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Wage Inequality Continued in 2018

Disparities by race and gender persist

WASHINGTON - Inflation-adjusted wages grew for most workers across the wage distribution in 2018, according to a new report by EPI Senior Economist Elise Gould. Analyzing data from the Current Population Survey (CPS), Gould finds that while some workers saw modest wage growth last year, large gaps by gender, race, wage, and education level remain—and some of these gaps are increasing.

The State of Working America: Wages 2018 details the most up-to-date hourly wage trends through 2018, showing that, while there have been welcome improvements, wage growth continues to be slower than would be expected in an economy with relatively low unemployment.

“Since 2000, wage growth has been strongest for the highest-wage workers, continuing the trend in rising wage inequality for the past four decades,” said Gould. “Additionally, many working people, particularly working women and black workers are still facing persistent and, in some cases, worsening wage gaps.”

Other key findings in The State of Working America: Wages 2018, an annual look at wage trends as part of EPI’s State of Working America series, include:

  • From 2017 to 2018, relatively fast wage growth continued at the top, but workers at the 20th and 30th percentiles saw the strongest wage growth. Median wages grew 1.6 percent over the year.
  • State-level minimum wage increases over the last few years are associated with stronger wage growth for low-wage workers in those states.
  • Significant gender wage gaps remain across the wage distribution and by educational attainment. Men with only a college degree are paid more on average than women with advanced degrees.
  • Wage growth since 2000 was faster for white and Hispanic workers than black workers. Black-white wage gaps were larger in 2018 than in 2000. Among black workers, only college- and advanced-degree holders had higher wages than in 2000, but their wage growth was significantly slower than white and Hispanic workers with those same degrees.
  • Over the last year, the strongest wage growth occurred among those with some college and those with advanced degrees. Between 2000 and 2018, the college wage premium rose slightly, not nearly fast enough to explain rising wage inequality.

“Low wage workers in the 21 states (and the District of Columbia) that increased their minimum wage in 2018 experienced stronger wage growth than low-wage workers in the states that didn’t,” said Gould. “Simply put, policy matters.”

Notably, while the CPS is one of the best measures of hourly pay, the CPS “top-codes” weekly earnings above $2,884.61 as having weekly earnings of exactly $2,884.61 in order to preserve the anonymity of respondents. Because this amount hasn’t changed or been updated for inflation in 20 years, it has become harder to uncover wage levels at the top of the wage distribution and the extent of top-end wage growth.

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The Economic Policy Institute, a nonprofit Washington D.C. think tank, was created in 1986 to broaden the discussion about economic policy to include the interests of low- and middle-income workers. Today, with global competition expanding, wage inequality rising, and the methods and nature of work changing in fundamental ways, it is as crucial as ever that people who work for a living have a voice in the economic discourse.

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