Wage inequality fell in 2022 because stock market declines brought down pay of the highest earners: But top 1% wages have skyrocketed 171.7% since 1979 while bottom 90% wages have seen just 32.9% growth
Key findings:
- Average inflation-adjusted annual earnings fell across the board in 2022, but the losses were far smaller among the bottom 90% of wage earners. The disproportionate losses for the highest earners—driven by stock market declines—led to a compression in the overall wage distribution over the year.
- Over the pandemic labor market, annual earnings growth was fairly consistent for high earners and the bottom 90%, averaging about 2.6% between 2019 and 2022.
- Over the long run, however, earnings growth has been vastly unequal. From 1979 to 2022:
- Wages for the top 1% and top 0.1% skyrocketed by 171.7% and 344.4%, respectively.
- Wages for the bottom 90% grew just 32.9%.
- The top 1% earned 12.9% of all wages in 2022—up from 7.3% in 1979. The bottom 90% received just 60.1% of all wages in 2022, far lower than their 69.8% share in 1979.
Newly available wage data from the Social Security Administration (SSA) allow us to analyze wage trends through 2022 for the top 1% and other very high earners, as well as for the bottom 90%. Average earnings for all groups fell in 2022, likely due to unusually high inflation. Year-over-year inflation was 8.1% because of supply chain bottlenecks, shifting demand during the pandemic, and energy price shocks from the Russian invasion of Ukraine which began in February 2022.
Table 1 shows average annual earnings by wage group for each of the business cycle peaks since 1979, as well as for the last two years (in 2022 dollars). Average real earnings for the bottom 90% of the wage distribution experienced the smallest losses in 2022 (–0.2%), 10 times smaller losses than the 90th-99th percentile (–2.2%) and 70 times smaller losses than the top 1% (–14.3%). This is consistent with other research finding that low-wage workers had the strongest hourly wage growth over the last three years, leading to significant wage compression.
At the very top of the earnings distribution, however, the losses far exceed what would be expected from this period of high inflation alone. SSA pay not only includes wages, salaries, commissions, bonuses, and severance pay; it also includes exercised stock options, which is not a small share of very high-end compensation. Given that 2022 saw stock prices fall considerably (especially relative to strong growth in 2021), these stock market declines pulled down top 1% pay in the SSA data and also explain why CEO pay fell in 2022.
To the extent that wage compression in 2022 was driven by a fall in stock market values, earnings likely did not get more equitable in a sustainable, long-term way, given that stock market declines over a year are relatively rare. This wage compression is not likely to last without changes in the rules of executive compensation or a structural shift in the bargaining power of typical workers.
Average annual wages (selected years, 2022 dollars) and percent change in annual wages over time, by wage group, 1979–2022
| Average annual wages (2022 dollars) | Long-term | Pandemic labor market | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Year | 1979 | 1989 | 2000 | 2007 | 2019 | 2021 | 2022 | 1979–2019 | 1979–2022 | 2021–2022 | 2019–2022 |
| Bottom 90% | $30,730 | $31,726 | $35,496 | $36,629 | $39,810 | $40,928 | $40,845 | 29.5% | 32.9% | -0.2% | 2.6% |
| 90th–99th | $100,819 | $115,808 | $149,410 | $159,999 | $178,941 | $187,609 | $183,511 | 77.5% | 82.0% | -2.2% | 2.6% |
| 90th–95th | $85,586 | $93,717 | $119,261 | $126,829 | $140,384 | $145,178 | $142,845 | 64.0% | 66.9% | -1.6% | 1.8% |
| 95th–99th | $119,860 | $143,422 | $187,096 | $201,461 | $227,136 | $240,648 | $234,342 | 89.5% | 95.5% | -2.6% | 3.2% |
| Upper 5% | $153,738 | $211,082 | $293,194 | $312,023 | $335,037 | $375,904 | $344,667 | 117.9% | 124.2% | -8.3% | 2.9% |
| Upper 1% | $289,249 | $481,722 | $717,585 | $754,272 | $766,640 | $916,928 | $785,968 | 165.0% | 171.7% | -14.3% | 2.5% |
| 99.0th–99.9th | $250,947 | $369,807 | $481,841 | $514,513 | $542,370 | $606,884 | $560,249 | 116.1% | 123.3% | -7.7% | 3.3% |
| 99.9th–100th | $633,971 | $1,488,960 | $2,839,274 | $2,912,102 | $2,785,071 | $3,707,327 | $2,817,436 | 339.3% | 344.4% | -24.0% | 1.2% |
| Average | $39,623 | $43,793 | $52,569 | $54,908 | $59,600 | $62,889 | $61,136 | 50.4% | 54.3% | -2.8% | 2.6% |
Source: EPI analysis of Kopczuk, Saez, and Song, “Uncovering the American Dream: Inequality and Mobility in Social Security Earnings Data Since 1937” (2007) and Social Security Administration wage statistics.
Because of the earnings compression in 2022, the bottom 90% made up for their disproportionate losses earlier in the pandemic. Between 2019 and 2022, annual earnings growth was fairly consistent at 2.5–2.6% for the top 1%, the 90–99th percentile, and the bottom 90%.
Over the long run, however, earnings growth was vastly unequal (see Figure A). Between 1979 and 2022, annual earnings for the top 1% and top 0.1% skyrocketed by 171.7% and 344.4%, respectively, while earnings for the bottom 90% grew just 32.9%. On an annualized basis, bottom 90% wages grew less than 0.7% per year, compared with 2.4% and 3.5% annualized wage growth for the top 1% and top 0.1%, respectively.
It’s worth noting that these vastly unequal growth rates are on top of the already vast inequality that existed in 1979. Back then, the top 1% earned average wages ($289,249) more than nine times as much as the bottom 90% ($30,730). In 2022, the top 1% earned average wages ($785,968) 19 times as much as the bottom 90% ($40,845).
Cumulative percent change in real annual wages, by wage group, 1979–2022
| Year | Bottom 90% | 90th–95th percentile | 95th–99th percentile | Top 1% |
|---|---|---|---|---|
| 1979 | 0.0% | 0.0% | 0.0% | 0.0% |
| 1980 | -2.3% | -1.6% | -0.8% | 3.8% |
| 1981 | -2.2% | -1.4% | 0.3% | 4.1% |
| 1982 | -3.0% | -0.1% | 3.0% | 11.2% |
| 1983 | -2.2% | 2.3% | 5.4% | 15.6% |
| 1984 | 0.3% | 4.3% | 8.5% | 23.2% |
| 1985 | 0.9% | 5.3% | 10.4% | 25.8% |
| 1986 | 2.9% | 8.2% | 14.3% | 35.1% |
| 1987 | 2.9% | 7.9% | 16.1% | 55.1% |
| 1988 | 2.5% | 7.9% | 18.1% | 70.2% |
| 1989 | 3.2% | 9.5% | 19.7% | 66.5% |
| 1990 | 2.5% | 7.7% | 17.9% | 68.3% |
| 1991 | 1.3% | 16.5% | 21.6% | 50.2% |
| 1992 | 2.3% | 19.4% | 24.2% | 68.5% |
| 1993 | 1.6% | 19.4% | 26.0% | 63.3% |
| 1994 | 3.5% | 22.5% | 29.4% | 61.3% |
| 1995 | 4.7% | 24.3% | 32.6% | 72.8% |
| 1996 | 5.1% | 25.0% | 34.5% | 80.1% |
| 1997 | 7.6% | 27.9% | 39.6% | 96.1% |
| 1998 | 12.0% | 33.6% | 46.8% | 112.7% |
| 1999 | 14.6% | 36.9% | 51.8% | 130.5% |
| 2000 | 15.5% | 39.3% | 56.1% | 148.1% |
| 2001 | 15.8% | 39.7% | 55.1% | 126.0% |
| 2002 | 16.0% | 40.6% | 53.8% | 110.5% |
| 2003 | 16.5% | 41.6% | 55.7% | 112.3% |
| 2004 | 17.4% | 43.5% | 58.2% | 129.2% |
| 2005 | 17.0% | 43.8% | 60.1% | 138.1% |
| 2006 | 18.3% | 46.5% | 64.7% | 147.7% |
| 2007 | 19.2% | 48.2% | 68.1% | 160.8% |
| 2008 | 18.5% | 48.0% | 66.2% | 141.2% |
| 2009 | 18.3% | 49.0% | 65.7% | 118.8% |
| 2010 | 17.8% | 49.8% | 68.5% | 134.7% |
| 2011 | 16.9% | 50.1% | 69.3% | 137.6% |
| 2012 | 17.3% | 50.6% | 71.3% | 153.0% |
| 2013 | 17.5% | 51.1% | 72.0% | 141.2% |
| 2014 | 19.2% | 53.3% | 75.6% | 153.6% |
| 2015 | 23.1% | 58.0% | 81.4% | 160.6% |
| 2016 | 23.8% | 58.4% | 81.8% | 152.4% |
| 2017 | 25.1% | 59.5% | 83.2% | 162.2% |
| 2018 | 27.0% | 61.4% | 85.7% | 162.9% |
| 2019 | 29.5% | 64.0% | 89.5% | 165.0% |
| 2020 | 29.4% | 67.8% | 95.2% | 180.7% |
| 2021 | 33.2% | 69.6% | 100.8% | 217.0% |
| 2022 | 32.9% | 66.9% | 95.5% | 171.7% |
Source: EPI analysis of Kopczuk, Saez, and Song, “Uncovering the American Dream: Inequality and Mobility in Social Security Earnings Data Since 1937” (2007) and Social Security Administration wage statistics.
The highest earners have amassed a growing share of total wages since 1979
Table 2 displays the share of total earnings garnered by each wage group in business cycle peak years between 1979 and 2022, as well as changes over the long term and in the pandemic labor market.
The rise in shares for the bottom 90% as well as disproportionate losses at the top in 2022 has meant that we have essentially returned to the pre-pandemic earnings distribution. The final column of Table 2 illustrates this phenomenon with little-to-no change in earnings shares between 2019 and 2022 across the board.
But in the long run, the highest earners have captured a growing share of total wages even relative to already substantial inequality that existed in 1979. In 2022, the bottom 90% of workers earned only 60.1% of total earnings while the top 1% earned 12.9%. In other words, a group of workers that is 90 times as big in size earned only about 4.7 times as much as the much smaller group. Overall, the share of earnings for the bottom 90% fell 9.7 percentage points between 1979 and 2022 while the share of earnings for the top 1% grew 5.6 percentage points. This rising share for the top 1% is driven in part by rapid growth for the top 0.1% of wage earners, which nearly tripled their share of total earnings from 1.6% to 4.6% during the same period.
Share of all wages (selected years) and percentage-point change in share of total wages over time, by wage group, 1979–2022
| Share of wages | Long-term | Pandemic labor market | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Year | 1979 | 1989 | 2000 | 2007 | 2019 | 2021 | 2022 | 1979–2019 | 1979–2022 | 2021-2022 | 2019-2022 |
| Bottom 90% | 69.8% | 65.2% | 60.8% | 60.0% | 60.1% | 58.6% | 60.1% | -9.7% | -9.7% | 1.6% | 0.0% |
| 90th-99th | 22.9% | 23.8% | 25.6% | 26.2% | 27.0% | 26.8% | 27.0% | 4.1% | 4.1% | 0.2% | 0.0% |
| 90th–95th | 10.8% | 10.7% | 11.3% | 11.5% | 11.8% | 11.5% | 11.7% | 1.0% | 0.9% | 0.1% | -0.1% |
| 95th–99th | 12.1% | 13.1% | 14.2% | 14.7% | 15.2% | 15.3% | 15.3% | 3.1% | 3.2% | 0.0% | 0.1% |
| Upper 5% | 19.4% | 24.1% | 27.9% | 28.4% | 28.1% | 29.9% | 28.2% | 8.7% | 8.8% | -1.7% | 0.1% |
| Upper 1% | 7.3% | 11.0% | 13.7% | 13.7% | 12.9% | 14.6% | 12.9% | 5.6% | 5.6% | -1.7% | 0.0% |
| 99.0th–99.9th | 5.7% | 7.6% | 8.2% | 8.4% | 8.2% | 8.7% | 8.2% | 2.5% | 2.5% | -0.4% | 0.1% |
| 99.9th–100th | 1.6% | 3.4% | 5.4% | 5.3% | 4.7% | 5.9% | 4.6% | 3.1% | 3.0% | -1.3% | -0.1% |
Source: EPI analysis of Kopczuk, Saez, and Song, “Uncovering the American Dream: Inequality and Mobility in Social Security Earnings Data Since 1937” (2007) and Social Security Administration wage statistics.
Wage growth for the bottom 90% has lagged far behind average growth for much of the last 40-plus years. The data here support evidence from other data sources that show wages for middle-wage workers grew mainly in two periods since 1979: the late 1990s and the five years leading up to the more recent labor market peak in 2019. It’s not a coincidence that these were two periods when policymakers allowed the unemployment rate to reach 4% (or lower) without slowing the economy in the name of inflation control. Policymakers should heed this lesson and pursue full employment along with a host of other policies to curb rising inequality. This should include strengthening and enforcing labor standards such as those related to the minimum wage, the overtime threshold, wage theft, and noncompete agreements; increasing worker bargaining power by making it easier for workers to form unions; and reining in executive compensation with higher taxes, regulation, and better corporate governance.
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