InDepth – Sweden Post #4 – Wages/Pensions

This is part four of a series on what the US might learn from Sweden. This week we will talk about wages and pensions.


In The US

43% of US workers earn less than $15/hour while the top 33% earn more than $100,000/year and the top 10% make more than $200,000 (that’s $100+/hour). A McDonald’s employee makes an average of $8.90/hour. The US federal minimum wage is $7.25 an hour, which hasn’t been raised since 2009.

10.8% of Americans have union membership. Union members make $22 – $49/hour. ($45,000/year to $100,000/year). The median salary for US workers is below $35,000/year, in other words 50% of workers make less than that. The average salary of all workers is about $50,000/year.

  • The average annual salary for prisoners is about $800
  • The average annual salary for engineers is about $66,000
  • The average annual salary for doctors it is about $300,000.

In Sweden

Sweden doesn’t have a minimum wage. Instead, unions and employers negotiate wages/salaries. This is particularly important for low-income workers: A cashier at a Swedish McDonald’s earns $15 an hour. Very few Swedes earn less than $10 an hour. The average annual salary is $45,000.

About 75% of Swedes are union members. Since most middle- and upper-income Swedes join unions, this means still more benefits. For example, members get larger pensions if they make small (about $10 a month) contributions to a union’s insurance fund.

  • The average annual salary for prisoners is about $2,800
  • The average annual salary for engineers is about $49,000
  • The average annual salary for doctors it is about $72,000


In The US
Social Security benefits for retired citizens is about $1,500/month. The average government sector pension is about $1,800/month. The median private sector pension is about $850/month for a total monthly average of about $2,500

In Sweden

Pensions are covered by the government or union/employer plans. If Swedes have low-paying jobs (under $40,000 a year), the government and employers pay into the plans, but the employees don’t contribute. If they have middle- and higher-income jobs, they must contribute, along with their employers.

There are several sources that make up a Swedish pension. People who have worked and lived in Sweden will get a national retirement pension based on the income on which they have paid tax. The national retirement pension consists of income pension, premium pension and guarantee pension.

The average national retirement pensions about $1550. In addition to the national retirement pension, most people employed in Sweden also get an occupational pension, based on contributions made by their employers. That generally makes up about 30% of the total. The total comes to about $2,400/month.

Like the US, For added security, many choose to supplement their retirement benefits with private pension savings.
Let’s wrap it all up with a couple of general observations. Swedes simply don’t tolerate income inequality as we do in the US. But, at the same time they actually have more billionaires per capita than the US. Those billionaires are taxed almost three times more than in the US.

Sweden does not have a separate Social Security tax as the US does, instead it is a combination of three tax structures: income pension, premium pension, and guarantee pension.