Slow wage growth and rising inequality for most of the last four decades
APPAM Fall Research Conference
Denver, Colorado
November 8, 2019
Elise Gould
Senior Institute Economist
Economic Policy Institute
Slow wage growth and rising inequality is the norm
- Wages for the vast majority have grown slower than their potential and much slower than those at the top
- Except for the late 1990s and the last couple of years, wage growth would be zero over the last four decades
- Slow wage growth cannot be explained away by including benefits or looking at total compensation
- Slow wage growth cannot be explained away by changing the price deflator
- Slow wage growth cannot be explained away by shortages of skills or education
Wages for the vast majority have grown slower than their potential and much slower than those at the top
Notes: Data are for compensation (wages and benefits) of production/nonsupervisory workers in the private sector and net productivity of the total economy. “Net productivity” is the growth of output of goods and services less depreciation per hour worked. Source: EPI analysis of unpublished Total Economy Productivity data from Bureau of Labor Statistics (BLS) Labor Productivity and Costs program, wage data from the BLS Current Employment Statistics, BLS Employment Cost Trends, BLS Consumer Price Index, and Bureau of Economic Analysis National Income and Product Accounts Updated from Figure A in Raising America’s Pay: Why It’s Our Central Economic Policy Challenge (Bivens et al. 2014)The gap between productivity and a typical worker's compensation has increased dramatically since 1979: Productivity growth and hourly compensation growth, 1948–2018
Year
Hourly compensation
Net productivity
1948
0.00%
0.00%
1949
6.24%
1.55%
1950
10.46%
9.34%
1951
11.74%
12.25%
1952
15.02%
15.49%
1953
20.82%
19.41%
1954
23.48%
21.44%
1955
28.70%
26.38%
1956
33.89%
26.59%
1957
37.08%
30.04%
1958
38.08%
32.72%
1959
42.46%
37.64%
1960
45.38%
40.07%
1961
47.84%
44.37%
1962
52.32%
49.81%
1963
54.86%
55.03%
1964
58.32%
59.95%
1965
62.27%
64.92%
1966
64.70%
69.96%
1967
66.68%
71.98%
1968
71.05%
77.13%
1969
74.39%
77.85%
1970
76.81%
80.35%
1971
81.66%
87.11%
1972
91.34%
92.21%
1973
90.96%
96.96%
1974
87.05%
93.83%
1975
86.86%
98.11%
1976
89.35%
103.60%
1977
92.82%
106.06%
1978
95.66%
108.27%
1979
93.25%
108.12%
1980
88.05%
106.78%
1981
87.36%
110.50%
1982
87.70%
108.38%
1983
88.49%
114.51%
1984
87.03%
120.22%
1985
86.18%
123.65%
1986
87.25%
128.28%
1987
84.67%
128.81%
1988
84.02%
132.01%
1989
83.93%
134.12%
1990
82.37%
136.96%
1991
82.02%
138.50%
1992
83.20%
147.48%
1993
83.46%
148.51%
1994
83.89%
150.54%
1995
82.76%
151.60%
1996
82.87%
156.24%
1997
84.87%
160.72%
1998
89.27%
166.22%
1999
91.98%
173.47%
2000
92.96%
179.47%
2001
95.60%
183.72%
2002
99.49%
191.51%
2003
101.58%
201.22%
2004
100.56%
209.30%
2005
99.73%
215.31%
2006
99.88%
217.62%
2007
101.45%
219.79%
2008
101.39%
221.21%
2009
109.30%
228.49%
2010
111.00%
237.94%
2011
108.47%
237.91%
2012
106.50%
239.28%
2013
108.40%
240.69%
2014
109.08%
242.65%
2015
112.41%
245.44%
2016
114.39%
246.00%
2017
114.67%
249.34%
2018
115.62%
252.39%
Source: EPI analysis of Kopczuk, Saez, and Song (2010, Table A3) and Social Security Administration wage statisticsTop 0.1 percent earnings grew fifteen times faster than bottom 90 percent earnings: Cumulative percent change in real annual earnings, by earnings group, 1979–2018
Year
Bottom 90%
Top 1%
Top .1%
1979
0.0%
0.0%
0.0%
1980
-2.2%
3.4%
5.8%
1981
-2.6%
3.1%
7.3%
1982
-3.9%
9.5%
17.4%
1983
-3.7%
13.6%
28.7%
1984
-1.8%
20.7%
44.0%
1985
-1.0%
23.0%
45.8%
1986
1.1%
32.6%
60.9%
1987
2.1%
53.5%
106.6%
1988
2.2%
68.7%
140.2%
1989
1.8%
63.3%
123.9%
1990
1.1%
64.8%
129.8%
1991
0.0%
53.6%
104.6%
1992
1.5%
74.3%
156.0%
1993
0.9%
67.9%
140.2%
1994
2.0%
63.4%
126.9%
1995
2.8%
70.2%
137.0%
1996
4.1%
79.0%
157.3%
1997
7.0%
100.6%
225.6%
1998
11.0%
113.1%
254.9%
1999
13.2%
129.7%
300.5%
2000
15.3%
144.8%
337.6%
2001
15.7%
130.4%
300.5%
2002
15.6%
109.3%
239.5%
2003
15.7%
113.9%
250.1%
2004
15.6%
127.2%
287.6%
2005
15.0%
135.3%
306.9%
2006
15.7%
143.4%
324.9%
2007
16.7%
156.2%
362.5%
2008
16.0%
137.5%
309.0%
2009
16.0%
116.2%
241.6%
2010
15.2%
130.8%
278.0%
2011
14.5%
134.0%
279.0%
2012
14.6%
148.3%
327.9%
2013
15.1%
137.5%
289.3%
2014
16.6%
149.0%
323.7%
2015
20.5%
156.2%
337.9%
2016
21.0%
148.1%
310.3%
2017
22.2%
157.3%
343.2%
2018
23.9%
157.8%
340.7%
Notes: Shaded areas denote recessions. The xth-percentile wage is the wage at which x% of wage earners earn less and (100−x)% earn more. Source: EPI analysis of Current Population Survey Outgoing Rotation Group microdataThe 95th percentile continues to pull away from middle- and low-wage workers: Cumulative change in real hourly wages of all workers, by wage percentile, 1979–2018
10th percentile
50th percentile
95th percentile
1979
0.0%
0.0%
0.0%
1980
-6.7%
-0.6%
-1.8%
1981
-8.1%
-1.7%
-1.5%
1982
-11.8%
-2.1%
0.5%
1983
-14.7%
-1.9%
3.5%
1984
-16.4%
-1.4%
3.9%
1985
-17.5%
0.1%
6.1%
1986
-17.2%
0.8%
8.6%
1987
-17.3%
1.9%
11.6%
1988
-16.5%
0.5%
14.3%
1989
-17.1%
0.3%
7.7%
1990
-16.5%
0.2%
9.1%
1991
-15.1%
-0.6%
10.6%
1992
-14.4%
0.4%
8.8%
1993
-13.1%
1.9%
6.6%
1994
-13.8%
0.8%
12.4%
1995
-14.7%
-0.6%
12.7%
1996
-15.7%
-2.3%
13.4%
1997
-13.2%
-0.3%
14.8%
1998
-7.8%
3.3%
18.3%
1999
-6.1%
5.9%
21.5%
2000
-6.7%
6.5%
24.9%
2001
-3.8%
8.2%
27.0%
2002
-0.8%
9.8%
31.6%
2003
-1.2%
9.9%
30.5%
2004
-3.0%
11.1%
31.7%
2005
-5.3%
9.5%
32.0%
2006
-5.9%
9.9%
33.2%
2007
-4.3%
10.1%
35.5%
2008
-3.2%
9.3%
36.3%
2009
-2.4%
11.7%
39.4%
2010
-3.2%
11.0%
38.6%
2011
-5.7%
8.2%
37.3%
2012
-7.3%
6.9%
39.0%
2013
-6.7%
7.4%
41.4%
2014
-5.9%
7.5%
39.4%
2015
-1.4%
9.3%
48.3%
2016
-0.6%
11.2%
49.8%
2017
3.5%
12.2%
52.0%
2018
4.1%
14.0%
56.1%
Wages for the vast majority have grown slower than their potential and much slower than those at the top
Except for the late 1990s and the last couple of years, wage growth would be zero over the last four decades
Consistent positive growth in only 9 of the last 39 years: Annualized real median hourly wage growth in each period
50th percentile
50th percentile
50th percentile
50th percentile
1979
0.00%
1980
-0.60%
1981
-1.70%
1982
-2.10%
1983
-1.90%
1984
-1.40%
1985
0.10%
1986
0.80%
1987
1.90%
1988
0.50%
1989
0.30%
1990
0.20%
1991
-0.60%
1992
0.40%
1993
1.90%
1994
0.80%
1995
-0.60%
1996
-2.30%
-2.30%
1997
-0.30%
1998
3.30%
1999
5.90%
2000
6.50%
2001
8.20%
8.20%
2002
9.80%
2003
9.90%
2004
11.10%
2005
9.50%
2006
9.90%
2007
10.10%
2008
9.30%
2009
11.70%
2010
11.00%
2011
8.20%
2012
6.90%
2013
7.40%
2014
7.50%
7.50%
2015
9.30%
2016
11.20%
2017
12.20%
2018
14.0%
2019
15.1%
Years
Real median hourly wage growth
1979-1996
-0.1%
1996-2001
2.0%
2001-2014
0.0%
2014-2019
1.4%
Real annual earnings of the bottom 90% only saw consistent gains when the labor market was the tightest: Cumulative and annualized change in real annual earnings of the bottom 90% for various periods, 1979-2018
Year
Bottom 90%
Bottom 90%
Bottom 90%
Bottom 90%
1979
0.0%
1980
-2.2%
1981
-2.6%
1982
-3.9%
1983
-3.7%
1984
-1.8%
1985
-1.0%
1986
1.1%
1987
2.1%
1988
2.2%
1989
1.8%
1990
1.1%
1991
0.0%
1992
1.5%
1993
0.9%
1994
2.0%
1995
2.8%
2.8%
1996
4.1%
1997
7.0%
1998
11.0%
1999
13.2%
2000
15.3%
15.3%
2001
15.7%
2002
15.6%
2003
15.7%
2004
15.6%
2005
15.0%
2006
15.7%
2007
16.7%
2008
16.0%
2009
16.0%
2010
15.2%
2011
14.5%
2012
14.6%
2013
15.1%
2014
16.6%
16.6%
2015
20.5%
2016
21.0%
2017
22.2%
2018
23.9%
Years
Annual growth rate
1979-1995
0.2%
1995-2000
2.3%
2000-2014
0.1%
2014-2018
1.5%
Wages for the vast majority have grown slower than their potential and much slower than those at the top
Except for the late 1990s and the last couple of years, wage growth would be zero over the last four decades
Slow wage growth cannot be explained away by including benefits or looking at total compensation
Note: Data are for all workers. Net productivity is the growth of output of goods and services minus depreciation, per hour worked. Source: EPI analysis of data from the BEA, BLS, and CPS ORG (see technical appendix for more detailed information) Source: Economic Policy Institute analysis of data from the Bureau of Economic Analysis' National Income and Product Accounts, the Bureau of Labor Statistics' Consumer Price Indexes and Labor Productivity and Costs program, and Current Population Survey Outgoing Rotation Group microdata (see technical appendix for more detailed information)Growth of productivity, real average compensation (consumer and producer), and real median compensation, 1979–2018
Year
Real median hourly wage
Real median hourly compensation
Real consumer average hourly compensation
Real producer average hourly compensation
Net productivity
1979
0.0%
0.0%
0.0%
0.0%
0.0%
1980
-0.7%
-0.4%
-0.8%
1.3%
-0.6%
1981
-1.7%
-1.0%
-0.5%
1.6%
1.1%
1982
-2.1%
-1.0%
1.2%
3.1%
0.1%
1983
-1.9%
-0.5%
1.5%
3.3%
3.1%
1984
-1.4%
-0.1%
2.1%
4.2%
5.8%
1985
0.1%
1.6%
3.8%
5.9%
7.5%
1986
0.8%
2.4%
7.5%
9.4%
9.7%
1987
1.9%
3.0%
8.1%
10.9%
9.9%
1988
0.5%
1.7%
10.0%
12.8%
11.5%
1989
0.3%
1.8%
9.1%
12.2%
12.5%
1990
0.2%
1.7%
10.4%
14.4%
13.9%
1991
-0.7%
1.3%
11.6%
15.7%
14.6%
1992
0.4%
3.0%
15.4%
19.6%
18.9%
1993
1.9%
4.7%
14.8%
18.9%
19.4%
1994
0.8%
3.2%
14.0%
17.9%
20.4%
1995
-0.7%
0.8%
14.0%
18.4%
20.9%
1996
-2.2%
-1.4%
14.8%
19.9%
23.1%
1997
-0.2%
0.0%
16.7%
22.0%
25.3%
1998
3.3%
3.3%
21.1%
26.7%
27.9%
1999
5.9%
5.8%
24.0%
30.4%
31.4%
2000
6.5%
6.4%
27.5%
35.5%
34.3%
2001
8.1%
8.6%
29.4%
38.1%
36.3%
2002
9.8%
11.1%
30.9%
39.4%
40.1%
2003
9.9%
11.8%
33.6%
42.4%
44.7%
2004
11.1%
13.2%
36.1%
45.0%
48.6%
2005
9.5%
11.7%
36.3%
45.9%
51.5%
2006
9.9%
11.5%
37.1%
47.1%
52.6%
2007
10.1%
11.3%
39.0%
49.2%
53.7%
2008
9.3%
10.6%
38.0%
50.8%
54.4%
2009
11.6%
13.6%
40.9%
51.6%
58.0%
2010
11.0%
13.0%
41.4%
52.5%
62.5%
2011
8.2%
10.1%
39.8%
52.2%
62.5%
2012
6.9%
8.3%
40.2%
52.7%
63.2%
2013
7.4%
9.3%
40.4%
52.4%
63.8%
2014
7.5%
9.0%
41.7%
53.7%
64.8%
2015
9.2%
10.5%
45.3%
56.2%
66.1%
2016
11.2%
12.2%
45.4%
56.4%
66.4%
2017
12.1%
13.1%
46.7%
58.2%
68.1%
2018
14.0%
14.9%
47.4%
59.0%
69.6%
Wages for the vast majority have grown slower than their potential and much slower than those at the top
Except for the late 1990s and the last couple of years, wage growth would be zero over the last four decades
Slow wage growth cannot be explained away by including benefits or looking at total compensation
Slow wage growth cannot be explained away by changing the price deflator
Notes: Shaded areas denote recessions. Source: EPI analysis of Current Population Survey Outgoing Rotation Group microdataUsing different deflectors still shows slow growth: Cumulative change in real median hourly wages of all workers, 1979–2018
Date
Median, CPI-U-RS
Median, PCE
1979
0.0%
0.0%
1980
-0.6%
-0.3%
1981
-1.7%
-0.9%
1982
-2.1%
-0.9%
1983
-1.9%
-0.7%
1984
-1.4%
0.3%
1985
0.1%
1.8%
1986
0.8%
2.0%
1987
1.9%
3.5%
1988
0.5%
1.8%
1989
0.3%
1.6%
1990
0.2%
2.0%
1991
-0.6%
1.4%
1992
0.4%
2.3%
1993
1.9%
3.9%
1994
0.8%
2.8%
1995
-0.6%
1.6%
1996
-2.3%
0.5%
1997
-0.3%
3.0%
1998
3.3%
7.2%
1999
5.9%
10.6%
2000
6.5%
12.3%
2001
8.2%
14.9%
2002
9.8%
17.0%
2003
9.9%
17.5%
2004
11.1%
19.0%
2005
9.5%
17.9%
2006
9.9%
19.0%
2007
10.1%
19.5%
2008
9.3%
19.6%
2009
11.7%
21.9%
2010
11.0%
21.1%
2011
8.2%
18.7%
2012
6.9%
17.5%
2013
7.4%
18.3%
2014
7.5%
18.6%
2015
9.3%
20.5%
2016
11.2%
23.0%
2017
12.2%
24.5%
2018
14.0% (0.3%)
27.1% (0.6%)
Notes: Shaded areas denote recessions. The xth-percentile wage is the wage at which x% of wage earners earn less and (100−x)% earn more. Source: EPI analysis of Current Population Survey Outgoing Rotation Group microdataUsing a different deflator doesn't change the fact that most of the growth is at the top: Cumulative change in real hourly wages of all workers, by wage percentile, adjusted using PCE 1979–2018
Date
10th
Median
95th
1979
0.0%
0.0%
0.0%
1980
-6.4%
-0.3%
-1.4%
1981
-7.4%
-0.9%
-0.7%
1982
-10.7%
-0.9%
1.8%
1983
-13.6%
-0.7%
4.9%
1984
-15.0%
0.3%
5.7%
1985
-16.2%
1.8%
7.8%
1986
-16.2%
2.0%
9.9%
1987
-16.0%
3.5%
13.4%
1988
-15.4%
1.8%
15.8%
1989
-16.1%
1.6%
9.1%
1990
-15.0%
2.0%
11.1%
1991
-13.4%
1.4%
12.9%
1992
-12.8%
2.3%
10.9%
1993
-11.5%
3.9%
8.7%
1994
-12.2%
2.8%
14.6%
1995
-12.8%
1.6%
15.3%
1996
-13.4%
0.5%
16.6%
1997
-10.5%
3.0%
18.4%
1998
-4.4%
7.2%
22.8%
1999
-2.0%
10.6%
26.9%
2000
-1.8%
12.3%
31.5%
2001
2.2%
14.9%
35.0%
2002
5.7%
17.0%
40.2%
2003
5.6%
17.5%
39.5%
2004
3.9%
19.0%
41.1%
2005
1.9%
17.9%
42.2%
2006
1.8%
19.0%
44.2%
2007
3.9%
19.5%
47.1%
2008
5.9%
19.6%
49.1%
2009
6.6%
21.9%
52.1%
2010
5.6%
21.1%
51.2%
2011
3.5%
18.7%
50.7%
2012
2.0%
17.5%
52.8%
2013
2.7%
18.3%
55.7%
2014
3.8%
18.6%
53.8%
2015
8.7%
20.5%
63.6%
2016
10.0%
23.0%
65.8%
2017
15.0%
24.5%
68.8%
2018
16.0%
27.1%
74.0%
Source: EPI analysis of Kopczuk, Saez, and Song (2010, Table A3) and Social Security Administration wage statisticsUsing a different deflator doesn’t change the fact that most of the growth is at the very top, 1979–2018
Year
Bottom 90%
Top 1%
Top 0.1%
1979
0.0%
0.0%
0.0%
1980
-1.8%
3.8%
6.2%
1981
-1.8%
4.0%
8.2%
1982
-2.7%
10.9%
18.9%
1983
-2.4%
15.1%
30.3%
1984
-0.2%
22.7%
46.5%
1985
0.7%
25.0%
48.1%
1986
2.3%
34.3%
62.8%
1987
3.7%
55.9%
109.8%
1988
3.5%
70.9%
143.3%
1989
3.1%
65.4%
126.8%
1990
2.9%
67.7%
134.0%
1991
2.1%
56.8%
108.9%
1992
3.5%
77.6%
160.9%
1993
2.9%
71.2%
144.9%
1994
4.0%
66.6%
131.3%
1995
5.1%
74.0%
142.3%
1996
7.0%
84.0%
164.4%
1997
10.4%
107.0%
236.0%
1998
15.2%
121.1%
268.3%
1999
18.2%
139.9%
318.2%
2000
21.4%
157.9%
361.0%
2001
23.0%
145.0%
325.7%
2002
23.2%
123.0%
261.9%
2003
23.7%
128.8%
274.3%
2004
23.9%
143.4%
315.3%
2005
23.8%
153.4%
338.2%
2006
25.3%
163.5%
360.0%
2007
26.7%
178.1%
402.1%
2008
27.0%
160.0%
347.7%
2009
26.6%
136.0%
272.9%
2010
25.7%
151.9%
312.4%
2011
25.7%
156.9%
316.1%
2012
26.1%
173.1%
370.6%
2013
26.8%
161.5%
328.8%
2014
28.7%
174.9%
367.7%
2015
33.0%
182.7%
383.2%
2016
33.9%
174.5%
354.0%
2017
35.7%
185.8%
392.3%
2018
38.1%
187.3%
391.1%
Wages for the vast majority have grown slower than their potential and much slower than those at the top
Except for the late 1990s and the last couple of years, wage growth would be zero over the last four decades
Slow wage growth cannot be explained away by including benefits or looking at total compensation
Slow wage growth cannot be explained away by changing the price deflator
Slow wage growth cannot be explained away by shortages of skills or education
The median worker has more experience and education than they did four decades ago: Average age and share of workers with a college degree or more in the middle fifth, 1979-2018
| year | College or more | Average age |
|---|---|---|
| 1979 | 15.65%[labelx=20] | 36.05 |
| 1980 | 16.89% | 36.04 |
| 1981 | 16.17% | 36.18 |
| 1982 | 17.97% | 36.6 |
| 1983 | 18.33% | 36.66 |
| 1984 | 18.02% | 36.47 |
| 1985 | 17.39% | 36.45 |
| 1986 | 17.75% | 36.48 |
| 1987 | 17.77% | 36.67 |
| 1988 | 17.32% | 36.52 |
| 1989 | 17.20% | 36.91 |
| 1990 | 17.89% | 36.91 |
| 1991 | 17.80% | 37.17 |
| 1992 | 17.27% | 37.34 |
| 1993 | 18.05% | 37.77 |
| 1994 | 17.91% | 37.87 |
| 1995 | 18.67% | 37.97 |
| 1996 | 19.47% | 38.23 |
| 1997 | 19.47% | 38.48 |
| 1998 | 20.17% | 38.5 |
| 1999 | 19.53% | 38.32 |
| 2000 | 19.87% | 38.92 |
| 2001 | 20.15% | 39.15 |
| 2002 | 21.57% | 39.8 |
| 2003 | 21.76% | 39.98 |
| 2004 | 21.74% | 40.17 |
| 2005 | 21.69% | 40.12 |
| 2006 | 23.45% | 40.46 |
| 2007 | 23.94% | 40.64 |
| 2008 | 24.77% | 40.77 |
| 2009 | 25.77% | 41.55 |
| 2010 | 26.34% | 41.82 |
| 2011 | 26.51% | 41.9 |
| 2012 | 28.02% | 42.12 |
| 2013 | 28.62% | 42.25 |
| 2014 | 29.80% | 41.97 |
| 2015 | 29.99% | 42.06 |
| 2016 | 29.30% | 42.02 |
| 2017 | 31.03% | 41.87 |
| 2018 | 31.32% | 41.83 |
Source: EPI's State of Working America data library.
Wages of the bottom 60 percent of college graduates are lower today than in 2000: Cumulative percent change in real hourly wages of workers with a college degree, by wage percentile, 2000–2018
| year | 50th | 60th | 90th |
|---|---|---|---|
| 2000 | 0.0% | 0.0% | 0.0% |
| 2001 | 2.3% | 1.2% | 3.6% |
| 2002 | 1.5% | 1.4% | 2.4% |
| 2003 | 1.3% | 2.1% | 3.3% |
| 2004 | 0.1% | 0.4% | 2.8% |
| 2005 | -1.4% | 1.1% | 5.5% |
| 2006 | -1.0% | 0.4% | 4.5% |
| 2007 | -0.3% | -0.3% | 6.4% |
| 2008 | -1.1% | -1.1% | 5.9% |
| 2009 | -0.6% | -0.1% | 6.6% |
| 2010 | -1.3% | -0.8% | 5.3% |
| 2011 | -3.1% | -2.6% | 2.0% |
| 2012 | -4.5% | -3.0% | 3.9% |
| 2013 | -2.9% | -1.4% | 4.7% |
| 2014 | -4.5% | -3.1% | 3.9% |
| 2015 | -3.1% | -0.2% | 8.2% |
| 2016 | -1.7% | -0.5% | 14.5% |
| 2017 | -3.2% | 0.7% | 12.2% |
| 2018 | -2.4% | -1.2% | 9.8% |
Note: Sample based on all workers ages 16 and older. Education groups are mutually exclusive, so "college" here refers to those with only a four-year college degree.
Source: EPI analysis of Current Population Survey Outgoing Rotation Group microdata from the U.S. Census Bureau
Change in log occupation wage by change in log employment share, 2000–2007
Note: The regression line is from a simple linear regression of change in log occupation wage on change in log employment share. Observations are the 100 occupation percentiles. Standard errors are in parentheses.
Source: Authors’ analysis of Current Population Survey Outgoing Rotation Group microdata
Change in log occupation wage by change in log employment share, 1989–2000
Note: The regression line is from a simple linear regression of change in log occupation wage on change in log employment share. Observations are the 100 occupation percentiles. Standard errors are in parentheses.
Source: Authors’ analysis of Current Population Survey Outgoing Rotation Group microdata
Change in log occupation wage by change in log employment share, 1979–1989
Note: The regression line is from a simple linear regression of change in log occupation wage on change in log employment share. Observations are the 100 occupation percentiles. Standard errors are in parentheses.
Source: Authors’ analysis of Current Population Survey Outgoing Rotation Group microdata
Wages for the vast majority have grown slower than their potential and much slower than those at the top
Except for the late 1990s and the last couple of years, wage growth would be zero over the last four decades
Slow wage growth cannot be explained away by including benefits or looking at total compensation
Slow wage growth cannot be explained away by changing the price deflator
Slow wage growth cannot be explained away by shortages of skills or education
So . . . why is wage growth so slow and unequal?
Supply and demand factors seem to be playing a very little role
Rules were rigged against most workers and in favor of capital owners and high-paid managers
Strengthening labor market institutions can reverse this imbalance of power
Policy matters
CEOs make 312 times more than typical workers: CEO-to-worker compensation ratio, 1965–2017
| Year | CEO-to-worker compensation ratio based on options realized |
|---|---|
| 1965 | 20.0 |
| 1966 | 21.1 |
| 1967 | 22.3 |
| 1968 | 23.6 |
| 1969 | 23.3 |
| 1970 | 23.0 |
| 1971 | 22.8 |
| 1972 | 22.5 |
| 1973 | 22.2 |
| 1974 | 23.5 |
| 1975 | 25.0 |
| 1976 | 26.5 |
| 1977 | 28.1 |
| 1978 | 29.7 |
| 1979 | 31.6 |
| 1980 | 33.6 |
| 1981 | 35.7 |
| 1982 | 38.0 |
| 1983 | 40.4 |
| 1984 | 42.9 |
| 1985 | 45.6 |
| 1986 | 48.5 |
| 1987 | 51.5 |
| 1988 | 54.8 |
| 1989 | 58.2 |
| 1990 | 70.5 |
| 1991 | 85.3 |
| 1992 | 103.2 |
| 1993 | 106.1 |
| 1994 | 81.9 |
| 1995 | 112.3 |
| 1996 | 141.4 |
| 1997 | 207.5 |
| 1998 | 277.0 |
| 1999 | 248.1 |
| 2000 | 343.5 |
| 2001 | 194.1 |
| 2002 | 176.5 |
| 2003 | 219.2 |
| 2004 | 251.6 |
| 2005 | 299.0 |
| 2006 | 318.6 |
| 2007 | 327.4 |
| 2008 | 227.3 |
| 2009 | 187.8 |
| 2010 | 219.3 |
| 2011 | 225.6 |
| 2012 | 266.2 |
| 2013 | 278.6 |
| 2014 | 284.0 |
| 2015 | 271.6 |
| 2016 | 270.1 |
| 2017 | 311.7 |
Notes: CEO annual compensation is computed using the “options realized” and “options granted” compensation series for CEOs at the top 350 U.S. firms ranked by sales. The “options realized” series includes salary, bonus, restricted stock grants, options realized, and long-term incentive payouts. Projected value for 2017 is based on the change in CEO pay as measured from June 2016 to June 2017 applied to the full-year 2016 value. “Typical worker” compensation is the average annual compensation of the workers in the key industry of the firms in the sample.
Source: Authors’ analysis of data from Compustat’s ExecuComp database, the Bureau of Labor Statistics’ Current Employment Statistics data series, and the Bureau of Economic Analysis NIPA tables
As union membership declines, income inequality rises: Union membership and share of income going to the top 10%, 1917–2017
| Year | Union membership | Share of income going to the top 10% |
|---|---|---|
| 1917 | 11.0% | 40.3% |
| 1918 | 12.1% | 39.9% |
| 1919 | 14.3% | 39.5% |
| 1920 | 17.5% | 38.1% |
| 1921 | 17.6% | 42.9% |
| 1922 | 14.0% | 42.9% |
| 1923 | 11.7% | 40.6% |
| 1924 | 11.3% | 43.3% |
| 1925 | 11.0% | 44.2% |
| 1926 | 10.7% | 44.1% |
| 1927 | 10.6% | 44.7% |
| 1928 | 10.4% | 46.1% |
| 1929 | 10.1% | 43.8% |
| 1930 | 10.7% | 43.1% |
| 1931 | 11.2% | 44.4% |
| 1932 | 11.3% | 46.3% |
| 1933 | 9.5% | 45.0% |
| 1934 | 9.8% | 45.2% |
| 1935 | 10.8% | 43.4% |
| 1936 | 11.1% | 44.8% |
| 1937 | 18.6% | 43.3% |
| 1938 | 23.9% | 43.0% |
| 1939 | 24.8% | 44.6% |
| 1940 | 23.5% | 44.4% |
| 1941 | 25.4% | 41.0% |
| 1942 | 24.2% | 35.5% |
| 1943 | 30.1% | 32.7% |
| 1944 | 32.5% | 31.5% |
| 1945 | 33.4% | 32.6% |
| 1946 | 31.9% | 34.6% |
| 1947 | 31.1% | 33.0% |
| 1948 | 30.5% | 33.7% |
| 1949 | 29.6% | 33.8% |
| 1950 | 30.0% | 33.9% |
| 1951 | 32.4% | 32.8% |
| 1952 | 31.5% | 32.1% |
| 1953 | 33.2% | 31.4% |
| 1954 | 32.7% | 32.1% |
| 1955 | 32.9% | 31.8% |
| 1956 | 33.2% | 31.8% |
| 1957 | 32.0% | 31.7% |
| 1958 | 31.1% | 32.1% |
| 1959 | 31.6% | 32.0% |
| 1960 | 30.7% | 31.7% |
| 1961 | 28.7% | 31.9% |
| 1962 | 29.1% | 32.0% |
| 1963 | 28.5% | 32.0% |
| 1964 | 28.5% | 31.6% |
| 1965 | 28.6% | 31.5% |
| 1966 | 28.7% | 32.0% |
| 1967 | 28.6% | 32.0% |
| 1968 | 28.7% | 32.0% |
| 1969 | 28.3% | 31.8% |
| 1970 | 27.9% | 31.5% |
| 1971 | 27.4% | 31.8% |
| 1972 | 27.5% | 31.6% |
| 1973 | 27.1% | 31.9% |
| 1974 | 26.5% | 32.4% |
| 1975 | 25.7% | 32.6% |
| 1976 | 25.7% | 32.4% |
| 1977 | 25.2% | 32.4% |
| 1978 | 24.7% | 32.4% |
| 1979 | 25.4% | 32.3% |
| 1980 | 23.6% | 32.9% |
| 1981 | 22.3% | 32.7% |
| 1982 | 21.6% | 33.2% |
| 1983 | 21.4% | 33.7% |
| 1984 | 20.5% | 33.9% |
| 1985 | 19.0% | 34.3% |
| 1986 | 18.5% | 34.6% |
| 1987 | 17.9% | 36.5% |
| 1988 | 17.6% | 38.6% |
| 1989 | 17.2% | 38.5% |
| 1990 | 16.7% | 38.8% |
| 1991 | 16.2% | 38.4% |
| 1992 | 16.2% | 39.8% |
| 1993 | 16.2% | 39.5% |
| 1994 | 16.1% | 39.6% |
| 1995 | 15.3% | 40.5% |
| 1996 | 14.9% | 41.2% |
| 1997 | 14.7% | 41.7% |
| 1998 | 14.2% | 42.1% |
| 1999 | 13.9% | 42.7% |
| 2000 | 13.5% | 43.1% |
| 2001 | 13.5% | 42.2% |
| 2002 | 13.3% | 42.4% |
| 2003 | 12.9% | 42.8% |
| 2004 | 12.5% | 43.6% |
| 2005 | 12.5% | 44.9% |
| 2006 | 12.0% | 45.5% |
| 2007 | 12.1% | 45.7% |
| 2008 | 12.4% | 46.0% |
| 2009 | 12.3% | 45.5% |
| 2010 | 11.9% | 46.4% |
| 2011 | 11.8% | 46.6% |
| 2012 | 11.2% | 47.8% |
| 2013 | 11.2% | 46.7% |
| 2014 | 11.1% | 46.9% |
| 2015 | 11.1% | 47.2% |
| 2016 | 10.7% | 47.4% |
| 2017 | 10.7% | 47.9% |
Sources: Data on union density follows the composite series found in Historical Statistics of the United States; updated to 2017 from unionstats.com. Income inequality (share of income to top 10%) data are from Thomas Piketty and Emmanuel Saez, “Income Inequality in the United States, 1913–1998,” Quarterly Journal of Economics 118, no. 1 (2003) and updated data from the Top Income Database, updated March 2019.
A large share of workers do not have the union representation they want and need: Share of workers who are either covered by a union contract or would vote for a union in their workplace, and share of workers who are covered by a union contract, 1977 and 2017
| Share of workers either covered by a union contract or who would vote for a union | Share of workers covered by a union contract | |
|---|---|---|
| 1977 | 59.5% | 26.5% |
| 2017 | 59.9% | 11.9% |
Source: Author’s analysis of Thomas A. Kochan et al., “Worker Voice in America: Is There a Gap between What Workers Expect and What They Experience?” ILR Review 72, no. 1 (2019) and Bureau of Labor Statistics’ Current Population Survey public data series
Supplemental charts
The 10 occupations with the largest projected job growth
| The 10 occupations with the largest projected job growth | Employment (in thousands) | Projected growth (in thousands) | Median annual wage, 2018 | ||
|---|---|---|---|---|---|
| 2018 | 2028 | ||||
| 1 | Personal care aides | 2,421 | 3,302 | 881 | $24,020 |
| 2 | Combined food preparation and serving workers, incl. fast food | 3,704 | 4,344 | 640 | $21,250 |
| 3 | Registered nurses | 3,060 | 3,431 | 372 | $71,730 |
| 4 | Home health aides | 832 | 1,137 | 305 | $24,200 |
| 5 | Cooks, restaurant | 1,362 | 1,661 | 299 | $26,530 |
| 6 | Software developers, applications | 944 | 1,186 | 242 | $103,620 |
| 7 | Waiters and waitresses | 2,635 | 2,805 | 170 | $21,780 |
| 8 | General and operations managers | 2,376 | 2,541 | 165 | $100,930 |
| 9 | Janitors and cleaners, except maids & housekeeping cleaners | 2,404 | 2,564 | 160 | $26,110 |
| 10 | Medical assistants | 687 | 842 | 155 | $33,610 |
Source: EPI analysis of Bureau of Labor Statistics data
Note: In order to include data from the first half of 2019, all years refer to the 12 month period ending in June. Source: Authors' analysis of Current Population Survey basic monthly microdata from the U.S. Census BureauWage growth was stronger in the late 1990s than the current expansion: Real median wage growth, 1996–2000 and 2015–2019
1996-2000
2015-2019
White men
9.9%
6.6%
Black men
10.3%
5.0%
White women
9.4%
6.4%
Black women
9.2%
4.7%
Note: In order to include data from the first half of 2019, all years refer to the 12 month period ending in June. Source: Authors' analysis of Current Population Survey basic monthly microdata from the U.S. Census BureauWage growth stronger among workers with a college degree in the late 1990s than the current expansion: Real average wage growth, workers with a bachelors degree, 1996–2000 and 2015–2019
1996-2000
2015-2019
Men
10.9%
7.8%
Women
9.8%
3.0%
White
10.6%
6.6%
Black
11.5%
-0.3%