Whether the American economy as a whole has been declining is, perhaps, more of a political than an analytical question. Pessimists point to budget deficits, trade deficits, slow measured productivity growth, job loss, and “deindustrialization.” Optimists however can point to emerging technologies, strong aggregate growth as compared with, say, Europe, and the continuing market test of demand for immigration to the United States. There is no simple answer to a question for which no simple metric can exist.

Unquestionably, though, American society and economic life are changing. One change particularly stands out: after 1980 the distribution of income became much more unequal. Tax reductions skewed to the wealthy, high interest rates, cuts in government services, and recessions affecting the poor all contributed to this change. But so, and importantly for an understanding of industrial change in America, did changes in the distribution of industrial wage income.

The nature of changing wage inequality is easier to describe than to explain. Numerous studies of worker characteristics have shown that, in general, the 1980s reinforced the association of education and earnings. The relative wage of workers with high educational attainment rose, and that of those without such attainment declined.