The Long Wage Compression
This chart follows inflation-adjusted hourly wage levels at four positions in the wage distribution from before the Great Recession. Each series is indexed to Q4 2007. The measure tracks cash wage and salary earnings, excludes equity and benefits, and can move when the composition of employment changes.
These lines track positions in the wage distribution, not a fixed cohort of the same people. Changes can reflect both wage growth and changes in who is employed at each position. Cash wage and salary earnings only. The measure excludes stock grants, options, employer health insurance, retirement contributions, payroll taxes, and other benefits. For hourly-paid workers, the reported hourly rate excludes overtime, commissions, and tips. For other workers, usual weekly earnings can include those amounts when usually received.
What does it show?
Since Q4 2007, real hourly pay at the lowest-quartile midpoint has risen 26.4%, compared with 11.0% at the highest-quartile midpoint. Most of the measured gap opened after 2020, when employment composition changed sharply.
Methodology
Independent calculation from Basic Current Population Survey outgoing-rotation public-use records. The sample includes employed wage and salary workers on a nonagricultural main job and excludes self-employed people, allocated earnings, top-coded earnings, and hourly pay below $2.13. Reported hourly pay is used for hourly-paid workers. For other workers, usual weekly earnings are divided by usual main-job hours, with actual hours used only when usual hours are unavailable. Cash wage and salary earnings only. The measure excludes stock grants, options, employer health insurance, retirement contributions, payroll taxes, and other benefits. For hourly-paid workers, the reported hourly rate excludes overtime, commissions, and tips. For other workers, usual weekly earnings can include those amounts when usually received. This is a repeated cross-section rather than a matched panel. Each quarterly estimate pools the available outgoing-rotation samples, applies the CPS earnings weight, and calculates the 12.5th, 37.5th, 62.5th, and 87.5th percentiles of hourly pay, representing the midpoint of each wage quartile. Nominal levels are divided by the quarterly average seasonally adjusted CPI-U and indexed directly to Q4 2007 = 100. The index is not compounded from overlapping growth rates.