Wage inequality continues to skyrocket in the pandemic labor market, according to a new Economic Policy Institute report. Annual wages rose fastest for the top 1% of earners (up 9.4%) and top 0.1% (up 18.5%) in 2021, while those in the bottom 90% saw their real earnings fall 0.2%. Workers in the 90th–99th percentile of the earnings distribution also experienced real losses in 2021.
The top 1% now hold a record share of total earnings, while the bottom 90% share of earnings has hit a historic low. The top 1% earned 14.6% of all wages in 2021—twice as high as their 7.3% share in 1979. The bottom 90% received just 58.6% of all wages in 2021, far lower than their 69.8% share in 1979.
Over the 1979–2021 period:
- Wages for the top 1% grew more than seven times as fast as wages for the bottom 90%.
- Wages for the top 1% and top 0.1% skyrocketed by 206.3% and 465.1%, respectively.
- Wages for the bottom 90% grew just 28.7%.
- Bottom 90% wages grew only 0.6% per year on an annualized basis, compared with 2.7% and 4.2% annualized wage growth for the top 1% and top 0.1%, respectively.
Even in 1979, there was vast inequality between wage groups, with the top 5% earning five times as much as the bottom 90%. But as the report shows, the inequality that existed in 1979 pales in comparison with the inequality experienced in 2021.
“Rising wage inequality and slow and uneven wage growth for most workers have been defining features of the U.S. labor market for the past four decades,” said Elise Gould, EPI senior economist and co-author of the report. “The highest earners have amassed a growing share of total wages, while the bottom 90% has continued to fall further behind. This growing inequality isn’t inevitable—it is a result of decades of deliberate policy decisions to reduce workers’ bargaining power.”
These intentional policy decisions that have resulted in rising inequality include tolerating excessive unemployment, failing to routinely raise the federal minimum wage, and eroding workers’ rights to form unions resulting in declining union membership, among others.
“After decades of growing inequality, raising wages and building worker power must be at the center of economic policymaking,” said Jori Kandra, EPI research assistant and co-author of the report. “Policymakers need to use every tool at their disposal to reverse these policy trends—including by prioritizing full employment, strengthening and enforcing labor standards, and removing obstacles to workers forming unions.”