Is the Tide Lifting All Boats? A Closer Look at the Earnings Growth Experiences of U.S. Workers

Chalom, Rene; Karahan, Fatih; Moore, Brendan; Topa, Giorgio

Discussion Paper

Is the Tide Lifting All Boats? A Closer Look at the Earnings Growth Experiences of U.S. Workers

Abstract: The growth rate of hourly earnings is a widely used indicator to assess the economic progress of U.S. workers, as well as the health of the labor market. It is also a measure of wage pressures that could potentially spill over into inflationary pressures in a tightening labor market. Hourly earnings growth, on average, has gradually risen over the course of the current expansion, under way since the end of the Great Recession. But how have different groups of workers fared in this regard? Have hourly earnings risen uniformly at all points of the wage distribution, or have some segments of the workforce been left behind? In this post, we take a close look at earnings growth over the past two decades at different points of the wage distribution and for various demographic groups. Our goal is to examine whether there are any significant patterns in the evolution of the distribution of earnings, as opposed to just looking at the behavior of aggregate earnings growth. We focus primarily on hourly earnings growth, although our findings apply to total earnings as well.

Keywords: Earnings growth; distribution; inequality;

JEL Classification: J3;