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Inequality at work continues to worsen, says economist

The gap between the wages of those at the top of the income scale and those in the middle and the bottom has widened significantly since 1980 and is now greater than at any time since the 1920s, said Cornell economist Francine Blau '66 at a gathering of Cornell alumni, Oct. 2, at the Cornell Club in New York City.

Blau, the Frances Perkins Professor of Industrial and Labor Relations and Labor Economics, was the speaker at "Opportunity 103: Inequality at Work," the third in a series of four seminars for alumni organized by Cornell sociologist and interim provost David Harris, with assistance from Alumni Affairs and Development. The seminars are intended to provide a deeper understanding of inequality as it applies to race and ethnicity, education, wages and international development.

"I meet a lot of alumni who have tremendous passion about issues of inequality," Harris told the group. The series also gives alumni an inside look at the work being done in the social sciences at Cornell.

Blau noted that in 2005, the top 1 percent of earners made 19 percent of all income, up from 8 percent in 1975. But it's not just a matter of large disparities between the very rich and very poor, she stressed, but between the top half of the income scale and the bottom: In 2005, a male worker in the 90th percentile made three times as much as a male worker in the 50th percentile, up from twice as much in 1979. And if the figures took into account employer-sponsored health insurance and other benefits, which have eroded overall since 1980 and tend to be worse for lower-paid workers, "the inequalities would be worse," she said.

Female workers have fared somewhat better than males over the years, said Blau, and now make 79 cents to every dollar earned by men, compared with less than 65 cents in 1965. Women are still affected by wage inequality, Blau noted, though not as deeply as men and minorities, and the reasons may yield insights that could help the other groups catch up.

The primary reason for wage inequality across all groups is what Blau called "rising returns to skill." The monetary rewards for improving one's skill sets have increased dramatically over the past three decades, she said. Women have been steadily gaining in this area and in the area of education; females now earn 57 percent of all bachelor's degrees awarded in the United States.

In policy terms, this underlines the "key importance of education and improving human capital" in closing the wage gap, said Blau. She also advocates for providing such subsidies to family income as the earned income tax credit, which she said "probably has more upside than an increase in the minimum wage," which negatively impacts employment.

Claudia Wheatley is a writer with the Office of Publications and Marketing.

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