Income growth: If growth were inclusive, all workers would see their incomes rising, with the largest gains among lower-wage workers. 

Insights & Analyses

  • Income has decreased most dramatically from 1990-2017 for workers at the bottom rung (in the 10th percentile) and has increased most dramatically for workers at the top (in the 90th percentile).

  • Income has increased steadily in recent decades for the highest-earning workers, from $94,554 in 1980 to $113,761 in 2017.

  • Only three states (Alaska, Wyoming, and Michigan) saw declining incomes for top earners between 1980 and 2017. Forty-one states saw declining incomes for workers at the 10th income percentile during this period.

Drivers of Inequity

Reduced bargaining power among workers due to declines in union membership and corporate consolidation as well as a higher average unemployment rate have caused incomes for low-wage workers to grow more slowly than those of high-wage workers. Growing trade with low-wage countries, automation, and stagnant minimum wage rates also contribute to income inequality. However, growing income inequality disproportionately impacts women and people of color as these populations are concentrated in low-wage jobs. This trend is a result of historical practices, such as racial segregation and policies that banned women and people of color from accessing education and higher paid professions, as well as ongoing factors, including biased hiring practices and inadequate childcare support.

Strategies

Grow an equitable economy: Policies to create good jobs for all

Strategy in Action

California law improves protections for millions of workers in the gig economy. Millions of Californians work as contractors rather than employees, which prevents them from accessing a variety of benefits such as health insurance and protection from employment discrimination. In 2019, however, the state passed a law that makes classifying workers as independent contractors more difficult for employers. The law will lead to the reclassification of close to two-thirds of all workers who are currently classified as contractors, such as childcare workers and janitors. By becoming employees, these workers will gain the right to unionize as well as access to health care, a particularly important change given that independent contractors in California are twice as likely to be uninsured as regular employees according to a recent study. Major employers opposed the bill and soon after the bill's passage Uber and Lyft filed a lawsuit claiming that the new regulations do not apply to them. Despite this pushback, California's strengthened labor legislation is part of a nationwide trend toward greater protection for gig economy workers. Eleven other states have passed similar laws to improve protections for independent contractors along with cities like New York and Philadelphia. Read more.

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