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null Wage Stagnation and the Decline of Standardized Pay Rates, 1974–1991

Wage Stagnation and the Decline of Standardized Pay Rates, 1974–1991

Wage Stagnation and the Decline of Standardized Pay Rates, 1974–1991

Figure 1. Pay Stagnation across Data Sources, 1974–1991

Using new establishment-by-occupation microdata, we show that the use of discretionary wage setting significantly expanded in the 1970s and 1980s. Increasingly, wages for blue-collar workers were not standardized by job title or seniority but instead subject to managerial discretion. When establishments abandoned standardized pay rates, wages fell, particularly for the lowest-paid workers in a job and for those in establishments that previously paid above market rates. This shift away from standardized pay rates, in context of a broader decline in worker bargaining power, accelerated the decline in real wages experienced by blue-collar workers in the 1980s.
 

Read the full article in American Economic Journal: Applied Economics

Citation
Massenkoff, Maxim and Nathan Wilmers. 2023. "Wage Stagnation and the Decline of Standardized Pay Rates, 1974–1991." American Economic Journal: Applied Economics, 15 (1): 474-507.
DOI: 10.1257/app.20200819