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Labor Markets and Economic Inequality in the United States Since the End of the 1970s

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Publication Date: April 2005

Publisher(s): Center for Economic and Policy Research

Author(s): John Schmitt

Topic: Labor (Labor conditions, wages, salaries, and benefits)

Keywords: Unionization; Privatized systems; Household income

Type: Report

Coverage: United States


By most measures, the United States is the most unequal of the world's advanced capitalist economies, and inequality has increased substantially over the past 30 years. This article documents trends in the inequality of three key economic distributions--hourly earnings, annual incomes, and net wealth--and relates these developments to changes in economic and social policy over the past three decades. The primary cause of high and rising inequality is the systematic erosion of the bargaining power of lower- and middle-income workers relative to their employers, reflected in the erosion of the real value of the minimum wage, the decline in unions, widescale deregulation of industries such as airlines and trucking, the privatization and outsourcing of many state and local government activities, increasing international competition, and periods of restrictive macroeconomic policy.

This report was originally printed in the International Journal of Health Services, vol. 35, no. 4, pp. 655-673. This is a revised and updated version of "Mercados de trabajo y desigualdad en el plano económico en los Estados Unidos desde finales de la década de los años setenta," in Gerardo Fujii and Santos M. Ruesga (eds.), El trabajo en un mundo globalizado, Madrid: Ediciones Pirámide, 2004.