Wage Compression or Wage Divergence? Real Wage Growth Comparison between New York City and the U.S., 2019-2023
Since 2019, low-wage workers have experienced far slower wage gains than high-wage workers in New York City – even as the opposite has been true nationwide. This has fueled growing income inequality on New York City post-pandemic.
This new report from CNYCA shows that New York City’s high-wage workers experienced an 18.2 percent real wage gain from 2019-2023. Meanwhile, low-wage workers here saw their wages increase by only six percent. By way of contrast, higher wage gains among low-wage workers than among high-wage workers nationally created what economists call “wage compression” and narrowing income inequality.
In addition, while U.S. low-wage workers recorded their fastest wage increase since 1996, New York City low-wage workers experienced slower real wage growth in 2019-2023 compared to 2013-2019.
Nationally, fiscal and monetary policy mitigating the economic impact of the pandemic resulted in a tight post-pandemic labor market that lifted the reported national average wages for low wage workers. Furthermore, minimum wage increases policy in some 29 states and the District of Columbia also bolstered wage growth for low-wage workers during this time period. These conditions did not arise in New York City. The unemployment rate in New York City remained consistently and significantly higher than the national rate for the 2019-2023 period. The stagnation of the New York state minimum wage – attributable to a failure by policymakers to inflation-index the state minimum wage – also contributed to the slower real wage growth of low wages in the city.
The report compares labor market conditions and minimum wage policy at the national and New York City level that contribute to these outcomes. It draws on Current Population Survey (CPS) data to provide evidence that real wage growth was strongest for low-wage workers in the U.S., and for high-wage workers in New York City. The report also draws on additional data that documents average real wage growth by industry in New York City. Low-wage workers in home health care services experienced the highest real wage decline. Meanwhile high-wage workers in colleges and universities recorded the highest real wage gains.