The era of wage stretching has been a current focus, but we direct attention
here to a decade of extraordinary wage compression-the 1940s. Wages narrowed
by education, job experience, and occupation, and compression occurred within
cells. The 90-10 differential in the log of wages for men was 1.45 in 1940 but 1.06 in
1950. By the late 1980s it returned to its 1940 level, thus restoring a dispersion of 50
years ago. World War II and the National War Labor Board share some credit for the
Great Compression, but much was due to an increased demand for unskilled labor
when educated labor was greatly expanding