Pay differences between organizations are a key source of wage inequality. I propose a novel perspective on these differences by theorizing that firms serving different consumers create systematically different kinds of jobs. Firms that serve high-income consumers specialize jobs into higher-paying and higher-skilled positions focused on quality, while those that serve lower-income consumers emphasize cost minimization by requiring workers to perform a wider range of general tasks. Matching consumer foot traffic data and establishment-level wage records, I find that establishments serving higher-income consumers pay their workers more. This effect holds comparing among establishments in the same neighborhoods and industries. Longitudinally, establishments increase wages when they shift toward higher-income customers. Analysis of online job postings further reveals that jobs at higher-income-serving firms involve a narrower set of tasks that command higher market value. These findings show how consumer markets shape firms’ internal job design and contribute to pay inequality across organizations in the service economy.

From 2014 to 2024, the share of US hourly workers paid below $15 in real terms fell by two-thirds, from 38% to 13%. Why? We first distinguish entry and exit from organizational changes among incumbent employers. Organizational changes can, in turn, be imposed on employers by external constraints, like labor market tightness, or emerge from the pursuit of new opportunities. Using restricted-access panel data drawn from administrative records and job reviews, we bring this framework to bear on the recent wage gains at the bottom of the labor market. Contrary to creative-destruction predictions, employer exit contributed little to rising pay at the bottom. Low-paying employers of low-wage occupations contracted, but the main driver of rising pay was low- and middle-paying incumbent employers of low-wage occupations increasing pay. These gains in low-wage occupations were associated with tightening labor markets and increased minimum wages. But over and above these external constraints, employers also pursued new opportunities for reorganizing work in low-skill jobs. Notwithstanding organizational inertia, major gains for workers’ pay can come from changes in existing workplaces.

Prior research finds that rising labor market inequality in the United States was abetted by structural changes in the economy: a consolidation of occupation and organizational bases of advantage; rising within-job inequality; and declining pay and employment in middle-earning jobs. In this article, we revisit these structural changes by asking whether they have been reversed as labor market inequality fell over the last decade. Drawing on restricted-use microdata from the Occupational Employment and Wages Statistics, we find that declining inequality is due to declining inequality in occupation premiums. There has been only a small reversal of consolidation and no decrease in inequality within jobs. Low-wage jobs gained on shrinking middle-earning occupations, further eroding union, manufacturing, and public sector wage premiums. These findings demonstrate a novel configuration of labor market inequality, in which pay rose in low-wage jobs, but underlying inequality structures in the economy persisted.

Starting in 2014, large US retail and warehouse employers began publicizing new voluntary corporate minimum wages. These minimums provided a new wage floor affecting millions of workers. We draw on novel employer-linked household panel data to investigate the impact of this new organizational policy on workers. Corporate minimums effectively reduce low-wage work and narrow pay gaps within organizations. These policies deliver substantial reductions in covered workers’ likelihood of poverty. Working poverty at adopting firms falls sharply by 30% to 50%, relative to workers in similar jobs, labor markets and competitor employers. Poverty reduction is not explained by shifting worker selection, pre-trends, or offsetting decreases in hours or health insurance. However, adopters employ more college-educated workers and intensify work. These findings show that wage-setting decisions by large employers have substantial social consequences, shaping inequality at the bottom of the labor market.