Overview: Wage Dynamics in the Twenty-First Century

true Throughout most of the twentieth century, economic growth was associated with rising median real wages. However, since the early 1980s, measured median real hourly compensation has been stagnant despite robust productivity growth. To the extent that measured real wage growth has occurred, it has been concentrated disproportionately at the upper end of the wage distribution. Many view the lack of growth of median wages over this time period as evidence that the American middle class has not advanced and as a symptom of declining social mobility. The decoupling of measured median real wage growth and productivity growth has been viewed as a puzzle among both academics and policy makers. During this time period, there has also been a separation of wage growth and othermacroeconomic fundamentals. For instance, theUnited States has had record low levels of unemployment in the years prior to the global pandemic, yet during the prepandemic period there was little accompanying wage growth. This presents an apparent contradiction of the long-standing Phillips curve analysis that negatively relates unemployment towage growth. Researchers have begun to dig into this puzzle of late (see, e.g., Del Negro et al. 2020). Recent explanations involve the possibility that we have mismeasured the amount of slack in the economy (Krueger, Cramer, and Cho 2014; Abraham, Haltiwanger, and Rendell 2020) or that we have a flatter