By Elise Gould | March 10, 2016
For the full story and report: 
http://www.epi.org/publication/wage-inequality-continued-its-35-year-rise-in-2015/
Introduction and key findings
Over the last three-and-a-half decades, rising inequality has been a defining feature of the American economy. The way rising inequality has directly affected most Americans is through sluggish hourly wage growth in recent decades, despite an expanding and increasingly productive economy. For example, had all workers’ wages risen in line with productivity, as they did in the three decades following World War II, an American earning around $50,000 today would instead be making close to $75,000. A hugely disproportionate share of economic gains from rising productivity is going to the top 1 percent and to corporate profits, instead of to ordinary workers—who are more productive and educated than ever. This rising inequality is largely the result of big corporations and the wealthy rewriting the rules of the economy to stack the deck in their favor. This has prevented the benefits of productivity growth from “trickling down” to reach most households.
Unfortunately, although inflation-adjusted wages grew across the board in 2015 (due to a sharp dip in inflation), the trend of rising wage inequality continued unabated last year. This paper begins by detailing the most up-to-date hourly wage trends through 2015 and then examines the continued growth in inequality that began in the late 1970s. This rising inequality is confirmed by the latest wage data, analyzed across the wage distribution and education categories, including striking differences by race and gender.
Key findings include:
- While real hourly wages (i.e., wages adjusted for inflation) grew across the board in 2015, this is largely due to a sharp dip in inflation; growth in nominal wages (i.e., wages unadjusted for inflation) has not accelerated. This dip in inflation is unlikely to be a durable source of future real wage gains.
- Nominal wage growth of 2.2 percent remains below a level where workers would reap the benefits of economic growth.
- There is no evidence of substantial acceleration of wages that would signal that the Federal Reserve Board should worry about incipient inflation and raise interest rates in an effort to slow the economy.
- Real hourly wage growth in 2015 was fastest at the top of the wage distribution, illustrating that wage inequality continued its 35-year rise last year.
- The gap between the middle and bottom has remained stable since 2000.
- The gap between the top and everyone else has grown.
- Looking at men and women separately, from 2014 to 2015, the strongest wage growth was at the top of the men’s wage distribution and at the bottom of the women’s wage distribution.
- For men, wages at the 95th and 90th percentiles grew by 9.9 percent and 6.2 percent, respectively, compared with only 2.6 percent at the median.
- While significant gender wage gaps remain across the wage distribution, there has been significant narrowing of the gap at the bottom and middle of the wage distribution since 2000.
- In 2015, faster low-wage wage growth occurred in states that increased their minimum wage.
- The 10th percentile women’s wage grew 5.2 percent in states with legislated minimum-wage increases, compared with only 3.1 percent growth in states without any minimum-wage increase.
- Racial and ethnic wage gaps are on the rise at the top of the wage distribution.
- Between 2014 and 2015, white wage growth was at least as fast as black wage growth at all deciles, and was far stronger at the top than at the middle or bottom.
- Wage growth at the bottom of the Hispanic wage distribution since 2000 greatly exceeded that of low-wage black workers, who actually experienced losses over that period.
- Regardless of race or ethnicity, within-group inequality has risen since 2000, with stronger growth at the top than at the bottom.
- Over 2000–2015, wage growth was faster among the more educated, but not fast enough to explain growing wage inequality.
- For both men and women, those with less than a college degree had lower wages in 2015 than in 2007.
- While there has been a slow narrowing of gender wage gaps for those with less than a college degree since 2000, gender wage gaps continued to grow among those with an advanced degree.
