The Decline of Low-wage Jobs

From 2014 to 2024, the share of US hourly workers paid below $15 in real terms fell by two-thirds, from 38% to 13%. This drove declines in US labor market inequality for the first time since 1980, as pay increases in low-wage retail, food service and logistics jobs outpaced higher-status occupations. How did these substantial wage increases emerge? Using restricted-use microdata from the Occupational Employment and Wages Statistics and the Quarterly Census of Employment and Wages, we find that rising pay across low-wage occupations, rather than declining inequality within-job or in workplace pay premiums, explains a majority of declining wage inequality since 2015. Contrary to creative destruction predictions, establishment exit contributed little to rising pay at the bottom. Low-paying employers of low-wage occupations contracted, but this accounts for less than a fifth of rising wages at the bottom. The main driver of rising pay was low- and middle-paying employers of low-wage occupations increasing pay. Notwithstanding organizational inertia, major gains for workers' pay can come from changes in existing workplaces.