Is Earnings Inequality Really Increasing?


Is Earnings Inequality Really Increasing?

February 28, 1997


This policy brief examines the supposition that job growth in the United States has led to rising earnings inequality. Generally, when economists examine the effects of structural changes in the economy, they use total earnings. Using data from the Survey of Income and Program Participation and the Current Population Survey (CPS), this brief argues that the correct measure for earnings inequality should be earnings per hour (the wage rate). The brief examines earnings inequality through the wage-rate lens, contrasts the findings with those of other studies, and suggests implications for policy and interpreting economic trends. An addendum addresses difficulties with using CPS data.

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