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Arin Dube

We've had an incredible wage compression that has cut the rise in 90-10 wage inequality since 1980 by a 1/3 during over just 3 years.

This is a testament to the strong fiscal and monetary policy support that allowed an unprecedented recovery in employment following a recession.

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antoniofatas :verified:

@arindube Is there a short explanation of what other studies get wrong when they look at similar issues? For example, epi.org/publication/inequality

Economic Policy InstituteInequality in annual earnings worsens in 2021: Top 1% of earners get a larger share of the earnings pie while the bottom 90% lose groundRising wage inequality and slow and uneven growth in real (inflation-adjusted) hourly wages for the vast majority of workers have been defining features of the U.S. labor market for most of the last 40 or so years. In only about 10 years since 1979 did most workers see any consistent positive wage growth: in the tight labor market of the late 1990s and in the five years leading up to the pre-pandemic labor market peak in 2019. Some low-wage workers have experienced disproportionate wage gains in the current business cycle—gains that even beat out high inflation. However, the latest data on annual earnings from the Social Security Administration show that the very top continues to pull away and amass a larger share of the earnings pie, while the bottom 90% continues to fall further behind. In 2021, annual wages rose fastest for the top 1% of earners (up 9.4%) and top 0.1% (up 18.5%), while those in the bottom 90% saw their real earnings fall 0.2% between 2020 and 2021. Workers in the 90th–99th percentile of the earnings distribution also experienced real losses in 2021. 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, the lowest share on record, and far lower than their 69.8% share in 1979. From 1979 to 2021, wages for the top 1% and top 0.1% skyrocketed by 206.3% and 465.1%, respectively, while wages for the bottom 90% grew just 28.7%. On an annualized basis, bottom 90% wages grew only 0.6% per year, compared with 2.7% and 4.2% annualized wage growth for the top 1% and top 0.1%, respectively.
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Arin Dube

@antoniofatas I think a combination of:
1) their focus on annual earnings (mix of hours and wages) as opp to our focus on hourly wages
2) they are only looking through 2021
3) they are focused the the very top; we are looking at inequality within bottom 90%

Elise Gould

@arindube @antoniofatas
please take all this with a huge grain of salt because it requires rather heroic assumptions about the earnings distribution within wage bins, but i decided to take a look within the bottom 90% of the annual earnings distribution using the SSA data. it's rather striking--though not necessarily robust--that the SSA data shows a similar pattern of wage compression between 2020 and 2021 within the bottom 90% of the wage earners.

Blue bar chart shows faster wage growth for the bottom 30% of workers than higher up the wage distribution between 2020 and 2021. The top 1% has the fastest of any group.
Jan 12, 2023, 02:14 PM·Public·Web
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