The consensus view among economic historians is that wage inequality in American manufacturing followed an inverted-U path from the early nineteenth century until just before World War Two. The previous literature, however, has been unable to fully document this path over time, or fully assess the role of explanatory factors such as changes in firm organization and technology. We provide fresh evidence that allows us to better document the inverted U as well as its causes. In the first part of the paper, we use the Department of Labor’s Hand and Machine Labor Study to show that wage inequality within manufacturing establishments rose over the nineteenth century. In the second part, we use information from Massachusetts on construct a new time series showing that wage inequality among production workers declined from the 1890s to the late 1930s. For both periods technology played a role – the shift to steam-powered factories over the nineteenth century raised wage inequality, whereas electrification after 1900 reduced it.