Mar 05

Millennials Would’ve Made More Money a Decade Ago – US News

Today’s labor market should be as promising as it’s ever been for young adults.

The last few decades have seen tremendous strides in technological advancement and workplace productivity, employers across the country are looking to fill roughly 5.6 million vacancies, and educational attainment among young adults has never been higher. Theoretically, today’s employers should be throwing money at young job candidates who three decades ago would have been considered overqualified.

But that’s not what’s happening, according to a new study from the left-leaning Center for American Progress. In fact, its findings suggest young workers today are making virtually the same amount as their counterparts did three decades ago.

“Median compensation – wages plus the value of benefits from employers such as health care premiums and 401(k) contributions – for a 30-year-old in 2014 was below that of a 30-year-old 10 years earlier,” the report said. “Indeed, 30-year-olds today make around the same amount of money as 30-year-olds in 1984, despite the facts that they are 50 percent more likely to have finished college and that they work in an economy that is 70 percent more productive.”

The study compares the median wages and benefits of 30-year-old workers in 2014, 2004 and 1984 – intentionally focusing on Americans outside of their 20s who have mostly completed any relevant postsecondary education. Those who were 30 in 2014 were defined by the study as millennials, while the 2004 population was labeled Generation X-ers and the 1984 group baby boomers.

The analysis ultimately found that median hourly compensation in 2014 ($19.32) was less than 2 percent higher than it was 30 years prior ($18.99), with respect to inflation. What’s more, 30-year-olds back in 2004 made nearly 7 percent more ($20.63) than they did in 2014, even though they were 18 percent less likely to hold a college degree.

“The above data are as striking as they are disturbing, particularly when it seems reasonable that millennials should benefit from their higher levels of education and a more productive economy – two traditional remedies for sluggish wage growth,” the report said.

Indeed, the report’s findings cast doubt on the widely held belief that educational attainment and productivity growth translate to increased employee pay. Workers with more advanced degrees should theoretically be able to negotiate more money and benefits from their employers based on their qualifications. And a more productive workforce means employees are able to generate more output without working extra hours. That means employers’ profit margins are able to expand, potentially allowing them to put more money toward funding raises and bonuses for workers. But neither dynamic is currently playing out to benefit America’s younger workers, according to the report.

That’s not to say, however, that young adults are wasting money on advanced degrees. According to the Bureau of Labor Statistics, the unemployment rate of Americans between the ages of 25 and 34 with less than a high school diploma sat at 12.1 percent in January. Those who graduated high school but didn’t attend college had an 8.7 percent unemployment rate, while those with a bachelor’s degree enjoyed just a 2.7 percent rate.

So while college graduates today are actually paid a little bit more than they were 30 years ago, the report shows that the gap between graduates and nongraduates has widened since the 1980s. That in itself isn’t terribly surprising, as several organizations have published recent reports profiling the wealth disparity seen in America and the world in recent years.

And considering higher educational attainment is being considered more and more a norm in the U.S. labor market, those lacking high school diplomas or college degrees are naturally expected to be less successful when it comes to getting a well-paying job.

To that end, the number of employed individuals in the U.S. ballooned 54 percent over the last three decades, according to government statistics, while the number of those with four years of college under their belts increased by an even greater 68 percent.

What’s more alarming in the report, however, is the suggestion that 30-year-olds in 2004 were significantly better off than those of the same age today. Such individuals in the mid-2000s were less likely to hold a college degree and worked in a labor market that was only 50 percent more productive than it was in 1984 (compared with nearly 70 percent more productive today). But they made nearly 7 percent more overall, with college graduates making about 6 percent more than they did in 2014.

Pay dropped off sharply during and immediately following the Great Recession, as available jobs dried up and workers accepted positions at lower pay levels just to earn some semblance of a check. And even though there are plenty of jobs available in today’s labor market, the study suggests pay hasn’t rebounded at all and has actually weakened over the last 10 years.

What that means going forward is unclear. Average hourly earnings have consistently climbed between 2 percent and 2.5 percent annually in the Labor Department’s monthly employment reports, meaning wages have at least made some progress over the course of the last few months.

And yet a full recovery to pre-recessionary compensation levels remains elusive.

“Despite substantial recent progress, there remains a great deal of slack in the millennial labor market,” the study concluded. “The current U.S. labor market is still one where millennials compete for jobs instead of employers competing for millennials by offering them higher wages.”
Additionally, Thursday’s study showed that compensation for 30-year-old college graduates actually climbed about 9 percent between 1984 and 2014, while pay for those without a college education fell 6 percent.

Source: Millennials Would’ve Made More Money a Decade Ago – US News

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