A recent study conducted by a researcher at Duke University reveals that pay inequality is more prevalent among newer companies compared to older ones. The study analyzed payroll data from the U.S. Census Bureau and found that pay-setting policies tend to remain unchanged throughout the life cycle of companies, indicating a potential increase in earning inequality among workers in the future. The research also highlights the decrease in the number of businesses entering the market over the past 25 years, leading to a larger share of workers being employed in older firms. Several factors contribute to pay inequality in newer companies, including differences in pay for similar workers, the specialization in hiring certain types of workers, outsourcing, changing norms about profit sharing, and the decline in unionization. The researcher suggests that implementing regulations, such as limiting offshoring and promoting the hiring of American workers, could help mitigate pay inequality in these companies.
However, a new study by Elise Gould and Josh Bivens of the Economic Policy Institute challenges the notion that pay inequality is more prevalent among newer companies. They argue that inequality has indeed risen enormously in the United States over the past half-century, as demonstrated by the available data on individual Americans' earnings in the labor market. The data shows that the pay of workers who are not managers or supervisors has not kept pace with productivity growth, leading to a growing gap between their pay and overall growth. The main driver of this gap is the concentration of labor income at the top of the wage distribution. The Social Security Administration data on annual wage earnings reveals vastly unequal earnings growth between 1979 and 2022, with the top 1% and top 0.1% experiencing significant increases while the bottom 90% saw much smaller growth. The share of earnings for the bottom 90% fell, while the share for the top 5% and top 0.1% grew. CEO pay has also grown significantly, with CEOs of the 350 largest publicly owned US firms seeing a 1,209% increase in inflation-adjusted pay between 1978 and 2022. The authors argue that policy changes are needed to address this inequality, including efforts to re-empower workers through expanded unionization and maintaining low unemployment rates.
These contrasting studies shed light on the complex issue of pay inequality in America. While the Duke University study focuses on the specific dynamics within newer companies, the study by Gould and Bivens provides a broader perspective on the overall trends in pay inequality in the United States. Both studies emphasize the need for policy changes to address this issue and ensure fair compensation for workers.
The perception that American workers' wages have lagged behind productivity since the 1970s is the subject of an opinion piece in The New York Times. The author argues that the issue is more about inequality rather than employers suppressing wages. Two charts from different organizations show conflicting data on the gap between pay growth and productivity growth. The discrepancy arises from different definitions of pay and productivity. The article mentions scholars Josh Bivens and Scott Winship who have different perspectives on the issue. [69cc48f5]
The American Worker Project, an initiative by the Economic Innovation Group, aims to forge a consensus about the condition of American workers. It features original analysis, public opinion research, and guest essays. The project presents an essay examining the condition of American workers from 1980 to the present, finding that the typical worker is thriving but progress has slowed. They outline an agenda to close the gap between progress and potential. The project seeks to improve the lives of workers and ensure the economy delivers on its full potential [5bdebe0a].