DECOMPOSING CHANGES IN RETAIL FOOD WAGE DISTRIBUTIONS, 1983-1998: A SEMI-PARAMETRIC ANALYSIS

What role has the growing practice of eating out rather than at home played in the evolution of wages in retail food? Between 1983 and 1998, real wages fell for nearly all types of grocery store employees, whether they were relatively well paid, poorly paid, or somewhere in the middle. This resulted in an eight and a half percent decrease in the average real wage, but unlike many other industries, there was no increase in wage inequality. The "food away from home trend" is apparently connected to the deterioration in grocery store wages for all employees except those earning somewhere in the top ten percent of wages. Without this change in consumer behavior, average real grocery store wages would have risen by seven percent rather than falling by 12 percent. While harmful to nearly all grocery store employees, this trend has benefited many workers in the restaurant industry, where the average real wage rose by nearly twenty five percent. Because this growth was not evenly distributed, occurring primarily in the upper part of the wage distribution, wage inequality in this segment of retail food increased. Moreover, the increase in the fast food sector during this period is associated with decreasing real wage levels, or slower wage growth, in both the grocery and restaurant industries. The labor market institutions of minimum wage laws and labor unionization are also found to be important determinants of wage trends in retail food. Part-time employment is associated with lower wage outcomes, but over the last 20 years, the frequency of part-time work in these two industries actually declines. Overall, however, labor market institutions and changing demographic characteristics still leave much of the observed changes in real wages in retail food unexplained. The data source for this analysis is the Current Population Survey, supplemented with secondary data sources.