We begin with an overview of how the Covid-19 pandemic and subsequent recovery [including US policies passed during it] have disrupted longstanding trends in aggregate wage inequality. Following the pandemic, substantial nominal wage growth at the bottom of the distribution reversed around 38% of the rise in 90-10 log wage inequality since 1980 and led to a fall in the college-high school wage premium. The reduction in the 90-10 log wage ratio following the pandemic was nearly half (46%) of the reduction during the Great Compression of 1940–1950 period. Importantly, we find that this wage compression was accompanied by a rise in the rate of job-to-job separations—especially among young non-college workers.
