National Average Wage Index - NAWI

AAA

DEFINITION of 'National Average Wage Index - NAWI'

An index calculated annually by the Social Security Administration (SSA) based on wages subject to federal income taxes and contributions to deferred compensation plans. The National Average Wage Index (NAWI) is used by the SSA in the indexation of retirement and insurance benefits in the United States.

INVESTOPEDIA EXPLAINS 'National Average Wage Index - NAWI'

The national average wage is calculated by taking the previous year's amount and increasing it by the percentage increase in wages over the last year. This data provides investors with valuable information to let them know what the workers in the nation are making.

This statistics provides insight into the direction of wage trends, which can have an effect on wage inflation, which could cause the fed to raise rates to curtail it. Raising interest rates will have a negative effect on bond and equity markets. Alternatively, if wage inflation seems to be decreasing, the Fed may lower rates, which would have positive effects in the markets.

RELATED TERMS
  1. Sticky Wage Theory

    An economic hypothesis that the pay of employed workers tends ...
  2. Index

    A statistical measure of change in an economy or a securities ...
  3. Economic Growth Rate

    A measure of economic growth from one period to another in percentage ...
  4. Economic Cycle

    The natural fluctuation of the economy between periods of expansion ...
  5. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced ...
  6. Unemployment Rate

    The percentage of the total labor force that is unemployed but ...
RELATED FAQS
  1. What is GDP and why is it so important to investors?

    The gross domestic product (GDP) is one the primary indicators used to gauge the health of a country's economy. It represents ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Economic Indicators That Do-It-Yourself Investors Should Know

    Understanding these investing tools will put the market in your hands.
  2. Options & Futures

    Explaining The World Through Macroeconomic Analysis

    From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone.
  3. Active Trading

    Introduction To Stationary And Non-Stationary Processes

    What to know about stationary and non-stationary processes before you try to model or forecast.
  4. Retirement

    Economic Indicators To Know

    The economy has a large impact on the market. Learn how to interpret the most important reports.
  5. Investing

    What are Preference Shares?

    Preference shares, also referred to as preferred shares, are equity shares that give the shareholders certain rights ahead of common shareholders. For instance, when the corporation declares ...
  6. Retirement

    Pages From The Bad CEO Playbook

    Excess compensation, golden parachutes, tunneling and IPO spinning make these bad executives even worse.
  7. Retirement

    5 Lesser-Known Retirement And Benefit Plans

    These plans aren't widely used, but they fill a specific niche for employees in certain situations.
  8. Insurance

    Trending Toward Asset-Based Management

    Will charging fees instead of commission increase your client base?
  9. Investing Basics

    Beware Of Company Stock In Qualified Plans

    While this strategy does have a few advantages, it can also pose some substantial risks to employees.
  10. Retirement

    Job Hunting: Higher Pay Vs. Better Benefits

    Focusing on salary may be a mistake. Find out which benefits have the highest long-run payoff.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center