It is widely recognized that inequality of labor market earnings in the United States has increased dramatically in recent decades. This may be seen in Figure 3.1, adapted from Autor, Katz, and Kearney (2008), which plots the growth of real hourly wages of US workers (both male and female) by earnings percentile for the years 1973 through 2005. Over the course of more than three decades, wage growth was weak to nonexistent at the bottom of the distribution, strong at the top of the distribution, and modest in the middle. While real hourly earnings of workers within the bottom 30 percent of the earnings distribution rose by no more than 10 percentage points, earnings of workers at the ninetieth percentile and above rose by more than 40 percentage points. What is less widely known, however, is that this smooth, monotonic growth of wage inequality is a feature of a specific time period—and that this time period has passed. 1 Figure 3.2, adapted from Autor, Katz, and Kearney (2006), shows that, consistent with common perceptions, the growth of wage inequality between 1973 and 1989 was strikingly linear in wage percentiles, with sharp drops in real wages at the bottom of the distribution and modest increases at the top. 2 Yet, starting in the late 1980s, the growth of wages became polarized, as wages experienced strong, ongoing growth in the top of the earnings distribution (at or above the seventieth percentile) and modest growth in the lower tail of the distribution (at or below the thirtieth percentile). Notably, the portion of the wage distribution that saw the least real earnings growth between 1989 and 2005 was the middle, roughly the group of earners between the thirtieth and seventieth percentiles of the distribution. 3