Income inequality is also rising between companies, and not just individuals

Inequality isn’t just rising between individuals, it’s also a rising between companies. That is, top-paying companies have boosted paychecks for their employees by much more than low-paying companies have for theirs.

This isn’t just about the earnings of executives rising faster than the working masses. According to recently published research (pdf) by economists at Stanford, the University of Minnesota, and the US Social Security Administration, about two-thirds of the rise in US income inequality from 1981 to 2013 can be explained by how much more the average employee at top-paying firms makes. Rising inequality between firms is also a factor in rising overall inequality in Germany, Sweden, and the UK as well, the researchers note.

Using tax data, the economists found that average pay—including wages, salaries, bonuses and stock options—at a company in the 90th percentile grew by 36% in the 30-odd years they studied, while pay only rose by 6% at firms in the 25th percentile. Pay at the median company barely rose over this time.

Within companies, wage growth between the highest and lowest earners was not meaningfully different in most cases. For companies with 100-999 employees, which cover about 70% of all workers in the US, an employee with a paycheck in 90th percentile at the company made 39% more in 2013 than in 1981; an employee in the 10th percentile made 40% more.