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April, No. 261

The inequality of labor market earnings in the U.S. has increased dramatically in recent decades. However, closer examination of the data reveals two distinct periods of rising inequality: 1973–89 and 1989–2005. The first period was one of diverging wages throughout the distribution, while the second period was one of polarizing wage growth.

Last Updated: 03/12/2009

Explaining Trends in Wages, Work and Occupations

David H. Autor

It is widely recognized that inequality of labor market earnings in the United States has increased dramatically in recent decades. Over the course of more than three decades, wage growth was weak to nonexistent at the bottom of the distribution, strong at the top of the distribution, and modest in the middle. While real hourly earnings of workers within the bottom 30% of the earnings distribution rose by no more than 10 percentage points between 1973 and 2005, earnings of workers at the 90th percentile rose by more than 40 percentage points.