Significant Increases in Income Inequality for MLB

New York Yankees Salaries, 1988 vs. 2011

Salaries	1988	1988 Salaries in 2011 Dollars	2011
Mean	$700,400	$1,323,000	$6,756,300
Median	$480,000	$906,700	$2,100,000
High	$2,000,000	$3,778,000	$32,000,000
Low	$67,000	$126,560	$414,000
Ratio High/Low	29.9	29.9	77.3
Gini Coefficient	0.459		0.636
Share of Payroll
Top 10%	28.5%		39.2%
Top 20%	49.7%		61.9%
Top 50%	80.1%		93.9%

The salary data displayed in the table above for the New York Yankees from 1988 and 2011 are from the USA Today Salaries Database.  By every possible measure (ratio of high:low salary, Gini coefficient, and shares of total payroll going to the  top 10%, 20% and 50% of players) income inequality has increased significantly for the baseball players employed by the New York Yankees between 1988 and 2011, and I suspect these huge increases in income inequality would be the same for other MLB teams, and for all players in MLB as a group.  And yet the typical pro baseball player is doing much better today than in 1988 because the mean and median salaries have increased dramatically, as has the salary of the lowest-paid Yankee, despite the huge increase in income inequality.  

What can we learn from this? 

The lesson from MLB  is that rising income inequality over time, whether it’s in professional sports or in society as a whole, can be a natural and expected outcome of competitive labor markets and the expanded opportunities that come from larger and increasingly competitive global markets. And those same competitive forces that lead to greater income inequality in both the MLB and the overall economy over time also usually help to make all MLB players and all Americans better off year after year, just not at exactly the same rate.