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Rising wages could be one of the most significant long-term effects of the COVID-19 pandemic on the economy. With widespread shortages reported in the labor market this summer, many employers—especially those with lower wages—have tried to woo workers with better compensation and benefits. These trends have led to the fastest rate of wage growth since the Great Recession, particularly among the lowest earners.
But low-wage businesses still have a long way to go in order to match the strong rates of wage growth for high-income jobs over the past few decades. According to data from the Economic Policy Institute, inflation-adjusted wage growth from 1979 to 2019 was a mere 3.3% at the 10th percentile of wages for a worker. For the average earner, wages increased by 15.1% over that period, while for those earning the 95th percentile, wages increased by 63.2%.
These distinct trends have increased the share of Americans in high-earning occupations and created a large gap between the high and low ends of the income spectrum. Twenty years ago, only 0.7% of American workers were in jobs that typically paid more than $100,000 per year. As of 2015, that share stood at 3.8%. And in the past five years alone, the percentage of American workers in six-figure jobs more than doubled to 7.9% in 2020.