Men born after 1967 are making less than the group that preceded them, and that's bad news for all workers.
The paradox of the recovery has been unemployment rates coming way down, some jobs even going wanting, more people entering the workforce — but wage growth stubbornly slow. Researchers at the San Francisco Fed speculate some of this is because high-earning baby boomers are retiring and their younger replacements are earning less. Over time, the newcomers will make more money.
But not in every case. A new paper — from Fatih Guvenen at the University of Minnesota, Greg Kaplan at the University of Chicago and other researchers — argues that men, especially, may not find the same ladder up as their older cohorts.
Studying Social Security data, they found that lifetime incomes (between ages 25 and 55) for men who entered the workforce after 1967 has stagnated or fallen. Median lifetime income grew by 12 percent for men born after 1957. But the 1967 to 1983 cohort saw a decline of 10 percent. A man turning 25 in 1983 earned $136,400 less than his 1967 counterpart.
Significantly, the researchers found that the worst hit came early in their working lives as adults. In inflation-adjusted dollars, the median income for a 25-year-old man in 1983 was $4,000 less than for the same age in 1967. This jibes with other research showing weaker earnings for most young people today compared with the 1960s, and today they are often carrying big student loan debt.
Most Read Business Stories
- West Virginia factory is center stage in supply chain crisis as U.S. economy seeks to rebound from COVID
- Buying an electric vehicle? Here is some advice.
- Melinda Gates' name listed on Seattle home deed ahead of divorce, but that doesn't mean she bought it
- A landlord, a tenant and the battle for 1042 Cutler St. in upstate New York
- Pfizer COVID-19 shot expanded to US children as young as 12
Also, lifetime earnings for the 1957-67 men rose across all income levels. For the 1967 to 1983 group, only the top 20 percent saw improvement.
The same paper found a steady increase in lifetime income for women. Still, inequality persists and the 1957-67 cohort did better.
What’s different between the two groups of men? The first benefited from stable employment, ladders up, improving paychecks and sometimes unions and pensions. The second group came of age with inflation, stagflation, the corporate-raider destruction of the 1980s, union-busting and the end of stable, good jobs, among many changes. Globalization forces affected both groups. Fewer men are going to college.
I won’t extrapolate this to the rise of Trumpism — his voters tend to be older and white, more likely to have benefited from the golden age of the American middle class. But such a downward path as charted in this paper is inherently politically destabilizing.
Today’s Econ Haiku:
Walmart and Google
Team up to fight Amazon
Main Street’s been knocked out