For wage growth, millennials can’t catch a break. They’re reaping the non-rewards of a decades-long trend.
A 30-year-old millennial earns roughly the same as what a 30-year-old earned 30 years ago, according to a new study from the Center for American Progress.
The wage stagnation is demoralizing when the differences are vast. Millennials today “are 50 percent more likely to have finished college and that they work in an economy that is 70 percent more productive,” but a weak recovery and a shift in the labor market has kept starting salaries low, the report notes.
The median compensation for 30-year-old workers in 1984 was $18.99 per hour. By 2004, it had moved up to $20.63 hourly, but declined to $19.32 hourly by 2014.
To boost median earnings for workers, the Center for American Progress suggested boosting union membership in the private sector, along with more support for family and medical leave policies could boost young workers. However, private-sector unionism has declined due to the fall of manufacturing jobs and the shift to service jobs. Unionizing retail workers wouldn’t have the profit margins for robust wage growth in the same way that unionizing manufacturing workers could in the 1940s.
Policy, at least in the short term, isn’t as effective to confront wage stagnation. Economic shifts decades in the making, along with a trend where economic gains have focused on the wealthy, has made the problem stark and presented a misleading correlation. Most of the wage growth has gone to “the prosperous class,” those making $100,00 or more, which is about 11 million workers.
“Most astonishing is how much of the overall increase in wages earned by the 153.6 million people with a job in 2012 went to this narrow band of very well paid workers: Just 7 percent of all jobs pay in this range, but those workers collected 76.9 percent of the total real wage increase,” David Cay Johnston wrote for Al-Jazeera.
It’s not that the rich have taken the gains that low- and middle-income workers would have earned. It’s that the most productive workers have taken most of the productivity gains. The economic challenge for policymakers is how to overcome wage stagnation when there isn’t a clear culprit or bogeyman to blame.
The Center for American Progress pushes for the expansion of private-sector unions, which have declined for decades, but that wouldn’t do enough to reverse a tough labor market for young workers. For now, they might be stuck in a rough economic spot for years until higher economic growth returns.
