Newspaper Article

THE INCOME GAP RIDDLE Analysts find no easy explanations; TODAY'S KEY POINTS U.S. business productivity rose more than 90% between 1950 and 1973 and so did middle-class income. In the same length of time since '73, productivity has grown by less than a third, and most income gains have gone to the well-off. Demographic and social changes figure importantly in who wins and loses in today's economy. The increase in families headed by a single woman has bolstered the low end of the income scale. Th

RICK ROMELL AND GEETA SHARMA-JENSEN

1996

Overview

[THE INCOME GAP RIDDLE Analysts find no easy explanations; TODAY'S KEY POINTS U.S. business productivity rose more than 90% between 1950 and 1973 and so did middle-class income. In the same length of time since '73, productivity has grown by less than a third, and most income gains have gone to the well-off. Demographic and social changes figure importantly in who wins and loses in today's economy. The increase in families headed by a single woman has bolstered the low end of the income scale. The high end, meanwhile, has grown in part because the wives of well-paid men are increasingly likely to work, and to be paid well themselves. Some of the growth in wage inequality stems from temporary not permanent changes in earnings. But the biggest increases in earnings volatility have occurred among less-educated, lower-income workers those least equipped to ride out an economic storm. Individuals increasingly bear the risks of economic ups and downs that formerly were borne by corporations. While many believe economic globalization has sent U.S. jobs to low-wage nations, it may be a small factor in the widening gap between haves and have-nots. Pay inequality has risen in industries largely immune to international competition, and the vast majority of U.S. trade is with nations whose wage scales mirror our own. Computers and other technological changes have made higher-skilled workers increasingly valuable. In the late '70s, male college graduates averaged a third more pay than their high school counterparts. By 1990, the difference was 60%. One study found that workers who use computers make 10% to 15% more than those who don't. Yet the computer revolution hasn't provided much boost to U.S. productivity a continuing puzzle. Series: Middle Class Lost: America Pulling Apart \\ Second of four parts] [THE INCOME GAP RIDDLE Analysts find no easy explanations; TODAY'S KEY POINTS U.S. business productivity rose more than 90% between 1950 and 1973 and so did middle-class income. In the same length of time since '73, productivity has grown by less than a third, and most income gains have gone to the well-off. Demographic and social changes figure importantly in who wins and loses in today's economy. The increase in families headed by a single woman has bolstered the low end of the income scale. The high end, meanwhile, has grown in part because the wives of well-paid men are increasingly likely to work, and to be paid well themselves. Some of the growth in wage inequality stems from temporary not permanent changes in earnings. But the biggest increases in earnings volatility have occurred among less-educated, lower-income workers those least equipped to ride out an economic storm. Individuals increasingly bear the risks of economic ups and downs that formerly were borne by corporations. While many believe economic globalization has sent U.S. jobs to low-wage nations, it may be a small factor in the widening gap between haves and have-nots. Pay inequality has risen in industries largely immune to international competition, and the vast majority of U.S. trade is with nations whose wage scales mirror our own. Computers and other technological changes have made higher-skilled workers increasingly valuable. In the late '70s, male college graduates averaged a third more pay than their high school counterparts. By 1990, the difference was 60%. One study found that workers who use computers make 10% to 15% more than those who don't. Yet the computer revolution hasn't provided much boost to U.S. productivity a continuing puzzle. Series: Middle Class Lost: America Pulling Apart \\ Second of four parts]

• Publisher: Journal Sentinel Inc
• Subject: Burtless, Gary / Gottschalk, Peter / Levine, Marc / Levy, Frank / Rosen, Sherwin