Declining Inequality and Persistent Inequality Structures

Abstract

Prior research finds that rising labor market inequality in the United States was abetted by structural changes in the economy: a consolidation of occupation and organizational bases of advantage; rising within-job inequality; and declining pay and employment in middle-earning jobs. In this article, we revisit these structural changes by asking whether they have been reversed as labor market inequality fell over the last decade. Drawing on restricted-use microdata from the Occupational Employment and Wages Statistics, we find that declining inequality is due to declining inequality in occupation premiums. There has been only a small reversal of consolidation and no decrease in inequality within jobs. Low-wage jobs gained on shrinking middle-earning occupations, further eroding union, manufacturing, and public sector wage premiums. These findings demonstrate a novel configuration of labor market inequality, in which pay rose in low-wage jobs, but underlying inequality structures in the economy persisted.