Evidence from Current Population Surveys, various cohorts of the National Longitudinal Surveys, and the Panel Study of Income Dynamics suggests that the fraction of American employees who were paid salaries held constant from the late 1960s through the late 1970s, and continued to hold constant or perhaps fell slightly thereafter through the late 1990s. An analysis that accounts for the changing industrial, occupational, demographic, and economic structure of the work force shows that this fraction was 9 percentage points below what would have been expected in the late 1970s. This shortfall is not explained by growth in the temporary help industry, declining unionization, institutional changes in overtime or wage payment regulation, the increasing openness of American labor and product markets, or convergence of nonwage aspects of hourly and salaried employment. The author suggests several alternative explanations.
