Wage Stagnation and the Decline of Standardized Pay Rates, 1974–1991
- (pp. 474-507)
(Complimentary)
Abstract
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.Citation
Massenkoff, Maxim ⓡ 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.20200819Additional Materials
JEL Classification
- J31 Wage Level and Structure; Wage Differentials
- J33 Compensation Packages; Payment Methods
- J52 Dispute Resolution: Strikes, Arbitration, and Mediation; Collective Bargaining
- M52 Personnel Economics: Compensation and Compensation Methods and Their Effects
- O33 Technological Change: Choices and Consequences; Diffusion Processes
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