Financial-sector workers’ pay since the 1980s far outstripped national averages, driving inequality.

Evidence

Increasing income inequality is attributable partly to the disproportional income increase in the financial sector. Prior to 1980, employees in the broad financial sector earned no more than their per capita share, but since the 1980s, their compensation levels skyrocketed, and by 2000, their compensation level was 60% higher than the national average (Tomaskovic-Devey & Lin 2011). In terms of average weekly wages, employees in the investment banking and securities industry of Manhattan earned six times more than average workers in Manhattan, and 20 times more than average workers in the United States (Sum et al. 2008). — Gerald F. Davis & Suntae Kim, Financialization of the Economy, 76

Categorization

• XREF: Connects to Piketty’s Capital in the 21st Century on top-income concentration and the rentier share of the 1%. — connects to: US income inequality roughly doubled between 1980 and 2007. — Mark Blyth, Austerity: The History of a Dangerous…, 59; Most earnings inequality growth occurred within industries, not between them. — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 81; Financialization drives earnings inequality nearly as much as declining unionization — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 164 (+1 more)
• SHARE: The Manhattan investment-banker six-times/20-times wage contrast is a sharp stat for an economist friend.

Related

• Financialization raises earnings inequality across most US industries (similarity 0.87)
• Most earnings inequality growth occurred within industries, not between them. (similarity 0.86)
• Financialization drives earnings inequality nearly as much as declining unionization (similarity 0.85)
• Financialization independently explains over half of labor’s falling income share since 1970. (similarity 0.83)
• Inequality dimensions reflect one institutional shift toward financialization (similarity 0.83)
• Prior research linked financialization to inequality mostly indirectly, not causally. (similarity 0.83)
• Financialization caused most of the decline in labor’s income share since 1970 (similarity 0.83)
• Financialization channels income toward the wealthy and depresses productive investment and wages. (similarity 0.83)
• US income inequality roughly doubled between 1980 and 2007. (similarity 0.83)
• Declining industries show rising earnings inequality (similarity 0.81)
• Deunionization still leaves much wage inequality unexplained, pointing to financialization (similarity 0.81)
• Financialization trajectories diverged across industries after 1997 (similarity 0.80)
• Ken-Hou Lin & Donald Tomaskovic-Devey — Financialization and U.S. Income Inequality, 1970-2008 (similarity 0.80)
• US inequality since 1970 grew mostly within rather than between industries (similarity 0.79)
• Structural inequality has redistributed trillions from American workers to the richest (similarity 0.79)

Broader Connections

• Financialization drives earnings inequality nearly as much as declining unionization #corroborates (0.85) — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 164
• Financialization raises earnings inequality across most US industries #corroborates (0.82) — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 152