The link between labor market tightness and wage changes has weakened since the Great Recession: Change in average annual real wage growth in response to a 1-percentage-point increase in unemployment or employment rates, by wage percentile, 1980–2007 vs. 2008–2016

10th percentile: 1980–2007 10th percentile: 2008–2016  Difference between periods 50th percentile: 1980–2007 50th percentile: 2008–2016  Difference between periods 90th percentile: 1980–2007 90th percentile: 2008–2016  Difference between periods 
Unemployment rate -0.58229309 -0.24305 0.33924 -0.45911 -0.29576 0.163341 -0.34647 -0.14454 0.201931
Prime-age EPOP 0.26675019 0.1940874 -0.072662778 0.23045574 0.16538717 -0.065068595 0.100662 0.068622 -0.03204

Notes: Each bar is the coefficient from the regression of the real annual percent change in a given percentile’s wage on the labor market tightness outcome interacted with a time period indicator. Regressions include state and year fixed effects. Additional details and estimates are in the appendix. EPOP refers to the employment-to-population ratio; prime-age refers to adults ages 25–54.

Source: Authors’ analysis of annual, state-level aggregations of Current Population Survey data, 1980–2016

View the underlying data on