Older Workers Have Seen Wages Increase Twice As Fast As Younger Workers In The US by Eric Bush, CFA
Over the past 16 years there has been a shift in earnings power from younger workers to older workers. In 2000, the median weekly wage for workers who were between the ages of 25 to 34 was $545. The median weekly wage for workers 65 years old or older was $483. Put another way, the oldest workers in the labor force made about 89% as much as the 25 to 34 year old cohort. Out of the six working age buckets, the 65 years and older group made less money than all but the 16-24 years age age group. Since then workers 65 years and older have consistently seen their wages grow by nearly twice as fast as younger workers. The oldest group of workers have experienced roughly 4% compound annual growth in wages while the 25-34 year old age group has only seen their wages grow by 2% annually. No group other than the 65 year and older even surpasses 3% annually. And since the start of the great recession the chasm between the oldest workers and everyone else has only grown wider. 65 year old and older workers have still experienced 4% annual wage grow while annual wage growth for workers between the ages of 16-24, 25-34, and 55-64 has fallen below 2% annually. This sustained difference in wage growth rates has led to the oldest set of workers earning 119% as much as the 24-35 year age earn. Also, the 65 year and older group now earns 95% as much as the highest earning age group, 45-54 years, up from just 73% in 2000. Unfortunately for the economy, labor productivity has been growing at approximately the same rate as the wage growth for 25-34 years old group, slightly below 2% annually, and not at the 4% annual rate for the 65 years and older group of workers.