The article studies the U.S. earning trends since 1950 and gives explanations for
the inequality in earnings. Both slow growth and increased inequality appear in the
comparison of adult male earnings distributions for 1979 and 1987. Trends in women's
earnings paint a somewhat brighter picture. Women, like men, have experienced slow
hourly wage growth and growing wage inequality. But in terms of annual earnings,
both factors have been offset by changes in hours worked. The result is a significant
increase in the proportion of women who earn $20,000 a year or more. A combination
of shifts in supply and shifts in demand is necessary to explain the observed trends
between these groups. A critical aspect of supply shifts was the entry into the labor
market of the well-educated baby boom generation. Demand shifts can be characterized
as a long-term trend toward increasing relative demand for highly skilled workers.
The growth in within group earnings inequality has many potential explanations, but
it is not well understood and contains opportunities for future research.