" The big surprise in recent decades is that the competitive forces that limit pay differentials
failed to do so. "
"Forty or so years of rising inequality would seem time enough for the centripetal forces of competition to pull earnings toward market-clearing levels. But that hasn’t happened. "
" The labor market has been dominated by economic forces
that pull the wages of firms further apart from each other,
motivating our analysis of the role of employers in increasing inequality.”
" 86 % " of the increase in inequality over all
Comes within comparable job class types
It takes a Better firm to earn a Better wage rate
"In other words, a lot of inequality is about where you work. The rise in equality is linked to differences across what firms are paying employees who appear to be similarly qualified. As Freeman acknowledges, this argument that this is a quantitatively important cause of rising inequality isn't ironclad at this point, but it's highly suggested in several ways of looking at the data: Freeman writes:
"This implies that 86% ... of the trend increase in inequality [from 1977-2009] occurs among people with measurably the same skills, whereas just 14% of the trend increase comes from changes in earnings among workers with different skills. The big surprise in the exhibit is that the inequality of average earnings among establishments increased by the same 0.147 points [measuring variance of natural log of earnings, a standard measure of inequality of earnings] as did inequality among workers with the same characteristics. This suggests that all of the increase in inequality among similar workers comes from the increase in earnings at their workplaces."
