| ACTUARIAL NOTE                                                                                            |                                           |
|-----------------------------------------------------------------------------------------------------------|------------------------------------------------|
|                                                                                                      | SOCIAL SECURITY ADMINISTRATION                 |
| Number 103May 1981                                                                                        | Office of the Chief ActuaryBaltimore, Maryland |
| AVERAGE WAGES FOR INDEXING UNDER THE SOCIAL SECURITY ACT     AND THE AUTOMATIC DETERMINATIONS FOR 1979-81 |
| by Eli N. Donkar, Ph.D., A.S.A.                                                                           |

| INTRODUCTION                                                    |
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| CONSTRUCTION OF THE 1951-77        AVERAGE WAGE SERIES          |
| 1.                                                              | Historical precedents for       wage indexing and average wage |
| 2.                                                              | The preliminary series       of average wages |
| 3.                                                              | Limitations on other       historical sources of data available from SSA |
| 4.                                                              | The construction of the       final average wage series for 1951-77 |
| 5.                                                              | The final        series—indications of reliability |
| AVERAGE WAGES FOR 1978 AND       1979                           |
| 1.                                                              | Sources of data for years after       1977 |
| 2.                                                              | IRS wage data for 1977-79 |
| 3.                                                              | Average wages for indexing, 1977-79 |
| DETERMINATION OF WAGE-INDEXED PROGRAM       AMOUNTS FOR 1979-81 |
| 1.                                                              | The retirement test exempt amounts |
| 2.                                                              | Amount of earnings required for a       quarter of coverage |
| 3.                                                              | Bend points in PIA formula and maximum       family benefit formula |
| 4.                                                              | Contribution and benefit base |
| 5.                                                              | Contribution and benefit base         under provisions in "old law" |
| Relevant Federal Register Publications                          |
| Tables                                                          |
| 1.                                                              | Average wage series for indexing earnings      under the Social Security Act, calendar years 1951-79 |
| 2.                                                              | Social Security program amounts determined under     the automatic provisions which depend on increases in average wages, calendar years 1978-81 |
| 3.                                                              | First-quarter averages used in constructing the       preliminary indexing series, calendar years 1951-77 |
| 4.                                                              | First-quarter averages used in constructing the       final indexing series, calendar years 1951-77 |
| 5.                                                              | Average wages, percentage increases and       indexing factors resulting from the preliminary average wage series, the final average wage series,      and an average wage series derived from Department of Commerce (DoC) estimates,       calendar years 1951-77 |
| 6.                                                              | Number of "wage items" per employee      tabulated from the 1-percent sample LEED file, calendar years 1957-73 |
| 7.                                                              | Average wages for the first quarter      for private industry population covered by unemployment insurance,      calendar years 1951-75 |
| 8.                                                              | Estimated amounts of Average Indexed       Monthly Earnings for maximum wage earners retiring at age 62 in each year 1979-90, calculated      using three different wage series for indexing |
| 9.                                                              | Summary of wage data tabulated by the      Internal Revenue Service from individual tax returns filed for tax years 1977-79 |

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Notes published in the 1980s