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SLOWING ECONOMY MAY REVIVE INEQUALITY
Report shows that least advantaged workers are first to bear brunt of downturn
Washington, D.C. – The rapid acceleration in real wage growth that low- and middle-wage workers enjoyed during the latter 1990s slowed in 2000, according to a new report from the Economic Policy Institute.
The Quarterly Wage and Employment Series, a regular publication from EPI, reveals that in 2000, the weakening economy slowed the robust recent growth in real wages for low- and middle-income male earners and low-income female earners. Real wage growth accelerated, however, for high-wage workers – those at the 90th percentile of the wage distribution.
These trends indicate a possible return to the expanding wage inequality of the 1980s and early 1990s, when high wages grew faster than middle and low wages.
The slowing growth in real wages for middle- and low-wage workers may be explained by a loosening in the labor market. Earlier wage gains were due mostly to full employment. Young men, minority men, and men with at most a high school diploma appear at this point to be the most vulnerable to rising unemployment.
The unemployment rate for men without any college education stopped its decline in the middle of 1999; by the end of 2000, this rate had begun to rise. African-American men with at most a high school education were hardest hit; the unemployment rate among this group rose by 1.1 percentage points, returning to its level in the first quarter of 1998.
From the beginning of 1998 through the end of 2000, however, the unemployment rate among women has continued to decline.
“The data through 2000 show evidence of fraying around the edges,” says the report, “as the job opportunities and wage trends of less-advantaged workers, particularly males, appear to be affected by the slowdown.”
The Quarterly Wage and Employment Series is a regular publication from EPI written by Jared Bernstein, a labor economist.
The Economic Policy Institute is a non-profit, non-partisan economic think tank founded in 1986.
