WSJ's David Wessel: Is Inequality Over Wages Worsening?

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The Wall Street Journal

CAPITAL
By DAVID WESSEL


Is Inequality Over Wages Worsening?
January 19, 2006; Page A2

A distinguishing feature of the U.S. economy of the past quarter-century is a sharp increase in economic inequality. No matter how you slice the data, very well-paid folks have done better than the rest.


(snip)

Roughly 90% of full-time workers earn less than $90,000 a year. What about them? In the 1980s, wages of $90,000-a-year workers (measured in today's dollars) pulled away from workers at the middle, and wages of those in the middle pulled away from workers at the bottom. The consensus diagnosis: Computer technology changed the workplace and made employers prize and pay more for skill and education. The 1990s were different. Nearly all workers did better than they did in the 1980s -- even those at the bottom, the ones who notice when the minimum wage goes up. And inequality wasn't as simple to diagnose. The $90,000-a-year crowd continued to do better than men and women in the middle, but the gap between the middle and the bottom didn't keep widening.

(snip)

In the 1980s, technology whacked employment and wages of those at the bottom whose jobs were easily automated or shipped overseas. And it helped those who leveraged computers to be more productive. In the 1990s, though, those whose work was made more valuable by computers saw wages and job prospects grow. But the same goes for many low-wage workers who work for those at the top -- janitors, waiters, gardeners, home-health aides and massage therapists. The losers are in the middle, those whose jobs and wages are threatened by the increasing sophistication of computers and workers overseas.

If these scholars are right, then the answer is to restructure American schools so they prepare workers for jobs for which technology is either a wage booster or irrelevant -- and teach them to avoid jobs most vulnerable to technology or outsourcing.

Write to David Wessel at [e-mail]

URL for this article:
http://online.wsj.com/article/SB113762975701250282.html (subscription)

[upi402]

1. IT staff are unemployed now, their wages have dropped if employed

WSJ can illuminate at times. But I don't understand how educating kids for another skill with fading demand is the answer.
Outsourcing sucks, and now the white collars hear that sucking sound.
Thanks Al Gore and Bill Clinton!

[question everything]

2. Was thinking the same thing

Also, one cannot escape the conclusion that the gap started to widen during the Reagan years, while it slowed during the Clinton's.