The median lifetime income for men is in slow steady decline according to new research from the National Bureau of Economic Research (NBER). The trend is in contrast to an opposite trend in the median lifetime income for women, but don’t assume those two things are connected. The economy is not a gendered zero-sum game. In fact, the combined trends seem to indicate a further stratification of the work force, the sneaky effects of automation, and that the researchers who have publicly stated that future generations of American be worse off than their parents are probably right.
The NBER analysis from their working paper Lifetime Incomes in the United States Over Six Decades shows that men who entered the workforce in the early 1980s earned $136,400 less in lifetime income by age 55 than those who entered the workforce in the 1960s. That reflects a 10%-19% decline, despite adjusting for increased employer perks during that time period, including pensions and health coverage.
For women, the story is a bit more optimistic. In the sixties, the average female worker earned just under 40 percent of the median lifetime income of the average male worker. For those entering the workforce in the eighties, that number grew to 60 percent while still lagging significantly. For both groups, any gains seen in lifetime income were relegated to the top percent of earners.
One of the biggest takeaways in the report is an acknowledgment of what’s holding back lifetime earnings: poor wages in early employment. For men who entered the workforce in the ‘80s their salaries at age 25 were $4,000 less (adjusted for inflation), that the previous generation. By the time the reached 35 they were $8,000 off pace of the previous generation. While there is growth for women, the story is much the same, particularly for those entering the workforce after 1979, suggesting the women’s upward trend will likely flatten or decline. What’s more, it’’s not getting any better. “Partial life-cycle profiles of income observed for cohorts that are currently in the labor market indicate that the stagnation of lifetime incomes is unlikely to reverse,” the NBER authors note.
The research is in line with other recent findings suggesting the coming generations will be worse off than their parents. One recent study found that the majority of jobs for Millennials were in some sort of service industry where wages are commonly low, which may be why most in the older generation view their economic prospects with a deep pessimism. But even beyond wages, data suggest that in many places in the U.S. lifespans are actually declining.
It all reinforced the dour narrative that the American dream of generational improvement has ceased to be realistic or feasible for the average worker. Don’t tell the kids.