A very important part of the story is the spread of low wage across major parts of the whole economy. For example, seven low wage/low productivity sectors including education and health, accommodation and food, and business services saw their share in output between 1990 and 2016 fall from 48% to 41%. Meanwhile, their share of total employment rose from 47% to 61% with an essentially constant share of total wages (56%).
In effect, the structure of production is being hollowed out, and the U.S. is becoming what many analysts are starting to refer to as a “dual economy” — one with good wages for a minority of people who work in areas like finance or technology, and stagnant or falling wages for the majority who work in sectors such as retail with relatively high productivity growth but low wages. That pushes overall inequality way up.
