
First off, newborn babies have a hard time working.
Second, even if you wanted to turn this into more of a universal basic income (UBI) scenario—in which case newborn babies would be entitled to income—it would be really hard to figure out exactly who gets to control money allotted for kids.
That’s messy and complicated, so we’re going to assume that kids under the age of 15 don’t get a salary in this world.
I’ll talk about that more when I go through the calculations, but for now, it’s important that we get a little more information on age demographics.
So, the first thing to know is that the working age around the world is typically considered 15 through 64.
Once you hit 65, you’re retired, and before 15, you don’t work.
Obviously, there are tons of exceptions to this, but for the sake of the math we’re doing, it’s important to break down the population along these lines.
All of that is to say that this is how many people there are in the world by these age groups:
- Under 15: 2.01 billion
- 15 to 65: 5.19 billion
- Over 65: 783 million
We will be using these population numbers to come up with salary estimates a little later.
#2 World Economy
Next up, we need to know how much money there is.
How are we actually paying all of these salaries?
There are a lot of ways to try to go about this.
We could try to add up all of the existing salaries in the world today and just redistribute them.
The problem with that is that there are more than a few countries that don’t really have good salary data.
I’m going to take a different approach.
Instead, I’m going to figure out how much money is in the world.
More specifically, I’m going to figure out how much value is produced by the global economy each year.
This number is a little better because even countries that struggle to calculate salary data still trade in the global economy, and that allows us to use trade numbers to get a clear idea of how much money is really going around the world.
The number that describes all of this is known as the global gross domestic product, or global GDP.
It’s the best estimate we have for the total value of the entire global economy in a year.
The most recent year we have for that number is 2019 (it takes a while to calculate these things), and the GDP in 2019 was $87.752 trillion.
So, the easiest way to get from a GDP number to an average salary would be to divide the GDP by the population.
If you do that, then everyone in the world would receive $10,996.49 every year.
That’s the simplest calculation, but it’s not the most reasonable.
There are actually a lot of things we need to consider to clean up our estimate, and I’ll be walking you through those in the following sections.
How Much Would Everyone Get if Everyone in the World Got an Equal Salary? (5 Scenarios)
Considering all of the numbers I just threw at you, we can get into some real estimates for salaries in a totally equal income world.
The thing is, there are a few different ways to go about making the calculation, and the final number will depend on a few assumptions.
Let me throw a few at you:
- Are we paying retirees a salary?
- What about disability?
- Are kids getting paid?
I’ll walk through each of these assumptions and a few others in the following sections.
I’ll even paint some different salary projections based on all of this.
The point is that there are different viable answers, and I want to explain each in detail.
Before any of that, though, I’m going to reiterate the short answer.
The best number I came up with is $7,933.38 per year.
When you go through the different scenarios, you’ll see why I think that number is more realistic than any other.
#1 Excluding Kids
I really don’t want to get into child labor discussions here; that’s its own long article.
What I can quickly acknowledge is that child labor is treated very differently around the world, and there are children who work extremely long hours.
But, in this calculation, I’m assuming that such situations don’t exist.
This isn’t a political statement; it’s just easier math.
Also, if we can give every working-age adult an equal salary in this scenario, maybe that alone would eliminate child labor.
The point is that we have to draw some lines somewhere in order to get meaningful numbers, and this is one of the lines I drew.
On that topic, I’m also ignoring disabilities.
Obviously, disabilities exist, and while plenty of people with disabilities can still do work, some are so extreme that no work is realistic.
In this hypothetical, people on disability get the same salary as people who aren’t.
Again, I don’t want to get into political discussions about that.
It’s just a line to draw to make the math a little easier.
#2 Excluding Retirement
There’s another thing we need to discuss, and that’s retirement.
I used 65 as the cutoff age for people who work.
Even if that’s not a hard line that exists in reality, it’s a nice number to use for this calculation.
But if we go with that assumption, then there are 783 million retirees unaccounted for.
Are they getting retirement benefits?
I actually ran the calculation both ways so that you can really see the difference.
783 million people might not seem like that much in the face of 8 billion, but it actually makes a huge difference in the annual incomes that we’re projecting.
With all of that said, if retirees get absolutely nothing in this scenario, then working-age people will bring in $16,907.90 each year.
You might notice that this is more than double the $7,900 number I quoted you earlier.
We’ll get to why.
#3 Including Retirement
The first thing we need to do is include retirement pay.
This is a grim world if you suddenly don’t get money anymore when you hit 65.
Such a world would probably argue about what kind of pay is correct for retirees.
Maybe they would make less than people still at work.
But, since this is all hypothetical, that’s not really the best way to draw the line.
Instead, we’re going to assume that retirees get the same pay as anyone else.
At the very least, it means you wouldn’t have to adjust your lifestyle once you stop working.
With all of that said, bringing retirees into the fold drops the annual income down to $14,691.44.
That’s a big drop in income, but it still doesn’t explain why I’m quoting you a significantly smaller number as the best number.
#4 Using More Realistic Global Salary Data
There’s a problem with the calculations above.
It assumes that 100% of the global GDP can be paid out in salary.
That’s definitely impossible because producing things has costs that aren’t related to labor.
Doctors need medical equipment, and that equipment has costs.
Bus drivers need buses, and buses need fuel.
All of the different jobs we can do have raw costs in order to make them work, and those costs eat up a huge portion of the GDP.
So, we need to figure out what fraction of the global GDP actually goes to pay for labor.
With that percentage, we can adjust the numbers above, and we’ll have a more realistic projection.
Unfortunately, there is no perfect number that we can use.
It’s actually impossible to get a clean average for how much of the global GDP is paid out in labor.
But, there are good numbers if we look at just one country: the United States.
The U.S. keeps very close track of these things, and that can at least give us a reasonable ballpark for this estimation.
When you go through U.S. numbers in this metric, you’ll find that the percentage of GDP that is paid in labor has gone down a lot in the past 30 to 40 years.
There are tons of reasons why, but a big one is automation.
In the United States, a lot of productivity is handled by non-human contributions (like robots and automation software).
While the robots don’t get paid, they do cost money, and that money mostly comes from the labor pool.
This is important to point out because we’re looking at a reasonable labor estimate for the whole world, and the United States definitely uses more automation than the average country.
So, to try to balance all of this, I’m going to take the labor portion of GDP from the United States from 1980.
This was a time when there was a lot of automation, but not nearly as much as today.
It’s a way to try to average the whole world.
It’s not a perfect number, but we don’t really have access to anything better, so that’s what I went with.
Let’s get down to the math.
In 1980, roughly 54% of the U.S. GDP was paid out in labor.
Using that same percentage we get two new annual salary estimates for our little experiment:
- If retirees are unpaid, the average salary is $9,130.27
- If retirees are paid, the average is $7,933.38
You might recognize that second number.
It’s the one that I said is the best estimate.
With a realistic expectation of labor costs and accounting for retirement, that’s what everyone would make in this hypothetical situation.
Keep in mind that these are annual numbers.
You would get $7,933.38 each year.
It’s not a big wage in most of the world.
#5 Household Income
There’s something else we didn’t discuss.
The numbers I projected pay stay-at-home parents for their efforts.
That means that the household income would be roughly double the individual income.
Yes, there are single-parent homes, but there are also homes with grandparents.
In all, the ratio of adults with a salary to children averages out, so the average household income would be $15,866.76.