LegiStorm

Summary:

Wage earnings are the largest source of income for many workers, and wage gains are a primary lever for raising living standards. Reports of stagnant median wages have therefore raised concerns among some that economic growth over the last severa l decades has not translated in to gains for all worker groups. To shed light on rece nt patterns, t his report estimates real (inflation - adjusted) wage trends at th e 10 th , 50 th (median) , and 90 th percentile s of the wage distributions for the workforce as a whole and for several demographic groups , and it explores changes in educational atta inment and occupation for these groups over the 1979 to 2017 period . Key findings of this report include the following:  Real w ages rose at the t op of the d istribution , whereas wages stagnated or fell at the bottom. R eal (inflation - adjusted) wages at the 9 0 th percentile increased over 1979 to 2017 for the workforce as a whole and across sex, race, and Hispanic ethnicity . However, a t the 90 th percentile, wage growth was much higher for white men and women and lower for black and Hispanic men. By contrast, middle (50 th percentile) and bottom (10 th percentile) wages grew to a lesser degree (e.g., women) or declined in real terms (e.g. , men).  The gender wage gap narrowed, but other gaps did not. From 1979 to 2017 , the gap between the women’s median wage and me n’s median wage became smaller. Gaps expanded between the median wage s for black and white workers and for Hispanic and non - Hispanic workers over the same period.  Real wages fell for workers with low er levels of e ducational a ttainment and rose for highly e ducated workers. Wages for workers with a high school diploma or less education declined in real terms at the top, middle, and bottom of the wage distribution, whereas wages rose for workers with at least a college degree. The wage value of a college degre e (relative to a high school education) increased markedly over 1979 - 2000. The college wage premium has leveled since that time, but it remains high. High - wage workers, as a group, benefited more from the increased payoff to a college degree because they a re the best educated and had the highest gains in educational attainment over the 1979 to 2017 period.  Education and occupation patterns appear to be important to wage trends . Worker groups studied in this report were more likely to have earned a bachelor’ s or advanced degree in 2017 than workers in 1979, with the gains in college degree attainment being particularly large for workers in the highest wage groups. For some low - and middle - wage worker groups, however, these educational gains were not sufficien t to raise wages. Occupational categories of workers appear to matter as well and may help explain the failure of education alone to raise wages. The f ocus of this report is on wage rates and changes at selected wage percentile s , with some attention given to the potential influence of education al attainment and the occupational distribution of worker groups on wage patterns . Other fa ctors are likely to contribute to wage trends over the 1979 to 2017 period as well, including chan ges in the supply and demand for workers, labor market institutions , workplace organization and practices , and macroeconomic trends . This report provides an overview of how these broad forces are thought to interact with wa ge determination , but it do es not attempt to measure their contribution to wage patterns over the last four decades . For example, changes over time in the supply and demand for workers with different skill sets (e.g., as driven by technological change and new international trade patterns) is like ly to affect wage growth . A declining real minimum wage and decreasing unionization rates may lead to slower wage growth for workers more reliant on these institutions to provide wage protection , whereas changes in pay - setting practices in certain high - pay occupations, the emergence of superstar earners (e.g., in sports and entertainment), and skill - biased technological changes may have improved wage growth for some workers at the top of the wage distribution . Macroeconomic factors , business cycles, and other national economic trends affect the overall demand for workers , with consequences for aggregate wage growth , and may affect employers ’ production decisions (e.g., production technology and where to produ ce ) with implications for the distribution of wage income . These factors are briefly discussed at the end of the report .