Company Size and Inequality

The Census Bureau has put out some interesting figures on the size of companies in the U.S.  Naturally as the economy grows we would expect that companies would earn more money.  What we would not necessarily expect is for the largest firms to employ a growing proportion of the workforce.  We see this by looking at the right half of the last table under Employment Size of Firms.

Notice how the figures for firms employing 20+, 100+ and 500+ have all risen.  By looking closely at the data we notice that all of the increase is due to the increased proportion of employees who were employed by firms that employed at least 500 employees, which moves from 45..5% of the workforce in 1988 to 50.6% in 2008. This increase is exactly the same as the increase in the proportion employed by those employing more than 100, which moved from 60.0% to 65.1%, and is actually greater than the increase in the proportion employed by the firms employing at least 20, which only increased from 79.1% to 82.2%.  This would imply that the proportion employed by the smallest firms shrank, the proportion employed by firms in the middle remained constant and the proportion employed by the largest firms grew.

Most of the change occurs in the 90's.  This is a period when income inequality for those who worked full time, year around increased.  This figure actually decreased from 2000 to 2010.  However, overall income inequality rose, no doubt due to the fact that a greater number of people were unemployed in 2010 compared with 2000.   Unemployment was also higher in 1990 than in 2000.

If I could figure out some way of telling how many people were employed as managers and how much they were paid in earlier years in a way that would lend itself to comparison with 2010, then this would be helpful.  The census indicates that there were more managers in 2000 than 2010.  This is probably accurate, since the figures for different types of managers has declined.  The figures from 1990 are harder to compare. I suspect they are using different definitions here.

From 2000 to 2010 the wages for managers grew faster than GDP.  Comparable wage data for previous years is more difficult to obtain.