At 11 years running, the United States is experiencing its longest economic expansion ever. And unemployment is at a 50-year low. But workers' wages haven't grown as fast as one would expect. At just above 3%, current wage growth lags well behind where it was during other periods this past century, when the jobs market was also booming.
It should come as no shock that slower-than-expected wage growth doesn't apply to everyone. Indeed, while overall wage growth lags, some groups have actually seen their wages soar.
What is surprising is who these wage winners are and the reasons behind their prosperity.
NEW WORKERS VS. EXPERIENCED WORKERS
If you think older, more experienced workers are getting bigger wage increases than younger workers, think again.
Much of the reason boils down to timing: Within the span of a decade, from 2009 to 2019, the United States shifted from having its weakest jobs market since the Great Depression to one of its strongest.
New workers are joining the workforce at a time when labor markets are historically tight. Over the last two years, for example, the median weekly earnings of workers aged 20 to 24 — mostly new hires — increased by close to 6%. That's a big jump.
During that time, however, earnings increased only by about 3% for those aged 25 and above. That cohort consists mostly of existing workers, who make up the bulk of the workforce. One reason for the tepid overall wage growth: Few workers in this age group have switched jobs, so their wage growth has depended on annual raises. And those raises have lagged.
After the Great Recession, salary-increase budgets collapsed to a historic low. They made a modest recovery in 2011, but since then have seen little growth. As a result, salaries for those workers who did not change jobs in the past year and who rely on annual raises have seen modest wage growth throughout this decade.
That has eroded the wage divide between new hires and existing workers, resulting in a historic level of pay compression. The pay gap between workers aged 20 to 24 and those in the 24 to 35 group is at its smallest level in over 30 years. Put another way, the wage premium for experience has shrunk. And because of that, so has the pay gap between new and existing hires.
Check out the full article from CNN here!