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