From 1973 to 2005, real hourly wages for individuals in the 90th percentile of income, typically those with college or advanced degrees, rose by 20% or more. For individuals in the 50th percentile or below, typically those with at most a high school diploma, real wages increased by only 5% to 10% (Source: FRBSF Economic Letter, December 1, 2006).
In large part, this increasing wage inequality is caused by a widening cap in wages between college graduates and those with a high school education or less. Another major factor is increasing globalization of labor markets. The United States tends to export goods that use skilled labor and import goods that use less skilled labor.
Job instability has also increased, which can affect a family's income. Approximately one in three workers change jobs every year, with approximately half doing so on a voluntary basis. Involuntary job loss results in unemployment for approximately four months, and new jobs typically pay 17% less than the former job (Source: FRBSF Economic Letter, December 1, 2006).