Monthly Labor Review March 2000 21

Earnings and Employment

Earnings have long been considered an

important measure of one’s economic

well-being, and it is widely accepted that

increased earnings over time result in improved

living standards. In the United States, real earnings rose sharply for several decades after World

War II, but the trend slowed abruptly during the

1970s. Although the picture during the 1980s and

much of the 1990s is less clear because of different patterns among the major earnings measures, it is safe to say that there was comparatively little real wage growth during that period.1

In recent years, however, workers’ real earnings

have been on the rise.

The stagnation in real earnings for much of

the 1990s stands in marked contrast to the considerable growth in employment during that decade. As of December 1999, the end of the period

examined in this article, the current economic expansion had lasted almost 9 years.2 During that

period, total employment, as measured by the

Current Population Survey (CPS), grew by more

than 161⁄2 million.3

Previous research, using data from the CPS,

showed that employment growth during the first

half of the 1990s was concentrated in both relatively higher paying and relatively lower paying

job categories, with a decline in the number of

jobs paying midlevel wages.4

 That same research

supported the notion that there was a trend toward “polarization” in employment growth.

However, it did not examine the earnings trends

in the fields associated with those categories,

nor did it address whether the marked employment

growth in some of the categories was accompanied

by wage gains. The analysis presented herein extends the earlier work by examining the changes in

both employment and earnings for all wage and

salary workers over the 1989–99 period.5 Specifically, the analysis addresses the following questions:

What has been the relationship between the change

in employment and the change in real median

weekly earnings? In particular, how have earnings changed in those job categories that posted

the largest increases in employment? In addition,

what happened to earnings dispersion during the

1990s, especially within the high-, middle-, and

low-paying job categories?

The findings presented in the sections that follow suggest that the marked growth in wage and

salary employment that took place from 1989 to

1999 in the highest and lowest earnings groups

was not accompanied by a rapid rise in earnings.

Earnings indeed rose, but only modestly, for both

groups. In contrast, both employment and wages

in the middle earnings group changed relatively

little over the period. While some specific occupation-industry categories posted both strong

employment and earnings growth, no significant

correlation between employment and earnings

changes was uncovered for the three major earnings groups. Finally, despite the polarization found

in employment growth, earnings dispersion

showed little change over the 1989–99 period.6

Earnings and employment

trends in the 1990s

Randy E. Ilg and

Steven E. Haugen are

economists in the

Division of Labor Force

Statistics, Bureau of

Labor Statistics.

Robust employment growth in high- and low-paying

job categories was not accompanied by large wage gains;

there was no apparent increase in overall earnings

dispersion during the 1990s

Randy E. Ilg

and

Steven E. Haugen
22 Monthly Labor Review March 2000

Earnings and Employment

Overview

The real median weekly earnings of all wage and salary workers showed little change from 1989 to 1996. In 1997, however, real earnings rose, and growth continued through 1999.

As a result of these increases, there was a slight improvement

in real earnings (6.9 percent) for the 1989–99 period. (Real

weekly earnings were adjusted by means of the Consumer

Price Index research series using current methods (CPI-U-RS;

see box, this page).7 During those years, wage and salary employment grew by 15.5 million, or 15.0 percent, with virtually all of the net growth occurring after the 1990–91 recession. (See chart 1 and table 1.) It is important to note that the

bulk of this job growth has been among full-time workers,

whose share of the net growth over the past 10 years (about

four-fifths) was in line with their share of total employment in

1989.8

As shown in table 1, real median weekly earnings rose in

professional specialty, sales, and service occupations, but

changed relatively little among the other major occupational

groups, such as managers. Together, managers and professionals accounted for three-fifths of the occupational employment

growth. Workers in sales and service occupations supplied most

of the remaining net increase in employment.

Among the major industry groups, real earnings rose in retail trade, in services, and in the finance, insurance, and real

estate industry. Real earnings changed relatively little among

the other major industries. Of the total increase in wage and

salary employment since 1989, most of the net growth (about

four-fifths) occurred in services and retail trade.

Occupations within industries

Employment matrix. A separate look at employment and

earnings trends in major occupations and industries provides

some insight into the nature of job and earnings growth, but

an examination of the changes for occupations within industries presents a more complete picture. For example, the fastgrowing services industry pays about the same as the median

for all industries, but encompasses a wide array of occupations, some of which are associated with low wages, some

with relatively high wages.9 The disaggregation of an industry by occupation allows one to determine, in much greater

detail than at the aggregate level, which pieces of the industry

are contributing to employment or earnings growth. However,

analyzing the changes in employment and earnings for the

nine major occupations crossed by the 10 major industries

(yielding 90 data series) can be quite cumbersome. To simplify such an analysis, the data series were ordered into a more

manageable format.

First, following the methods employed earlier by Ilg, the

occupation-industry categories were ranked in descending order by their median weekly earnings in 1988. The categories

were then classified into three groups—highest, middle, and

lowest earnings—each of which accounted for approximately

one-third of total employment in 1988.10 The data for the 90

individual occupation-industry categories were then sorted into

the three earnings groups. Table 2 displays the employment

and real median weekly earnings figures for the individual

categories and the overall figures for each of the three earnings groups for the years 1989 and 1999.11

Highest earnings group. From 1989 to 1999, employment in

the highest earnings group increased by 9.7 million, or about

27 percent—the most of the three earnings groups. Real median weekly earnings for the highest group showed only modest improvement. By 1999, real median weekly earnings in

this group had risen by 6.3 percent, to $728 per week.

As the U.S. economy moved out of the recession of the

early 1990s and employment expanded, job growth in the highest earnings group accelerated, and strong growth continued

through 1999. In contrast, real median weekly earnings for the

The Bureau of Labor Statistics has made numerous improvements to the Consumer Price Index (CPI) over the past quartercentury. While these improvements make the present and future

CPI more accurate, historical price index series are not adjusted to

reflect the improvements. Many researchers, however, expressed

an interest in having a historical series that was measured consistently over the entire period. Accordingly, the Consumer Price Index research series using current methods (CPI-U-RS) presents an

estimate of the CPI for all Urban Consumers (CPI-U) from 1978 to

1998 that incorporates most of the improvements made over that

time span into the entire series.

The CPI-U-RS is in some ways an extension of the CPI-U-X1, an

experimental series that shows what the inflation rate in the CPI-U

might have been if the current rental-equivalence method of measuring the cost of homeownership had been in place prior to 1983.

The Bureau of Labor Statistics statement on the use of the CPI-U-RS

The CPI-U-RS has some limitations. First, most estimates

are based on BLS research covering a short period of time and

extrapolated to a longer period. Therefore, there is considerable uncertainty surrounding the magnitude of the adjustments.

Second, there have been several improvements in the CPI not

incorporated into the CPI-U-RS, either because they do not represent changes in methodology, because they had negligible

impacts on the CPI’s growth rate, or because it was impossible

to systematically estimate the impacts of the new methods in

past years.

Nonetheless, the CPI-U-RS can serve as a valuable proxy for

researchers needing a historical estimate of inflation using current (1999) methods. The direct adjustment of individual CPI index series makes this the most detailed and systematic estimate

available of a consistent CPI series.
 Monthly Labor Review March 2000 23

group dipped in the mid-1990s, but earnings growth in 1997–

99 was strong enough to produce a small gain for the period as

a whole. (See chart 2.)

As might be expected, virtually all the high-paying managerial and professional occupations are concentrated in this

group. Employment among managers and professionals in the

highest earnings group accounted for about two-thirds of total

employment in the group in 1989, but made up nearly all of

the net employment increase over the 1989–99 period. Managers and professionals in the services industry expanded their

ranks sharply, together accounting for about two-thirds of the

employment gain in the highest earnings group. The trend in

their earnings, however, was comparable to that for the overall

group, declining a bit in the middle of the decade, but more

than recovering toward the end. While the number of executives in construction, manufacturing, and transportation also

rose substantially from 1989 to 1999, their earnings were little

changed. (See table 2.)

Although managers and professionals dominate in the highest earnings group, some other occupations include a large

number of high-paid workers. For example, precision production workers in manufacturing and transportation accounted

for a sizable share of employment in the highest earnings group.

However, employment and earnings for both job categories

changed little over the 1989–99 period.

In 1989, full-time workers accounted for slightly more than

90 percent of employment within the highest earnings group.

However, full-time workers contributed a somewhat smaller

share of the net increase in job growth over the 10-year period. This difference reflects the fact that much of the overall

employment growth occurred among professionals in the services industry, wherein part-time work is more prevalent than it

is among professionals in other industries.

No consistent relationship is evident between employment

and earnings changes in the highest earnings group over the

1989–99 period. For example, the number of executives in

services rose sharply, as did their earnings. Yet, at the same

time, employment among managers in transportation and public utilities also increased, but their earnings were little changed;

conversely, employment among professionals in construction

was little changed, but their earnings declined.

One measure that more systematically identifies the association between two variables (in this case, employment and

earnings) is the simple correlation coefficient. To construct

Table 1. Employment and median weekly earnings of wage and salary workers, by occupation and industry, 1989 and 1999

[Numbers in thousands]

 Employment

 Change2 Change2

Number Percent Number Percent

 Occupation

 Total .................................................... 103,480 118,963 15,483 15.0 $447 $478 $31 6.9

Executive, administrative,

and managerial .................................... 11,950 16,000 4,050 33.9 728 760 32 4.4

Professional specialty .............................. 13,408 18,693 5,285 39.4 688 735 47 6.8

Technicians and related support .............. 3,511 4,188 677 19.3 574 578 4 .7

Sales occupations ................................... 11,354 13,451 2,097 18.5 352 387 35 9.9

Administrative support, including clerical . 17,768 17,874 106 .6 390 400 10 2.6

Service occupations ................................ 14,410 16,829 2,419 16.8 245 273 28 11.4

Precision production, craft, and repair ..... 11,906 12,474 568 4.8 574 582 8 1.4

Operators, fabricators, and laborers ........ 17,399 17,514 115 .7 392 396 4 1.0

Farming, forestry, and fishing .................. 1,774 1,940 166 9.4 280 301 21 7.5

 Industry

 Total .................................................... 103,480 118,963 15,483 15.0 447 478 31 6.9

Agriculture ............................................... 1,499 1,735 236 15.7 289 307 18 6.2

Mining...................................................... 665 534 –131 –19.7 724 731 7 1.0

Construction ............................................ 5,798 6,747 949 16.4 536 525 –11 –2.1

Manufacturing .......................................... 20,831 19,408 –1,423 –6.8 528 554 26 4.9

Transportation and public utilities ............ 7,692 8,944 1,252 16.3 634 619 –15 –2.4

Wholesale trade ...................................... 3,942 4,586 644 16.3 513 528 15 2.9

Retail trade .............................................. 17,299 20,185 2,886 16.7 258 289 31 12.0

Finance, insurance, and real estate ......... 7,045 7,780 735 10.4 494 556 62 12.6

Services .................................................. 33,133 43,077 9,944 30.0 408 460 52 12.7

Public administration ............................... 5,576 5,966 390 7.0 607 636 29 4.8

1 Data are restricted to wage and salary workers and exclude the selfemployed, regardless of whether their businesses are incorporated. The data

include both full- and part-time workers. The Consumer Price Index research

series using current methods (CPI-U-RS) was used to convert current dollars to

constant dollars for 1989.

 2 Calculated from the rounded estimates shown.

NOTE: Employment growth was calculated using annual averages for 1989

and 1999.

Occupation and Industry

1989 1999 1999 1989

Median weekly earnings in

constant 1999 dollars1
24 Monthly Labor Review March 2000

Earnings and Employment

this measure, we used the percent change in employment for

each occupation-industry category (weighted by its share of

total employment in 1989) and the percent change in earnings.

The correlation coefficient ranges from –1.0 to 1.0, with 1.0

indicating a perfect positive relationship and –1.0 a perfect

negative relationship.

For the highest earnings group, the correlation coefficient

was 0.29, which, while positive, does not indicate a high degree of association between changes in employment and

changes in earnings. (The correlation coefficient for this group

was not statistically different from zero at the 90-percent confidence level.) Hence, the strongest growing occupation-industry categories in the high-earnings group were not necessarily associated with the fastest earnings growth.

Middle earnings group. From 1989 to 1999, employment in

the middle earnings group edged up, as growth in the second

half of the period offset losses during the recession of the early

1990s.12 Employment remained below prerecession levels until

1997. Substantial job growth in 1997 and 1998, however, led

to a net employment gain of some 400,000, about 1 percent,

over the entire 1989–99 period. (See chart 2.)

Real earnings in the middle earnings group drifted down

for most of the period, before recovering markedly during

1997–99. In 1989, median weekly earnings were $464 (in constant 1999 dollars). After reaching a low point in 1996 ($445),

earnings rose sharply. As a result, by 1999, earnings in the

middle earnings group—at $475—were little changed from

1989. (See table 2.)

The pattern of little overall change in employment and earnings trends for the middle earnings group masked variations in

several detailed occupation-industry categories. Many of these

categories include blue-collar occupations in a variety of goodsand service-producing industries. Employment in some occupation-industry categories, such as operators, fabricators, and

laborers in both construction and the transportation and public

utilities industry, grew markedly over the past decade, but their

weekly earnings declined. Employment declined significantly,

however, among operators, fabricators, and laborers in manufacturing, while their earnings changed little.

A few occupation-industry categories other than those typified by blue-collar jobs showed substantial employment

changes. The number of managers in retail trade increased, as

did their earnings. Employment among technicians in the services industry also rose between 1989 and 1999, but their earnings were up only slightly. However, the number of clerical

workers in manufacturing decreased, while earnings for the

group increased.

As with full-time workers in the highest earnings group,

full-time workers in the middle earnings group accounted for

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

-5

0

5

10

15

20

-5

0

5

10

15

20

Percent

Chart 1. Percent change in employment and real median weekly earnings of wage and 

 salary workers, 1989–99

NOTE: The percent shown represents the percent growth or decline in annual average employment or real median

 weekly earnings between the year indicated and the level in 1989.

Percent

Employment change 

Real earnings 
 Monthly Labor Review March 2000 25

Chart 2. Percent change in employment and real median weekly earnings of wage and salary 

 workers, by earnings group, 1989–99

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

0

5

10

15

20

25

30

0

5

10

15

20

25

30

Employment change

Real earnings

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

-5

-4

-3

-2

-1

0

1

2

3

-5

-4

-3

-2

-1

0

1

2

3

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

-5

0

5

10

15

20

-5

0

5

10

15

20

Highest earnings group

Employment change

Real earnings

Middle earnings group

Real earnings

Employment change

Lowest earnings group

NOTE: The percent shown represents the percent growth or decline in annual average employment or real median weekly 

earnings between the year indicated and the level in 1989. Median weekly earnings for the lowest earnings group have been 

adjusted for the years 1989 93. (See note 13 in the text.) 

 

 

Percent Percent

Percent

Percent

Percent

Percent
26 Monthly Labor Review March 2000

Earnings and Employment

Table 2. Employment and median weekly earnings of wage and salary workers, by major occupation and industry,

 1989 and 1999

[Numbers in thousands]

Median weekly earnings

 in constant 1999 dollars1

 Change2 Change2

Number Percent Number

Total ..................................... 35,863 45,516 9,653 26.9 $685 $728 $43 6.3

Professional specialty Finance, insurance, and real estate 198 378 180 90.9 811 856 45 5.5

Professional specialty Wholesale trade .............................. 77 145 68 88.3 961 811 –150 –15.6

Executive, administrative, and managerial Construction ................................... 473 784 311 65.8 795 798 3 .4

Executive, administrative, and managerial Services ......................................... 3,714 5,699 1,985 53.4 664 734 70 10.5

Professional specialty Services ......................................... 9,667 14,006 4,339 44.9 645 689 44 6.8

Technicians and related support Finance, insurance, and real estate 131 188 57 43.5 669 713 44 6.6

Executive, administrative, and managerial Transportation and public utilities .... 823 1,171 348 42.3 876 872 –4 –.5

Technicians and related support Transportation and public utilities .... 262 354 92 35.1 781 781 0 .0

Executive, administrative, and managerial Wholesale trade .............................. 401 541 140 34.9 673 716 43 6.4

Sales occupations Finance, insurance, and real estate 1,242 1,611 369 29.7 667 672 5 .7

Service occupations Public administration ...................... 1,370 1,742 372 27.2 630 630 0 .0

Professional specialty Public administration ...................... 775 984 209 27.0 820 816 –4 –.5

Executive, administrative, and managerial Finance, insurance, and real estate 1,884 2,311 427 22.7 685 733 48 7.0

Professional specialty Mining ............................................. 57 69 12 21.1 1,217 1,021 –196 –16.1

Professional specialty Transportation and public utilities .... 463 549 86 18.6 863 931 68 7.9

Sales occupations Wholesale trade .............................. 1,375 1,594 219 15.9 666 697 31 4.7

Executive, administrative, and managerial Public administration ...................... 1,207 1,378 171 14.2 714 814 100 14.0

Executive, administrative, and managerial Manufacturing ................................. 2,204 2,506 302 13.7 928 943 15 1.6

Professional specialty Manufacturing ................................. 1,727 1,950 223 12.9 922 978 56 6.1

Precision production, craft, and repair Transportation and public utilities .... 1,276 1,345 69 5.4 737 724 –13 –1.8

Professional specialty Construction ................................... 138 143 5 3.6 956 919 –37 –3.9

Sales occupations Construction ................................... 58 59 1 1.7 749 637 –112 –15.0

Sales occupations Manufacturing ................................. 709 700 –9 –1.3 668 700 32 4.8

Precision production, craft, and repair Manufacturing ................................. 4,004 3,837 –167 –4.2 600 607 7 1.2

Technicians and related support Manufacturing ................................. 708 653 –55 –7.8 680 715 35 5.1

Technicians and related support Public administration ...................... 251 231 –20 –8.0 668 658 –10 –1.5

Precision production, craft, and repair Mining ............................................. 220 189 –31 –14.1 736 719 –17 –2.3

Precision production, craft, and repair Public administration ...................... 239 196 –43 –18.0 634 624 –10 –1.6

Executive, administrative, and managerial Mining ............................................. 87 66 –21 –24.1 1,060 1,051 –9 –.8

.......................................................

 Middle earnings group Middle earnings group .........

Total ..................................... 33,362 33,757 395 1.2 464 475 11 2.4

Technicians and related support Retail trade ..................................... 80 198 118 147.5 388 350 –38 –9.8

Professional specialty Retail trade ..................................... 275 420 145 52.7 471 600 129 27.4

Executive, administrative, and managerial Retail trade ..................................... 1,129 1,484 355 31.4 502 565 63 12.5

Precision production, craft, and repair Finance, insurance, and real estate 131 172 41 31.3 462 498 36 7.8

Technicians and related support Services ......................................... 1,922 2,389 467 24.3 502 515 13 2.6

Precision production, craft, and repair Services ......................................... 1,319 1,637 318 24.1 480 515 35 7.3

Operators, fabricators, and laborers Transportation and public utilities .... 2,135 2,602 467 21.9 541 517 –24 –4.4

Service occupations Transportation and public utilities .... 263 317 54 20.5 485 405 –80 –16.5

Precision production, craft, and repair Construction ................................... 3,260 3,723 463 14.2 553 541 –12 –2.2

Operators, fabricators, and laborers Construction ................................... 1,416 1,592 176 12.4 447 428 –19 –4.3

Operators, fabricators, and laborers Wholesale trade .............................. 928 1,043 115 12.4 395 400 5 1.3

Administrative support, including clerical Transportation and public utilities .... 2,135 2,325 190 8.9 577 523 –54 –9.4

Technicians and related support Construction ................................... 55 58 3 5.5 601 615 14 2.3

Precision production, craft, and repair Wholesale trade .............................. 311 308 –3 –1.0 507 587 80 15.8

Precision production, craft, and repair Retail trade ..................................... 1,111 1,033 –78 –7.0 458 499 41 9.0

Administrative support, including clerical Finance, insurance, and real estate 3,081 2,733 –348 –11.3 384 407 23 6.0

Operators, fabricators, and laborers Manufacturing ................................. 8,736 7,636 –1,100 –12.6 411 421 10 2.4

Operators, fabricators, and laborers Mining ............................................. 176 151 –25 –14.2 626 590 –36 –5.8

Administrative support, including clerical Public administration ...................... 1,504 1,269 –235 –15.6 454 474 20 4.4

Sales occupations Transportation and public utilities .... 322 270 –52 –16.1 505 684 179 35.4

Farming, forestry, and fishing Manufacturing ................................. 63 51 –12 –19.0 391 471 80 20.5

Occupation Industry

See footnotes at end of table.

Employment

1989 1999

 Highest earnings group

Percent

Highest earnings group

1989 1999
 Monthly Labor Review March 2000 27

Administrative support, including clerical Manufacturing ................................. 2,336 1,824 –512 –21.9 $441 $456 $15 3.4

Service occupations Manufacturing ................................. 344 251 –93 –27.0 403 348 –55 –13.6

Operators, fabricators, and laborers Public administration ...................... 155 105 –50 –32.3 492 473 –19 –3.9

.......................................................

 Lowest earnings group Lowest earnings group ..........

.......................................................

Total ............................................ 34,256 39,696 5,440 15.9 3259 289 30 11.6

Sales occupations Services ......................................... 794 1,114 320 40.3 275 318 43 15.6

Administrative support, including clerical Agriculture ...................................... 82 104 22 26.8 282 280 –2 –.7

Sales occupations Retail trade ..................................... 6,801 8,054 1,253 18.4 250 286 36 14.4

Operators, fabricators, and laborers Retail trade ..................................... 2,082 2,450 368 17.7 237 265 28 11.8

Administrative support, including clerical Services ......................................... 5,988 7,025 1,037 17.3 340 356 16 4.7

Service occupations Retail trade ..................................... 4,339 5,078 739 17.0 188 220 32 17.0

Service occupations Services ......................................... 7,742 9,056 1,314 17.0 242 267 25 10.3

Service occupations Finance, insurance, and real estate 256 291 35 13.7 286 319 33 11.5

Farming, forestry, and fishing Agriculture ...................................... 1,186 1,339 153 12.9 279 293 14 5.0

Operators, fabricators, and laborers Services ......................................... 1,635 1,824 189 11.6 271 296 25 9.2

Administrative support, including clerical Wholesale trade .............................. 747 795 48 6.4 382 403 21 5.5

Administrative support, including clerical Retail trade ..................................... 1,467 1,433 –34 –2.3 301 331 30 10.0

Administrative support, including clerical Construction ................................... 353 336 –17 –4.8 354 387 33 9.3

Farming, forestry, and fishing Services ......................................... 352 327 –25 –7.1 250 331 81 32.4

Operators, fabricators, and laborers Agriculture ...................................... 76 69 –7 –9.2 354 326 –28 –7.9

Farming, forestry, and fishing Finance, insurance, and real estate 61 55 –6 –9.8 293 329 36 12.3

1 Data are restricted to wage and salary workers and exclude the self-employed, regardless of whether their businesses are incorporated. The data include both full- and part-time workers. The Consumer Price Index research

series using current methods (CPI-U-RS) was used to convert current dollars to

constant dollars for 1989.

2 Calculated from the rounded estimates shown.

3 The overall median weekly earnings figure for the lowest earnings group

has been adjusted to make it more comparable with earnings data collected

Table 2. Continued—Employment and median weekly earnings of wage and salary workers, by major occupation and

 industry, 1989 and 1999

[Numbers in thousands]

Median weekly earnings

 in constant 1999 dollars1

Change2 Change2

Number Percent Number Percent

beginning in 1994. Figures for the more detailed occupation-industry categories have not been adjusted. (See note 13 in the text.)

NOTE: Details will not sum to totals because occupation-industry categories that had an employment base of less than 50,000 in 1989 or 1999 are not

shown separately. Combined, these categories contributed only 56,000 to the

net increase in employment. Data in each group are presented on the basis of

change, from the largest percent increase to the largest decline. Employment

growth was calculated using annual averages for 1989 and 1999.

Occupation Industry

Employment

1989 1999 1989 1999

more than 90 percent of employment in the group in 1989. But

they made up just 55 percent of the small net increase in employment during the entire 1989–99 period. This difference is

due, in part, to the large decline among certain manufacturing

workers (operators, fabricators, and laborers; and administrative support personnel), the vast majority of whom work full

time. At the same time, employment increased considerably

among some occupations in the services and retail trade industries, in which part-time work is much more prevalent than

in other industries.

Consistent with the variations in employment and earnings

changes among the job categories in the middle earnings group,

there was little correlation between the two variables. (The

correlation coefficient was –0.06, not statistically different from

zero at the 90-percent confidence level.)

Lowest earnings group. Employment in the lowest earnings

group increased by 5.4 million (about 16 percent) between

1989 and 1999. Real earnings in the group rose by 11.6 percent, after adjustment.13 Employment in the lowest earnings

group was relatively unaffected by the recession of the early

1990s. Indeed, through 1993, the rate of employment growth

among low-wage workers actually exceeded that for workers at

the upper end of the earnings spectrum. However, by the mid1990s, job growth in the high earnings group had outpaced growth

in the lowest earnings group. As a result, over the entire 1989–

99 period, net employment growth among low earners was about

three-fifths that for the highest earnings group. As noted earlier,

employment growth in both groups far exceeded that for middlewage earners. (See chart 2 and table 2.)

In 1989, median weekly earnings for the lowest earnings

Middle earnings group—continued Middle earnings group—continued
28 Monthly Labor Review March 2000

Earnings and Employment

Table 3. Usual weekly earnings of wage and salary workers, by upper limits of selected deciles and quartiles, in current dollars

 and in constant 1999 dollars, annual averages, 1989–99

Upper limit of— Upper limit of—

 First First Third Ninth First First Third Ninth

 decile quartile quartile decile decile quartile quartile decile

1989 ............. 1$106 $206 $342 $532 $777 1$139 $269 $447 $696 $1,016

1990 ............. 1114 216 358 564 807 1142 269 446 702 1,005

1991 ............. 1116 223 371 585 834 1139 268 446 703 1,002

1992 ............. 1120 227 379 600 870 1140 266 444 702 1,018

1993 ............. 1122 233 391 616 901 1139 266 446 703 1,028

1994 ............. 128 236 398 636 935 143 263 444 710 1,044

1995 ............. 132 243 407 654 960 144 264 443 711 1,044

1996 ............. 136 250 417 673 988 144 265 441 712 1,046

1997 ............. 144 263 433 697 1,024 149 272 449 722 1,061

1998 ............. 154 277 458 727 1,084 157 283 468 743 1,108

1999 ............. 163 289 478 755 1,139 163 289 478 755 1,139

....................

1 The 10th-percentile earnings figure has been adjusted to make it more

comparable with earnings data collected beginning in 1994. (See note 15 in

the text.)

NOTE: The Consumer Price Index research series using current methods (CPI-U-RS) was used to convert current dollars to constant dollars for

1989–99.

Year

In current dollars In constant 1999 dollars

Second

quartile

(median)

Second

quartile

(median)

group were $259 (in constant 1999 dollars), after adjustment

for the break in series associated with the CPS redesign. Following a slight decline in real earnings from 1989 to 1992,

earnings in the lowest earnings group began to increase. Earnings rose markedly in 1998–99, reaching $289 in 1999.

Employment in the lowest earnings group is largely made

up of service, sales, and administrative workers, as well as

operators, fabricators, and laborers, in the retail trade and the

services industries. Among these occupation-industry categories, some of the fastest growing were sales and service workers in the retail trade and services industries. These categories

accounted for two-thirds of the net employment increase in

the lowest earnings group. Real earnings for all four categories also rose over the 1989–99 period.

Among clerical workers in the lowest earnings group, the

number working in the services industry rose substantially over

the period, but their earnings were up only slightly. In contrast, the retail trade industry lost administrative support workers over the 1989–99 period, but posted a substantial increase

in median weekly earnings.

Compared with the shares of the highest and middle earnings groups, a much smaller share of workers in the lowest

earnings group worked full time in 1989 (about three-fifths).

Even so, over the 1989–99 period, a large share of the net

employment gain for the lowest earnings group was attributable to full-time workers (about four-fifths). This increase reflected, in part, the strong growth in the number of full-time

workers in various occupations (for example, sales, service,

and administrative occupations) within the services industry.

Even though employment growth was robust in the lowest

earnings group and real earnings rose, the correlation coefficient was very low, 0.10 (not statistically different from zero

at the 90-percent confidence level). This underscores the weak

relationship between employment and earnings changes among

the occupation-industry categories in the lowest earnings group.

In sum, employment grew substantially in the highest and

in the lowest earnings groups from 1989 to 1999; job growth

was especially pronounced in the highest earnings group. Real

median weekly earnings also rose among workers in the highand low-wage groups, with relatively more improvement among

the lowest paid workers. Both employment and earnings among

workers in the middle were essentially unchanged over the

period. In addition, some specific occupation-industry categories in the three earnings groups posted both strong employment increases and real wage increases. However, there appears to be no systematic relationship between employment

and earnings changes, as evidenced by the low correlation

coefficients for the highest, middle, and lowest earnings groups.

Earnings dispersion

In this section, we turn to the question of whether the foregoing employment and earnings developments are associated with

changes in wage dispersion. As a measure of central tendency,

medians serve as an overall metric for the earnings of a given

group and allow one to make general inferences as to how the

earnings for the group have changed over time. However,

medians provide no information on the degree of dispersion in

an earnings distribution—that is, how widely spread individuals are in terms of their relative earnings levels—or the extent

to which the dispersion has changed.

One common method used to gauge changes in earnings
 Monthly Labor Review March 2000 29

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

6.4

6.6

6.8

7.0

7.2

7.4

7.6

6.4

6.6

6.8

7.0

7.2

7.4

7.6

Ratio

Chart 3. The 90–10 and adjusted 90–10 percentile ratios for all wage and salary workers, 

 1989–99

Ratio

NOTE: The 10th-percentile earnings figure has been adjusted to make it more comparable with earnings data 

collected beginning in 1994. (See note 15 in the text.)

Adjusted 90 10 percentile ratio

Unadjusted 90 10 percentile ratio

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

Ratio

 Chart 4 . The 90–50, 50–10, and adjusted 50–10 percentile ratios for all wage and salary workers,

 1989–99 

Adjusted 50 10 percentile ratio

Unadjusted 50 10 percentile ratio

90 50 percentile ratio

NOTE: The 10th-percentile earnings figure has been adjusted to make it more comparable with earnings data 

collected beginning in 1994. (See note 15 in the text.) 

Ratio
30 Monthly Labor Review March 2000

Earnings and Employment

Table 4. Usual weekly earnings of wage and salary workers, by upper limits of selected deciles and quartiles, in current

 dollars and in constant 1999 dollars for the three earnings groups, annual averages, 1989–99

Highest earnings group

Upper limit of— Upper limit of—

First First Second Third Ninth First First Second Third Ninth

decile quartile quartile quartile decile decile quartile quartile quartile decile

(median) (median)

In current dollars In constant 1999 dollars

1989 ............... 1$225 $370 $524 $758 $1,015 1$294 $484 $685 $991 $1,327

1990 ............... 1237 393 563 802 1,056 1295 489 701 999 1,315

1991 ............... 1247 405 587 814 1,116 1297 486 705 978 1,340

1992 ............... 1247 409 604 831 1,168 1289 479 707 973 1,367

1993 ............... 1256 417 614 868 1,209 1292 476 701 991 1,380

1994 ............... 258 415 622 894 1,237 288 463 694 998 1,381

1995 ............... 263 423 638 919 1,277 286 460 694 999 1,389

1996 ............... 266 431 653 943 1,331 282 456 691 998 1,409

1997 ............... 284 449 673 969 1,373 294 465 697 1,004 1,422

1998 ............... 293 476 700 1,013 1,439 299 487 715 1,035 1,471

1999 ............... 306 491 728 1,053 1,488 306 491 728 1,053 1,488

 Middle earnings group

Upper limit of— Upper limit of—

First First Second Third Ninth First First Second Third Ninth

decile quartile quartile quartile decile decile quartile quartile quartile decile

(median) (median)

 In current dollars In constant 1999 dollars

1989 ............... 1169 248 355 502 655 1221 324 464 656 856

1990 ............... 1178 259 367 512 683 1222 323 457 638 850

1991 ............... 1188 268 378 523 707 1226 322 454 628 849

1992 ............... 1192 274 395 549 719 1225 321 462 643 842

1993 ............... 1195 281 405 564 756 1222 321 462 644 863

1994 ............... 192 281 402 580 771 214 314 449 648 861

1995 ............... 197 287 410 592 786 214 312 446 644 855

1996 ............... 204 294 420 605 813 216 311 445 640 861

1997 ............... 214 303 438 624 850 222 314 454 646 881

1998 ............... 228 316 460 654 888 233 323 470 668 908

1999 ............... 237 328 475 672 915 237 328 475 672 915

 Upper limit of— Upper limit of—

First First Second Third Ninth First First Second Third Ninth

decile quartile quartile quartile decile decile quartile quartile quartile decile

 (median) (median)

In current dollars In constant 1999 dollars

1989 ............... 160 121 1198 308 429 178 158 1259 403 561

1990 ............... 167 129 1207 320 462 183 161 1258 398 575

1991 ............... 170 134 1211 327 475 184 161 1253 393 570

1992 ............... 172 141 1215 343 496 184 165 1252 401 581

1993 ............... 175 144 1223 358 514 186 164 1254 409 587

1994 ............... 78 139 236 362 521 87 155 263 404 582

1995 ............... 81 144 243 371 538 88 157 264 403 585

1996 ............... 84 150 252 382 558 89 159 267 404 591

1997 ............... 88 158 261 392 571 91 164 270 406 592

1998 ............... 92 167 276 411 599 94 171 282 420 612

1999 ............... 96 178 289 424 620 96 178 289 424 620

1 The 10th-percentile earnings figure for each earnings group and the median weekly earnings figure for the lowest earnings group have been adjusted

to make them more comparable with earnings data collected beginning in 1994. (See notes 13 and 15 in the text.)

NOTE: The Consumer Price Index research series using current methods (CPI-U-RS) was used to convert current dollars to constant dollars for 1989–99.

Year

Year

Year

Lowest earnings group
 Monthly Labor Review March 2000 31

dispersion is to track various ratios of percentiles over time.14

To construct some of these ratios, the weekly earnings values

associated with various percentiles (the upper limits of various deciles and quartiles) were computed for all workers and

for each of the three separate earnings groups from 1989 to

1999.15 (See tables 3 and 4.) We then calculated 90th-to-10th,

90th-to-50th, and 50th-to-10th percentile ratios (the upper limit

of the ninth decile divided by the upper limit of the first decile,

and so forth) for all workers and for each of the three earnings

groups for every year during the period.

Chart 3 suggests that earnings dispersion overall changed

very little during the 1990s (after adjustment; see note 13).

The 90th-to-10th percentile ratio held fairly steady. The 90thto-50th percentile ratio edged up, while the 50th-to-10th ratio

edged down, as shown in chart 4. Thus, those at the top and

those at the bottom of the distribution did better relative to

those in the middle, but exhibited little change relative to each

other. (Percentile ratios based on unadjusted data also are included in charts 3 and 4, to illustrate that the interpretation of

recent trends in earnings dispersion is sensitive to the data used.)

These findings seem to be consistent with the earnings changes

previously noted for the three earnings groups, in that median

weekly earnings rose for the lowest and highest earnings groups,

but held steady for workers in the middle. The most notable

feature of recent earnings patterns, including changes in earnings dispersion, is the relatively strong earnings growth among

the lowest paid workers in 1998 and 1999.

Within the earnings groups themselves, growing dispersion

was most evident in the highest earnings group. For example,

the 90th-to-10th percentile ratio increased markedly over the

entire 1989–99 period, reflecting strong real earnings increases

among the highest paid workers in the group. It is notable that

there was a slight decline in the 90th-to-10th ratio near the end

of the period, because earnings advanced relatively sharply

for those at the bottom rung of the highest earnings group over

the 1997–99 period. (See table 5.)

The middle earnings group showed less evidence of growing earnings dispersion than the highest earnings group, and in

the lowest earnings group, earnings dispersion actually declined. It is worth noting again that the lower paid workers in

each of these groups also saw their earnings rise slightly from

1997 to 1999.

WAGE AND SALARY EMPLOYMENT GREW SUBSTANTIALLY from 1989

to 1999. Nearly all of the growth was concentrated among relatively high- and low-paid workers, with the strongest job growth

occurring in the highest earnings group. There was scant employment growth among workers with midlevel wages. Real

median weekly earnings for the highest and lowest earnings

groups also showed some improvement over the entire period,

largely due to the marked acceleration in earnings growth toward the end of the decade. It is notable that the earnings growth

was somewhat more pronounced among workers in the lowest

earnings group. Despite a similar pickup in real median weekly

earnings in the middle earnings group in the late 1990s, earnings remained about unchanged over the entire period.

Among the more detailed occupation-industry classifications,

there was little correlation between those that grew the fastest in

terms of employment and those that registered rising wages. While

some individual occupation-industry categories had both strong

employment growth and strong earnings growth, others showed

divergent employment and earnings trends, and still others showed

declines in both employment and earnings. These widely different patterns were pervasive throughout the range of detailed occupation-industry categories analyzed.

Finally, given the distinct polarization in employment

growth from 1989 to 1999 and the absence of substantial overall earnings growth, we examined the data for changes in the

earnings dispersion. After adjusting for breaks in weekly earnings series associated with the redesign of the CPS in 1994, we

did not discern a general rise in earnings dispersion over the

1989–99 period. 

Table 5. Selected percentile ratios, by earnings group, annual averages, 1989–99

Highest earnings group Middle earnings group Lowest earnings group

90–10 90–50 50–10 90–10 90–50 50–10 90–10 90–50 50–10

1989 ...................... 14.51 1.94 12.33 13.88 1.85 12.10 17.15 12.17 13.30

1990 ...................... 14.46 1.88 12.38 13.84 1.86 12.06 16.90 12.23 13.09

1991 ...................... 14.52 1.90 12.38 13.76 1.87 12.01 16.79 12.25 13.01

1992 ...................... 14.73 1.93 12.45 13.74 1.82 12.06 16.89 12.31 12.99

1993 ...................... 14.72 1.97 12.40 13.88 1.87 12.08 16.85 12.30 12.97

1994 ...................... 4.79 1.99 2.41 4.02 1.92 2.09 6.68 2.21 3.03

1995 ...................... 4.86 2.00 2.43 3.99 1.92 2.08 6.64 2.21 3.00

1996 ...................... 5.00 2.04 2.45 3.99 1.94 2.06 6.64 2.21 3.00

1997 ...................... 4.83 2.04 2.37 3.97 1.94 2.05 6.49 2.19 2.97

1998 ...................... 4.91 2.06 2.39 3.89 1.93 2.02 6.51 2.17 3.00

1999 ...................... 4.86 2.04 2.38 3.86 1.93 2.00 6.46 2.15 3.01

1 The percentile ratios reflect adjustments to the 10th-percentile earnings figure for each group and the 50th-percentile earnings figure for the lowest earnings

group. These adjustments make data more comparable with those beginning in 1994. (See notes 13 and 15 in the text.)

Year
32 Monthly Labor Review March 2000

Earnings and Employment

Notes

ACKNOWLEDGMENT: The authors thank Anne E. Polivka, of the Office of Employment and Unemployment Statistics, Bureau of Labor Statistics, for deriving adjustment factors used in this article to address the breaks in various

CPS weekly earnings data series associated with the 1994 survey redesign.

1

 For an analysis of trends in various wage series from the Current Population Survey, the National Income and Product Accounts, and the Current

Employment Statistics survey, see Katharine G. Abraham, James R. Spletzer,

and Jay C. Stewart, “Why Do Different Wage Series Tell Different Stories?”

American Economics Association Papers and Proceedings, May 1999, pp.

34–39.

2

 The official end of the last recession, as determined by the National

Bureau of Economic Research (NBER), was March 1991. Under NBER’s method

for determining the length of an expansion or recession, the economic trough,

in March 1991, would be counted as the first month in the current economic

expansion. The economic peak (when it occurs) would be counted as the

first month in the subsequent economic recession. The longest expansion on

record, 106 months, occurred during the 1960s. As of December 1999, the

current economic expansion also appears to have lasted 106 months.

3

 The CPS is a nationwide sample survey of approximately 50,000 households conducted for the Bureau of Labor Statistics by the Bureau of the

Census. The CPS provides information about the employment status and demographic and socioeconomic characteristics of the civilian noninstitutional

population aged 16 and older. The major gauge of employment growth is the

Current Employment Statistics (CES) program, a BLS survey of more than

400,000 business establishments. However, this survey does not supply data

on the occupational characteristics of employment, an essential feature of

the research presented in this article. From March 1992 to December 1999, a

period of sustained job growth following the 1990–91 recession, the CES survey showed a job gain of about 22 million, well above the 161⁄2 million indicated by the CPS. (Both estimates are based on changes in seasonally adjusted

data). Numerous conceptual and methodological differences between the two

surveys could account for these differences in measured employment growth.

For a recent study of this issue, see Mark Schweitzer and Jennifer Ransom,

“Measuring Total Employment: Are a Few Million Workers Important?” Economic Commentary (Federal Reserve Bank of Cleveland, June 1999).

4

 See Randy E. Ilg, “The nature of employment growth, 1989–95,”

Monthly Labor Review, June 1996, pp. 29–36.

5

 Employment and earnings data analyzed in this article are based on the

Outgoing Rotation Group files from the CPS. Median weekly earnings for all

wage and salary workers, both full and part time, are analyzed, unless otherwise noted. Self-employed workers are excluded, regardless of whether their

businesses are incorporated. (Earlier research by Ilg, cited in note 4, analyzed total employment, including the self-employed.) The year 1989 was

chosen as the beginning year for the analysis presented herein because labor

market activity at the end of the 1980s resembled that of the late 1990s and

also because 1989 was sufficiently removed from the influence of the recession that started in mid-1990.

6

 Some of the earnings data presented in the article have been adjusted

for breaks in series associated with the introduction of the redesigned CPS in

1994. Adjustments were made to median weekly earnings for the lowest earnings group and for earnings at the 10th percentile for all workers and each of

the three earnings groups. The rationale for making these adjustments is discussed in detail in notes 13 and 15.

7

 See Kenneth J. Stewart and Stephen B. Reed, “Consumer Price Index

research series using current methods, 1978–98,” Monthly Labor Review,

June 1999, pp. 29–38. The increase in real median weekly earnings in 1997–

99 is particularly noteworthy. A change in real earnings can occur because

either nominal wages or the rate of inflation (or both) changed. Throughout

much of the 1990s, the annual rate of increase in the CPI-U-RS was about

equal to that of nominal earnings. From 1997 to 1999, the rate of inflation

was well below levels seen earlier in the decade, while the increase in nominal earnings improved. Other earnings measures, such as average weekly

earnings for private production or nonsupervisory workers from the CES program, showed a similar pattern.

8

 For the purposes of this article, full-time workers are those who usually

work 35 hours or more on their principal job.

9

 For additional information on the employment diversity in the services

industry, see Joseph R. Meisenheimer II, “The services industry in the ‘good’

versus ‘bad’ jobs debate,” Monthly Labor Review, February 1998, pp. 22–47.

10 The methodology used was adopted from that employed in previous

research on job growth. (See Ilg, “The nature of employment growth.”) Earnings data for 1988 were chosen for purposes of ranking the individual occupation-industry categories, because that year was outside the period of study,

but representative of the level of economic activity throughout much of the

1989–99 period. Similarly, data for 1988 were used as the basis for splitting

employment into three groups of nearly equal size. The groups do not necessarily contain exactly one-third of wage and salary employment, because an

occupation-industry category that fell on the dividing line between groups

was not split, but rather, was included in the group into which most of its

employment fell. Sensitivity testing has shown that ranking the occupationindustry categories by earnings from other years may influence those categories on the boundary of the major earnings groups. That is, some categories

tend to move in or move out of the major earnings groups, based on which

year is chosen for purposes of ranking. However, using earnings from other

years to rank the occupation-industry categories also shows that the trends in

employment growth for all earnings groups were similar to those presented

in this analysis, although the magnitudes of the changes differed somewhat.

11 Occupation-industry categories that had an employment base of less

than 50,000 in either 1989 or 1999 are not shown separately in the table,

because the earnings estimates for relatively small groups are generally associated with relatively large standard errors. Employment and earnings data

for these categories with fewer workers are, however, included in the totals

for the highest, middle, and lowest earnings groups. Combined, the 21 occupation-industry categories (out of the total of 90) accounted for a negligible

portion of the net increase in employment between 1989 and 1999. Data are

ranked in descending order by percent change in employment. The annual

estimates of employment and earnings for the nine major occupations and

10 major industries from 1989 to 1999, as well as the 90 individual data

series, are available from the authors upon request.

12 The reader is cautioned that the middle earnings group is not intended to

represent the “middle class.” While many studies have documented the erosion of the number of persons, households, or families in the “middle” of the

distribution of incomes (a trend often characterized as the “declining middle

class”), this article does not attempt to shed further light on that issue.

13 In January 1994, a new questionnaire and survey methodology were

introduced into the CPS. The survey questions on earnings were modified

substantially, to improve the quality of the data. While estimates of overall

median weekly earnings were not materially affected by the redesigned survey, the impact on earnings data for persons at the bottom of the weekly

earnings distribution was significant. In particular, changes to the survey in

1994 led to lower reported earnings for relatively low-paid workers, compared with pre-1994 estimates. To account for this break in the various series, median weekly earnings figures for the lowest earnings group over the

1989–93 period have been adjusted to reflect the methodology used in 1994

and later years. After adjustment, the real median weekly earnings for the

lowest earnings group for the years 1989–93 are somewhat lower than the

unadjusted figures for those years, resulting in a slightly larger percent change

over the entire 1989–99 period (11.6 percent, as opposed to 7.8 percent before adjustment). Because of the very small sample sizes, no attempt was

made to adjust the earnings series for the detailed occupation-industry categories in the lowest earnings group. (The adjustment factors were produced

specifically for this article by Anne E. Polivka of the Bureau of Labor Statistics and were derived using methods she has developed as part of ongoing
 Monthly Labor Review March 2000 33

research. See Anne E. Polivka, “Using Earnings Data from the Current Population Survey after the Redesign,” Bureau of Labor Statistics, working paper

306, January 1999. The adjustment factors are available from the authors

upon request.)

14 Percentiles for any wage or income distribution are calculated by ranking earnings observations from lowest to highest and then determining the

earnings level for the upper limit of a given percentile cutoff. For example,

10 percent of earnings observations are below the upper limit of the 10th

percentile (or first decile). For a recent analysis and discussion of wage inequality, see, for example, Paul Ryscavage, Income Inequality in America

(New York, M.E. Sharpe, 1998); see also Jared Bernstein and Lawrence

Mishel, “Has wage inequality stopped growing?” Monthly Labor Review,

December 1997, pp. 3–16.

15 As explained in note 13, in this article earnings data for the 1989–93

period have been adjusted (where applicable) for breaks in series associated

with the redesign of the CPS in 1994. With respect to various percentiles,

research has shown that the upper limit of the first decile for all workers was

significantly lower, as measured under the redesigned survey; hence, data

for the 1989–93 period have been adjusted (downward) to make them more

comparable. In addition, the first decile was adjusted for each of the three

individual earnings groups. As mentioned in note 13, the 50th percentile

(median) for the lowest earnings group also required adjustment.

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