Corporate Restructuring and Rising Wage Inequality in U.S. Cities, 1969-1999

Leslie McCall, Rutgers University

Organizational changes have received little scholarly attention as a cause of rising wage inequality and yet corporate restructuring has been widespread. This paper focuses on the impact of subcontracting on levels and changes in wage inequality in U.S. cities over the past three decades. A multilevel, pooled time series analysis is conducted for a sample of roughly 115 cities across 4 time points-1969, 1979, 1989, and 1999. Preliminary analyses reveal that the share of employment in subcontracting industries explains more of the variance in a key measure of wage inequality (within-group wage inequality) across cities than most other explanatory variables. The effects are also greatest in the earlier years, the very years in which the explanation of wage inequality is least understood, and the years in which these industries grew the most. These results also persist in models with extensive controls for other factors.