NCPA - National Center for Policy Analysis

Paychecks Larger At Big Firms

August 17, 1999

Economists have long been aware that large companies usually pay their workers more than do small firms. But that gap has been widening even further recently. For purposes of comparison, large companies are defined as those having more than 500 workers, with small companies having fewer than 100.

Based on data from the Bureau of Labor Statistics:

  • Large companies paid about 40 percent more to their employees at the start of the 1990s.
  • Now, that premium is just under 50 percent.
  • From March of 1998 to March of 1999, large employers increased wages an average of 3.3 percent -- while small companies increased pay by only 2.3 percent.
  • In 1999, white collar workers were earning 47 percent more at large firms -- up from 33 percent in 1993 and 39 percent in 1995.

Experts theorize that the disparity may be due to large companies hiring more high-skilled engineers, programmers, managers, etc. Also workers at big outfits are reaping the gains of their employers' superior performance. Larger companies nowadays seem to be better able to utilize the latest technologies while consolidating their control over markets.

Source: Michael Mandel, "Big Players Offer Better Pay," Business Week, August 30, 1999.


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