Compensation includes salaries, wages, bonus, stock options, tips, and the like subject to federal income taxes, as reported by employers on Forms W-2. It does not include income earned outside of the employment, such as investment income, interest income, rental income, lottery winnings and the like.
Compensation also includes contributions to deferred compensation plans, but excludes certain distributions from plans where the distributions are included in the reported compensation subject to income taxes. The result of including contributions, and excluding certain distributions is net compensation.
Average and median:
The "raw" average wage is computed as net compensation divided by the number of wage earners. Median wage is the wage that separate the higher 50% pay to the lower 50%. Half of the wage earners had net compensation less than or equal to the median, while the other half had more than that.