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Real Wage Growth (or Lack Thereof): Part 2 – The Long Run: 1979-2018

Posted by Bahr, Kevin - March 4, 2020 - Business and Economics, Center for Business and Economic Insight

In 2019 the Congressional Research Service (CRS) released an analysis of real wage trends over the period 1979-2018. The Congressional Research Service is part of the Library of Congress and works exclusively for the United States Congress. The goal of the CRS is to provide nonpartisan analysis on relevant policy issues and legal analysis to committees and members of both the House and Senate, regardless of party affiliation. The CRS report uses data collected from the Current Population Survey, a nationally representative sample of workers, to estimate real hourly wages at the 10th, 50th, and 90th income percentiles, and analyzes how real wages changed over time. Percentiles allow analyzing different income segments of the working population – workers at the 90th percentile have higher real hourly wages than 90% of workers.

Table 1 below is taken from that analysis and shows how real hourly wages changed between 1979 and 2018 across selected demographic characteristics for three different income levels. The change in real hourly wages was analyzed for workers at the 10th, 50th, and 90th income percentiles across varying demographic characteristics. In each case the graphs within the table shows how the dollar change in real hourly wages occurred over this time period. The vertical axis of each chart shows the change in real hourly wages (with a range between $0 and $65); the horizontal axis shows the time period 1979 through 2018.

Overall, workers at the 90th income percentile enjoyed the greatest change, with the hourly real wage increasing 37.6% from approximately $38.44 to $52.88. Workers at the 50th percentile (the median) had only a 6.1% increase in real wages; for workers at the 10th percentile not much changed, only a 1.6% increase. Looking at the change in real wages by demographics, men in the 90th income percentile had a 36.4% increase compared to 66.7% for women. At the 50th percentile, men had a decrease of 5.1% compared to gains of 25.7% for women. At the 10th percentile, men had a decrease of 13.3% to gains of 4.1% for women. The data indicate a lessening, but certainly not a complete closing, of the income gap between men and women.

Across ethnic differences, Whites had the greatest gains at each percentile, registering gains of 45.6%, 13.2%, and 8.2% for the 90th, 50th, and 10th percentiles respectively. Gains for Blacks and Hispanics were much less (if at all). At the 90th percentile, Blacks and Hispanics had increases of 28.5% and 11.4% respectively. At the 50th percentile, Blacks had an increase of 1.2% while Hispanics saw a decline of 4.6%. Both groups had declines in real wages at the 10th percentile, with Blacks having a 0.3% decrease and Hispanics a decline of 3.7%.

Summarizing, the key findings of the report included:

  • Overall, the median real wage (50th percentile) increased only 6.1% between 1979 and 2018, from approximately $20.76 to $22.00.
  • Overall, real wages at the 10th percentile increased only 1.6%, from an estimated $11.07 to $11.25.
  • Overall, real wages rose significantly at the top of the income distribution (37.6% overall) compared to real wages at the middle (6.1%) and bottom of the distribution (1.6%). Real wages rose at the 90th percentile for every category. Real wages at the 50th and 10th percentiles generally showed little growth or declined across most categories.
  • From 1979 to 2018, the gender wage gap narrowed, as the median wage increased 25.7% for women but declined 5.1% for men.
  • However, across ethnic differences, gaps expanded. Gains for Whites by far outpaced the gains of Blacks and Hispanics.

Table 1 – Real Wage Trends 1979-2018, by Selected Demographic Characteristics

Source: Congressional Research Service, Real Wage Trends 1979-2018. CRS Real Wage Trends

Table 2 below provides more detail on how real hourly wages changed over the period 1979 – 2018. Wages at the 10th, 50th, and 90th percentile are given by sex, race and ethnicity for 1979 and 2018. The 1979 wages are adjusted for inflation by the Consumer Price Index for All Urban Consumers (CPI-U), which measures the change in the price of a basket of goods and services purchased by urban consumers. At the 10th percentile, only White women saw real hourly wages increase – every other demographic had a decline. White women had an increase of $1.12, Black women saw a decline of $0.03, and Hispanic women had a decline of $0.31. For men, the decreases for Whites, Blacks, and Hispanics were $0.72, $0.27, and $0.25, respectively. At the 50th percentile, real hourly wages increased for women across all demographics. White women had an increase of $5.48, Black women $2.30, and Hispanic women $1.51. At the 50th percentile, real hourly wages increased for White men by $1.97, while wages decreased for Black and Hispanic men by $1.65 and $1.38, respectively. At the 90th percentile, real hourly wages increased across all demographics, and the increases were significantly greater than increases at the 50th percentile. For women, the increases for Whites, Blacks, and Hispanics were $19.97, $12.54, and $6.68, respectively. For men, the increases for Whites, blacks and Hispanics were $24.06, $5.46, and $2.73, respectively.

The gender gap lessened but remains – at the 10th percentile women made $10.55 (in 2018 dollars) vs. $12.00 for men; at the 50th percentile, women made $20.00 vs. $24.04 for men; at the 90th percentile, women made $46.15 vs. $59.00 for men. At each percentile, White women and White men had the highest real hourly wage for both 1979 and 2018. Ethnic gaps expanded. Gains for Whites by far outpaced the gains of Blacks and Hispanics for both men and women.

Table 2 – Wages at Selected Percentiles, by Sex, Race, and Ethnicity 1979-2018 Wages in 2018 dollars

Source: Congressional Research Service, Real Wage Trends 1979-2018. CRS Real Wage Trends

CBEI Blog Series: Real Wage Growth (or Lack Thereof)
Part 1: The Last Decade
Part 2: The Long Run: 1979-2018
Part 3: By Decade
Part 4: Economic Growth, Unemployment and Wage Growth

Kevin Bahr

Prof. Kevin Bahr, Ph.D. is the chief analyst of the Center for Business and Economic Insight at the University of Wisconsin-Stevens Point School of Business and Economics. Follow his blog for the latest news from CBEI.

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