Business
Apollo chief economist warns K-shaped economy is showing up in growing wage growth gap
A decade ago, low-income workers saw wages grow at the highest rate of any Americans. Now, the opposite is true, and the gap is widening between how quickly wages increase for wealthy and poorer U.S. households.
In a Monday blog post titled “K-shaped economy,” Apollo chief economist Torsten Slok warned the growing disparity is yet another sign of today’s economy continuing to serve the rich, while poor Americans continue to struggle.
“Before and during the pandemic, lower-income households experienced higher wage growth than other income groups,” he said. “But that has changed over the past year. Today, wage growth for low-income workers is significantly lower than wage growth for middle- and high-income workers.”
Slok cited data from the Federal Reserve Bank of Atlanta indicating that for Americans in the lowest-wage quarter, nominal wage growth went from a high of 7.5% in 2022 to about 3.5% today, the lowest in about a decade.
While wage growth for all income groups has declined in the last few years, growth for the highest-income quartile has held up better, dipping from a peak of about 5.5% in 2023 to more than 4.5% now, still one percent higher than the lowest-income group.
A JPMorganChase Institute report published last month similarly noted slowing wage growth in the U.S., with income gains waning for all age groups, but in particular for millennials and Gen Z—whose ages are correlated with less wealth. Young people’s wage growth slowed to 5.2% last month, one of the lowest levels since 2011, when the bank began collecting data. That’s down from about 14% in 2022 and from nearly 10% from early 2020 before the pandemic.
These disparities in wage growth add to mounting evidence of what economists are declaring a K-shaped economy, indicating two diverging fortunes for Americans based on income levels and other economic factors.
While the U.S. economy has resembled a “K” for decades, the gap between wealthy and poor has gained more attention as the middle class and those making $100,000 yearly are bunched in with the lower half of the K. For example, wage growth for the middle two quartiles also slowed sharply and is below that of the wealthiest U.S. consumers, according to the Atlanta Fed data.
Why has wage growth become K-shaped?
George Eckerd, wealth and markets research director for JPMorganChase Institute, attributes the changes in wage growth—particularly for younger, entry-level workers—to a stagnant low-fire, low-hire labor market. After companies hoarded workers during the pandemic-era labor shortage, hiring has slowed while firing has also been conservative to avoid replicating those earlier shortages.
“The key point there is that there’s been a slowdown in labor market dynamism, the gross hiring rate, the quits rate fall into relatively low levels, and that particularly impacts young people who rely more on job switching to advance in their careers,” Eckert told Fortune.
These workers usually rely on job hopping to work their way up the career ladder. But in a job-hugging era, many are missing the opportunities to climb the ranks and make more money, he said.
For those fortunate to be able to find new jobs, a bump in wages may not even be a guarantee. A Bank of America Institute report from August, citing Atlanta Fed data, found wage increases for job-hoppers have fallen from 20% in 2022 to just 7% as of July 2025. From May to July, wage growth for job-hoppers was the same as those for job-huggers.
Pantheon Macroeconomics analysts Samuel Tombs and Oliver Allen blame tariffs for the middling wage growth, arguing companies saddled with paying import taxes cut wages to buffer their margins.
“Data show wage growth has slowed more in the trade and transportation sector, and to a lower level, than any other major sector since the end of last year,” the analysts wrote in a note in September. “Fears workers would be able to secure larger wage increases in response to the tariffs look highly unlikely to be realized.”
