Young work­ers earned more in 1975 than today

The Washington Post - - ECONOMY & BUSINESS - BY MAX EHRENFREUND max.ehrenfreund@wash­post.com

The United States has en­joyed ex­tra­or­di­nary eco­nomic progress over the past four decades, but av­er­age in­comes for today’s young work­ers are lower than they were in 1975.

Over the past 40 years, young Amer­i­can work­ers saw their av­er­age in­comes de­cline by 5.5 per­cent af­ter ad­just­ing for in­fla­tion, ac­cord­ing to new fig­ures pub­lished Wed­nes­day by the Cen­sus Bureau. In 1975, work­ers ages 25 to 34 had a me­dian per­sonal in­come of $37,000 in mod­ern dol­lar terms. In 2016, that num­ber was down to $35,000.

Earn­ings have de­clined even though today’s young peo­ple are bet­ter ed­u­cated than they were 40 years ago. Thirty-seven per­cent of young peo­ple had a bach­e­lor’s de­gree last year, com­pared with 22.8 per­cent in 1975.

In part, ex­perts say, the de­cline in av­er­age in­comes has re­sulted from new im­ped­i­ments to fi­nan­cial suc­cess that con­front mil­len­ni­als but that older Amer­i­cans did not have to over­come. A more un­equal econ­omy presents fewer op­por­tu­ni­ties for younger work­ers. Young peo­ple today must com­pete with a well-ed­u­cated la­bor force, while young peo­ple in the past of­ten had an ad­van­tage over older work­ers who were less qual­i­fied.

In an­other sense, the de­cline rep­re­sents progress, be­cause it is partly a re­sult of gains among young women. Young women have joined the work­force in high num­bers, but be­cause they still earn less than young men, their en­trance has driven down the av­er­age for young work­ers in gen­eral. In 1975, just un­der half of women ages 25 to 34 were work­ing, and 18.4 per­cent had at least a bach­e­lor’s de­gree. In 2016, about 70 per­cent of women be­tween those ages were em­ployed, and 40 per­cent had at least a bach­e­lor’s de­gree.

The typ­i­cal in­come for a young woman in the la­bor force in­creased 28.5 per­cent since 1975, from $23,000 to $29,000 in 2015 dol­lars.

Mean­while, young men’s earn­ings have de­clined. For men in the la­bor force ages 25 to 34, the typ­i­cal in­come de­clined from $46,000 in 1975 to $40,000 last year.

Young men are also more ed­u­cated: Thirty-four per­cent now have a bach­e­lor’s de­gree, com­pared with 27.4 per­cent of their coun­ter­parts 40 years ago. Last year, roughly 5 in 6 were work­ing, and two-thirds had full-time, year­round jobs, fig­ures that have changed lit­tle since 1975.

“It’s hard to say that there’s one ex­pe­ri­ence for young adults that’s cap­tur­ing how they’re all do­ing,” said the Cen­sus Bureau’s Jonathan Vespa, the au­thor of the re­port.

This sit­u­a­tion for young peo­ple comes amid broad over­all gains for Amer­i­cans since 1975. Me­dian per­sonal in­come for all Amer­i­cans has in­creased from about $23,000 in 1975 to $30,000 today in 2015 dol­lars. (Those fig­ures in­clude many re­tirees and stu­dents.)

Data from the Bureau of La­bor Sta­tis­tics on those with full-time, year-round work con­firms the neg­a­tive trend for the young. Typ­i­cal weekly earn­ings for work­ers ages 25 to 34 in this cat­e­gory have de­clined 4 per­cent be­tween 1979 and last year af­ter ad­just­ing for in­fla­tion, ac­cord­ing to Ar­loc Sher­man, a re­searcher at the lib­eral Cen­ter on Bud­get and Pol­icy Pri­or­i­ties.

Gary Burt­less, an econ­o­mist at the non­par­ti­san Brook­ings In­sti­tu­tion, sug­gested a few ex­pla­na­tions for the dis­ap­point­ing data for young peo­ple. The level of ed­u­ca­tion in the Amer­i­can la­bor force was rapidly in­creas­ing in 1975. While it was typ­i­cal for older work­ers at that time not to have com­pleted high school, a new gen­er­a­tion — the baby boomers — had re­ceived what Amer­i­cans now think of as a stan­dard ed­u­ca­tion, in­clud­ing a high school diploma and, in­creas­ingly, a bach­e­lor’s de­gree.

As a re­sult, young peo­ple could claim more of the fruits of the Amer­i­can econ­omy then. “Com­pared to older work­ers, back then, they at least had a cou­ple of very strong ad­van­tages,” Burt­less said. “Those ad­van­tages are smaller for young adults today.”

At the same time, he said, in­equal­ity of in­come has in­creased in gen­eral in the Amer­i­can econ­omy, mean­ing that poorer work­ers — many of whom are younger — have not en­joyed the same progress as more af­flu­ent work­ers, who tend to be older.

“It’s a big prob­lem, even for peo­ple with col­lege cre­den­tials,” he said. “Those less-ed­u­cated peo­ple have fared quite mis­er­ably.”

In one sense, the de­cline rep­re­sents progress, be­cause it is partly a re­sult of gains among young women.

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