Changes in the Distribution of Workers' Hourly Wages Between 1979 and 2009 (declining union rates)

[Omaha Steve]

CBO wage study 1979 to 2009 "declining union rates contributed to increase in dispersion of upper half of wage distribution for men"


http://www.cbo.gov/doc.cfm?index=12051

February 2011

Abstract

This Congressional Budget Office (CBO) study, which was prepared at the request of the chairman and former ranking member of the Senate Committee on Finance, documents changes in the level and distribution of hourly wages received by workers in the United States between 1979 and 2009. It also reviews the leading explanations for changes in the supply of, and demand for, workers with different sets of skills as well as the role of labor market institutions in affecting wages. In keeping with CBO's mandate to provide objective, impartial analysis, this study does not make any recommendations. A related CBO study published in October 2009 analyzed trends in the distribution of annual earnings (Changes in the Distribution of Workers' Annual Earnings Between 1979 and 2007); a forthcoming CBO study will examine trends in the distribution of household income between 1979 and 2007.
Summary

Wages are a key component of the overall economic well-being of individuals and families. Hourly wages and hours worked determine an individual's earnings, and for most nonelderly adults, earnings constitute the bulk of their family's income. This Congressional Budget Office (CBO) study documents changes in the level and distribution of hourly wages in the United States between 1979 and 2009. It also reviews the research literature on important factors that most likely underlie the observed trends in wages.

The wage rate (the wage per hour of work) received by workers in the middle of the wage distribution (the 50th percentile) increased by about 20 percent over the 1979–2009 period after adjusting for inflation, reaching about $17 per hour in 2009. The dispersion of wages—the gap between wages at the top and bottom of the distribution—also increased over that period, but the pattern of changes at the top and bottom differed. For men and women alike, the gap between the wage rates received by high-wage (90th percentile) and middle-wage workers expanded throughout the 30-year period; the wage rates of high-wage women grew especially rapidly. In contrast, the gap between the wage rates received by low-wage (10th percentile) and middle-wage workers widened for both men and women early in the 1980s but has remained stable for the past 20 years.

Wages are affected by market forces (the level and distribution of skills supplied by workers and employers' demand for those skills) and institutional factors (such as minimum-wage laws and changes in the share of the workforce represented by unions). Given the complex pattern of changes in the wage distribution during the past 30 years, it is not surprising that no single explanation can account for the entire pattern.

FULL story at link.