Wages rose much faster for America’s lowest-paid workers than for their better-paid colleagues between 2019 and 2023, a new report says, a striking reversal after four decades of widening wage inequality.

Hourly pay rose by 12.1% in those years for low-wage Americans, from $12.06 to $13.52, boosted by policy decisions that aided those workers during the pandemic, according to a report from the left-leaning Economic Policy Institute.

In the same span, hourly wages grew by 0.9% for the highest earners, from $57.30 to $57.84.

The study compared wages across incomes, adjusting for inflation. It found the highest growth among workers in the 10th percentile for income, meaning that nine-tenths of workers earned more. The slowest wage growth came at the high end of the pay scale, represented by workers in the 90th percentile for earnings.

The trend is significant, the report says, because the wage gap between low- and high-income Americans had been growing for the previous 40 years.

“The current business cycle is a notable reversal of fortune for lower-wage workers in the U.S. labor market,” the report states.

Will the trend continue? That depends on several variables, the report says, including the federal government's willingness to cut interest rates and to raise the national minimum wage.

Did the pandemic bailout help low-wage workers, or hurt them?

According to the institute’s analysis, the data illustrate that Congress and the Trump and Biden administrations responded to the pandemic with policy moves “that made a real difference in people’s lives: Wages grew for those who needed it most.”

Other economists disagree: The pandemic-era economic bailout sparked the worst inflation in four decades, they contend. Despite the wage growth, low-income workers now face rising debt and dwindling savings.

Congress approved trillions of dollars in pandemic relief at the pandemic’s height, dispatching stimulus checks, enhanced jobless benefits and other aid.

By one argument, those funds saved low-wage workers from poverty and delivered them into a more favorable labor market.

“The government set up a bunch of different relief funds essentially for those workers and those businesses to survive during that time when they were shuttered,” said Elise Gould, a senior economist at the Economic Policy Institute. “When those jobs came back, (workers) weren’t as desperate to take the first job that came along. They were allowed to be a little bit pickier.”

By another argument, the federal government effectively shut down its own economy, and then set up relief programs that discouraged idle workers from returning.