I am the Sarofim Family Career Development Associate Professor of Work and Organizations at MIT Sloan. I research wage and earnings inequality, economic sociology and the sociology of labor and am affiliated with the Institute for Work and Employment Research and the Economic Sociology program.
My research appears in Administrative Science Quarterly, American Economic Journal: Applied Economics, American Sociological Review, American Journal of Sociology, ILR Review, Journal of Labor Economics, PNAS, and Social Forces. It has been covered in media outlets including The Economist, Washington Post, BBC, Nature: Human Behavior, Wall Street Journal, Time, Nasdaq.com, Fox Business, Harvard Business Review, The Nation, Boston Business Journal, NPR, Business Insider, The Hill, The Boston Globe, NBC News, Financial Times, and CNBC.
(with Clem Aeppli)Proceedings of the National Academy of Sciences, 2022
US earnings inequality has not increased in the last decade. This marks the first sustained reversal of rising earnings inequality since 1980. We document this shift across eight data sources, using worker surveys, employer-reported data, and administrative data. The reversal is due to a shrinking gap between low-wage and median workers. In contrast, the gap between top and median workers has persisted. Rising pay for low-wage workers is not mainly due to the changing composition of workers or jobs; minimum wage increases; or workplace-specific sources of inequality. Instead, it is due to broadly rising pay in low-wage occupations, which has particularly benefited workers in tightening labor markets. Rebounding post-Great Recession labor demand at the bottom offset enduring drivers of inequality.
Coverage: Business Insider, Time, Quartz
(with Maxim Massenkoff)Journal of Labor Economics, 2022
From 1970 to 2000, worker participation in strikes decreased by 90 percent. We show using understudied measures from labor market surveys that strikers also experienced worse outcomes after 1981. Event study evidence using the PSID suggests that strikers enjoyed 5-10 percent wage gains prior to the 1980s, but null wage changes thereafter. Additional analysis of collective bargaining agreements and person-level data from the SIPP and CPS reinforce the finding that strikes since the 1980s have not been associated with increases in wages, hours, or benefits. These findings are consistent with decreased strike effectiveness or more negative selection into ``defensive'' strikes.
(with William Kimball)Social Forces, 2022
When employers conduct more internal hiring, does this facilitate upward mobility for low-paid workers or does it protect the already advantaged? To assess the effect of within-employer job mobility on occupational stratification, we develop a framework that accounts for inequality in both rates and payoffs of job changing. Internal hiring facilitates advancement for workers without strong credentials, but it excludes workers at employers with few good jobs to advance into. Analyzing Current Population Survey data, we find that when internal hiring increases in a local labor market, it facilitates upward mobility less than when external hiring increases. When workers in low-paid occupations switch jobs, they benefit more from switching employers than from moving jobs within the same employer. One-third of this difference is due to low-paid workers isolated in industries with few high-paying jobs to transfer into. An occupationally segregated labor market therefore limits the benefits that internal hiring can bring to the workers who most need upward mobility.
Awards: IPUMS CPS Award for Best Published Research, 2021
(with Maxim Massenkoff)American Economic Journal: Applied Economics, 2022
Using new establishment-by-occupation microdata, we show that the use of discretionary wage-setting significantly expanded in the 1970s and 1980s. Increasingly, wages for blue-collar workers were not standardized by job title or seniority, but instead subject to managerial discretion. When establishments abandoned standardized pay rates, wages fell, particularly for the lowest-paid workers in a job and for those in establishments that previously paid above market rates. This shift away from standardized pay rates, in context of a broader decline in worker bargaining power, accelerated the decline in real wages experienced by blue collar workers in the 1980s.
Awards: Best Paper Award, Academy of Management OMT Division, 2020.
(with Letian Zhang)American Sociological Review, 2022
In an era of substantial labor market inequality, employers increasingly invoke prosocial mission, corporate responsibility and organizational purpose. Many commentators criticize these prosocial commitments as ineffectual and insincere. In this paper, we argue that these employer commitments in fact inadvertently reduce earnings inequality. Building on research on job values, we hypothesize that college graduates are more willing to sacrifice pay for prosocial impact. So employers’ increased emphasis on prosocial values disproportionately reduces pay for higher skill workers. We test this theory with data on online US job postings. We find that prosocial jobs which require a college degree post 10 percent lower pay than standard postings with exactly the same job requirements. Pay at prosocial, but low-education jobs, is no different from regular low-education jobs. This gap reduces the aggregate college wage premium by around 5 percent. We present a variety of supplementary evidence using resumes, survey data and an online experiment with hiring managers. The findings reveal an unintended consequence of employers' embrace of prosocial values: it offsets macro-level inequality.
(with Nicole Kreisberg)ILR Review, 2022
Starting in the 1980s, US employers revived aggressive action against unions. Employers’ public opposition to unions yielded a scholarly consensus that US employers actively and consistently discriminate against union supporters. However, evidence for widespread employer anti-union discrimination is based mainly on employer reactions to rare union organizing campaigns. To measure baseline or preventive anti-union discrimination, the authors field the first ever US-based résumé correspondence study of employer responses to union supporter applicants. Focus is on entry-level, non-college degree jobs and findings show no difference in employer callback rates for union supporter applicants relative to non-union applicants. Drawing on interviews and survey data, the authors suggest that union weakness itself may have hollowed preventive employer discrimination against union supporters.
(with Clem Aeppli)American Sociological Review, 2021
The two main axes of inequality in the U.S. labor market—occupation and workplace—have increasingly consolidated. In 1999, the largest share of employment at high-paying workplaces was blue-collar production workers, but by 2017 it was managers and professionals. As such, workers benefiting from a high-paying workplace are increasingly those who already benefit from membership in a high-paying occupation. Drawing on occupation-by-workplace data, we show that up to two-thirds of the rise in wage inequality since 1999 can be accounted for not by occupation or workplace inequality alone, but by this increased consolidation. Consolidation is not primarily due to outsourcing or to occupations shifting across a fixed set of workplaces. Instead, consolidation has resulted from new bases of workplace pay premiums. Workplace premiums associated with teams of professionals have increased, while premiums for previously high-paid blue-collar workers have been cut. Yet the largest source of consolidation is bifurcation in the social sector, whereby some previously low-paying but high-professional share workplaces, like hospitals and schools, have deskilled their jobs, while others have raised pay. Broadly, the results demonstrate an understudied way that organizations aﬀect wage inequality: not by directly increasing variability in workplace or occupation premiums, but by consolidating these two sources of inequality.
What explains pay inequality among coworkers? Theories of organizational influence on inequality emphasize the effects of formal hierarchy. But restructuring, firm flattening, and individualized pay setting have challenged the relevance of these structuralist theories. I propose a new organizational theory of differences in pay, focused on task structure and the horizontal division of labor across jobs. When organizations specialize jobs, they reduce the variety of tasks performed by some workers. In doing so they leave exclusive job turf to other coworkers, who capture the learning and discretion associated with performing a distinct task. The division of labor thus erodes pay premiums for some workers while advantaging others through job turf. I test this theory with linked employer–employee panel data from U.S. labor unions, which include a type of data that is rarely collected: annual reporting on work tasks. Results show that reducing task variety lowers workers’ earnings, while increasing job turf raises earnings. When organizations reduce task variety for some workers, they increase job turf for others. Without assuming fixed job hierarchies and pay rates, interdependencies in organizational task allocation yield unequal pay premiums among coworkers.
Awards: ASQ Dissertation Award, 2021, Finalist, Scholarly Achievement Award from the Human Resources Division of AOM, 2021
The post–World War II period of wage compression provides a strong contrast to the last forty years of rising inequality. In this article, I argue that inequality was previously constrained by pay coordination that spanned multiple workplaces. Cross-workplace coordination practices range from multi-employer bargaining agreements to informal employer collusion. To quantify the influence of these practices on inequality, I draw on establishment-level Bureau of Labor Statistics microdata from 1968 to 1977. Inequality between workplaces did not increase during the 1970s and inequality was lower among workers likely to be covered by cross-workplace coordination. Unionization, large establishments, and pension provision reduced inequality across workplaces, not only among coworkers within workplaces. These findings indicate that cross-workplace coordination mitigated inequality during the postwar period of egalitarian economic growth.
(with Matthew Desmond)American Journal of Sociology, 2021
This article examines tenant exploitation and landlord profit margins within residential rental markets. Defining exploitation as being overcharged relative to the market value of a property, the authors find exploitation of tenants to be highest in poor neighborhoods. Landlords in poor neighborhoods also extract higher profits from housing units. Property values and tax burdens are considerably lower in depressed residential areas, but rents are not. Because landlords operating in poor communities face more risks, they hedge their position by raising rents on all tenants, carrying the weight of social structure into price. Since losses are rare, landlords typically realize the surplus risk charge as higher profits. Promoting a relational approach to the analysis of inequality, this study demonstrates how the market strategies of landlords contribute to high rent burdens in low-income neighborhoods.
Since the 1970s, corporate restructuring has shifted more and more workers into workplaces substantially reliant on outside corporate buyers. During the same period, wages for U.S. workers have stagnated. Standard theories of wage determination allow bargaining power to affect wages within companies, but assume that competitive pricing allocates resources between different companies. I extend organizational theories of wage determination to between-organization interactions and I predict that powerful buyers can demand decreases in suppliers’ wages. Panel data on publicly traded companies shows that dependence on large buyers decreases suppliers’ wages and accounts for 10% of the decline in wage growth in nonfinancial firms since the 1970s. Instrumental variables analysis of mergers among buyers confirms that wage decreases result from strengthened buyer power. These findings document how networked production grew in tandem with consolidation among large buyers. The spread of unequal bargaining relations between corporate buyers and their suppliers slowed wage growth for workers.
Research on wage inequality has neglected the role consumers play in shaping the wage structure. This paper considers the consequences of the US economy’s increasing reliance on demand from high-income consumers. Unlike the mass consumers that defined the post-WWII US economy, high-income consumers pay a premium for high-quality and high-status products. These distinctive spending patterns mean that high-income consumers can increase segmentation between up-market and down-market producers and generate inequality among up-market producers. Vertical differentiation between employers serving different consumers thus underlies new types of industrial segmentation and dualism. Using input-output tables to link consumer expenditure and wage surveys, I implement variance function regression to find that industries more dependent on high-income consumers have greater wage inequality. This analysis identifies a new structural source of wage inequality not considered in previous research: the increasingly segmented composition of consumer demand reproduces wage inequality.
Awards: Granovetter Award for Best Paper in Economic Sociology (ASA, 2018), Consumers and Consumption Graduate Student Award (ASA, 2017)
Amid the long decline of US unions, research on union wage effects has struggled with selection problems and inadequate theory. I draw on the sociology of labor to argue that unions use non-market sources of power to pressure companies into raising wages. This theory of union power implies a new test of union wage effects: does union activism have an effect on wages that is not reducible to workers’ market position? Two institutional determinants of union activity are used to empirically isolate the wage effect of union activism from labor market conditions: increased union revenue from investment shocks and increased union activity leading up to union officer elections. Instrumental variable analysis of panel data from the Department of Labor shows that a 1 percent increase in union spending increases a proxy for union members’ wages between 0.15 percent and 0.30 percent. These wage effects are larger in years of active collective bargaining, and when unions increase spending in ways that could pressure companies. The results indicate that non-market sources of union power can affect workers’ wages and that even in a period of labor weakness unions still play a role in setting wages for their members.
(with Per Engzell)
Recent research finds that pay inequality stems both from firm pay-setting and from workers' individual characteristics. Yet, intergenerational mobility research remains focused on transmission of individual traits, and has failed to test how firms shape the inheritance of inequality. We study this question using three decades of Swedish population register data, and decompose the intergenerational earnings correlation into firm pay premiums and stable worker effects. One quarter of the intergenerational earnings correlation at midlife is explained by sorting between firms with unequal pay. Employer or industry inheritance account for a surprisingly small share of this firm-based earnings transmission. Instead, children from high-income backgrounds benefit from matching with high-paying firms irrespective of the sources of parents’ earnings advantage. Our analysis reveals how an imperfectly competitive labor market provides an opening for skill-based rewards in one generation to become class-based advantages in the next.
(with Carly Knight)
This article asks why firms adopt novel managerial ideologies. Over the past forty years, managerial ideas about workers have undergone rapid change. As companies abandoned postwar models of work, some adopted a “high road” approach to management, describing their employees as assets, while others adopted a “low road” approach, describing their employees as costs. In this article, we use research on organizational identity to develop a theory of how and why firms adopt one approach or the other. We argue that firms’ previously adopted managerial ideologies are sticky, such that firms that adopted an asset orientation in the past will continue to do so in the future. Furthermore, the type of worker defining that orientation changes when firms’ occupational composition changes. We argue that the organizational adoption of new managerial ideas is characterized by ideological reorientation—that is, management ideologies shift in response to occupational changes but are also constrained by each firm’s prior cultural history. We test these ideas using computational text analysis to analyze long-run variation in management ideology across a large panel of corporate annual reports. We find that ideologies forged in the old economy guided corporations into either high-road or low-road approaches to the new economy.
(with Per Lundborg)
How does family intervention affect earnings inequality? Stratification research has focused on how families advantage children through skill and education. But recent research on earnings inequality finds that, beyond skill, workers' earnings depend on whether they sort to high- or low-paying employers. We argue that, unlike in skill development, family intervention in worker-employer sorting can actually reduce inequality: family obligation can lead high-skill workers to accept jobs with family members at low-paying companies. Using linked employer-employee data from Sweden, we find a lower correlation between skill and company pay premiums in jobs filled by a family relative of an incumbent worker. This lower correlation is driven by high-skill workers joining relatives at low-paying companies. The pattern is especially strong when workers accept jobs with their parents or husbands or with family managers or owners. The net result of this negative sorting among family-related workers is reduced aggregate earnings inequality. The analysis show how local hierarchy can interrupt market sorting and offset earnings inequality.
(with Di Tong and Victoria Zhang)
Some employers consistently offer high pay and some low pay. These firm-wide pay premiums exacerbate labor market inequality. Yet prior research, focused on variation in firms' formal organization and product market position, has not entirely explained them. We propose that differences in informal social organization across firms accounts for part of this between-firm inequality. Specifically, we assess the incidence of three types of workplace social relations that could affect firm premiums: employer relational investment and gift-exchange; oppositional worker solidarity as a source of bargaining power; and workplace friendships as a job amenity that allows lower pay. To operationalize these concepts, we draw on text data from a large archive of job reviews. Variance decomposition analyses show that differences in social relations account for up to 15% of overall inequality in between-firm pay premiums and 5% of residual inequality. Differences in informal social organization, and not just formal organization, affect inequality between firms.
(with Barry Eidlin)
Does internal contention make labor unions more or less effective? Unions, like many organizations, face a trade-off between organizational discipline and member engagement. Too much contention can fracture a sense of common purpose, while too much discipline can erode member engagement. We argue that unions' formal democratic procedures and reliance on a delimited constituency of members tilt this trade-off in favor of contention, making contention more productive in unions than in other organizations. These conditions imply three mechanisms through which contention could increase union effectiveness: installing better union leaders; pressuring incumbent leaders into increased activity; and mobilizing union members. We test these predictions with data on contested local union elections across hundreds of union locals and with a case study of local voting patterns in a single union's national elections. We find that unions that hold contested elections have higher and growing dues levels, suggesting higher effectiveness. But this advantage is not driven by officer turnover or increased officer responsiveness. Instead, we show that locals with more election contestation harbor more member mobilization against employers following contested elections. The analysis demonstrates that internal contention can strengthen unions by mobilizing members.
I prioritize research transparency, and have included links to all code and most data for my post-PhD published projects above. The exceptions are for data that is either proprietary (Glassdoor, Burning Glass) or restricted-use (Occupational Employment Statistics, Longitudinal Employer-Household Dynamics). In those cases, I include all build and analysis code, so researchers with data access can still build on our work.
Several of my projects have involved developing novel sources of wage and earnings data. I am flagging them here in hopes that other researchers will learn from them. The Wage-Fixing Authority Survey data from 1974 to 1991 include job-level wage data from 60,000 (identified, often repeated panel) employers of blue collar workers. The Employer Expenditures for Employee Compensation data from 1968 to 1977 include data on pay and detailed benefits information for white and blue collar workers at the establishment level. The OLMS employee and officer data have labor union employees' pay, work activities and job titles (also available from OLMS directly, but with a series of database errors fixed by my cleaning code).
One more resource is our detailed guide (and code/data) to conducting an employer audit study, developed with Nicole Kreisberg. We found that we were making a lot of decisions in the course of our audit that weren't explicitly reported in prior published studies; we hope the detailed reporting in our article and this guide will help future perplexed auditors.
I advise doctoral students in the MIT Sloan PhD programs of the Institute for Work and Employment Research and Economic Sociology and have collaborated with PhD students elsewhere (particularly other Boston institutions). I also have periodic need for part-time and full-time pre-doctoral research assistants and for postdoctoral researchers. If you are interested in labor markets and inequality, email me and we can see if there is a project to collaborate on.
Website: Design by Xinyue Lin, via Gautam Rao and Maxim Massenkoff.