Why men are not earning more

by on September 17, 2017 at 2:33 am in Uncategorized | Permalink

“And it all starts at age 25,” Mr. Guvenen said. The decline in lifetime earnings is largely a result of lower incomes at younger ages rather than at older ages, he said, and “that was very surprising to us.”

Most younger men ended up with less because they started out earning less than their counterparts in previous years, and saw little growth in their early years. They entered the work force with lower wages and never caught up.

That is from a very good NYT piece by Patricia Cohen.  And note that in spite of all the recent very good economic news, for men the basic story really hasn’t changed, namely that of stagnation as a class.

I wonder sometimes if a Malthusian/Marxian story might be at work here.  At relevant margins, perhaps it is always easier to talk/pay a woman to do a quality hour’s additional work than to talk/pay a man to do the same.  And so as the demand for such additional hours opens up, the gains go to women, not men.  That is at least for the lower income brackets, and perhaps the very most for younger earners.  In other words, especially at young ages, women might be serving as a kind of “reserve army of the underemployed.”

1 Nick September 17, 2017 at 3:08 am

Didn’t Krugman talk about this years ago, in relation to the future ‘lost generation’ that graduated amidst the 2008 financial crisis and recession?

Also, might this not explain rising political extremism (in the sense of more outright supporters of socialism AND fascism)? Who are the most likely to adopt extreme beliefs? Young, unattached, educated men for whom the economy is not generating enough opportunities for them to take advantage of. It’s a milder case of what happened with the Arab Spring.

2 Bill September 17, 2017 at 8:05 am

Agreed. Young people should favor stimulus over austerity during a recession as this impacts them more than the old farts, which explains why the old farts are part of the Tea Party.

3 Dick the Butcher September 17, 2017 at 10:16 am

I wouldn’t quote Dr. Krugman on anything.

For me it’s family not ageism, markets, racism, or . . . Many of us old farts are grandparents and parents of young people. Some of us rat bastards believe its our responsibility, not the state’s, to support our families.

Hope and Change. Fundamental transformation. Young people should favor ACA/single-payer (huge tax hikes); DACA amnesty and chain immigration (Democrat/liberal electoral majorities forever); NAFTA (huge profits – oops); no-borders; millions more Islamic refugees (feed, clothe, house them and they massacre you); etc. Hell, wreck evil, unjust, racist America. That ought to improve their lifetime earnings.

US stimulus since 2008 ($4.5 trillion Fed QE’s and asset purchases; and $9 trillion deficits) yugely favored Wall Street, while Main Street declined. The new administration is filled with Goldman Sachs and Wall Street-types. Why Trump?

What is austerity? Is it an $800 billion deficit instead of $1 trillion.

I’m not part of the Tea Party. They are far too moderate.

One problem may be that many young people didn’t have parents and grandparents, i.e., the decline of the stable, one-man one-woman nuclear family. I know I am a bad person.

4 Hamilton September 17, 2017 at 3:48 pm

Yes, you are. Please go away.

5 mkt42 September 17, 2017 at 3:57 am

I remember seeing statistics decades ago about how the Baby Boom created an increase in the supply of labor and a concomitant decrease in wages — not just initially but projected to last over their lifetime.

So I was expecting to see the post-Baby Boomers, Gen X or whatever we’re supposed to call them, see an uptick in wages, apparently there was a bit of one when they hit age 25 but it didn’t last. Or is it the shadow Baby Boomers whose wages have been especially depressed? I’m not sure if the birth-and-immigration cohorts match with the popular labels of Baby Boom, Gen X, Millenial, etc. (Who comes up with those labels anyway? And for that matter, who came up with the Red State Blue State labels, which I don’t remember before the 2000 election? Hmm, wikipedia says it was Tim Russert in 2000.)

6 M September 17, 2017 at 1:49 pm

Couple thoughts.

1) The “Baby Boomers”, at least in the US, experienced a major rise in educational qualifications compared to their “Greatest” and “Silent” predecessors. OECD gives achieved US tertiary education for the 55-64 bracket at around 41%, not too dissimilar from the 47% among 26-34 year olds (https://data.oecd.org/eduatt/population-with-tertiary-education.htm).

The US GSS tends to support the educational transition occuring between birth cohorts at 1920-1945, with little change thereafter (https://imgur.com/a/qZyfJhttp://sda.berkeley.edu/sdaweb/analysis/;jsessionid=4A2C3B74886CCEC68AFFEAD628EBE732?dataset=gss16, degree, cohort).

Of course, this is actually felt through the economy all the way up to 2000, because of the age structure in the population (https://i.imgur.com/55P3WmZ.png), where it stalls out thereafter.

The “Boomers” probably had education advantages that allowed them to offset the increase in the labour force (both from their sheer cohort size, and the mobilization of women) and continue to capture higher wages.

Even the “Boomers” did depress wages, it may not have been them that felt it as much as previous generations equipped with lesser credentials.

That’s not the case for the “Millennials” – they’re competing with earlier cohorts with similar qualifications and who, in the case of the “Boomers” basically already own everything.

2) You might need to track how the size of the labour force. The sheer size of the “Baby Boomer” labour quake probably shouldn’t drop off until 20-30 years after the Gen X hit working age, and even then, may not drop off at all with the “Millennial” echo boom and high migration rates.

7 Steve Sailer September 17, 2017 at 9:38 pm

Obviously, the vast increase in the supply of labor post-1960s due to women and immigrants depressed the price of labor.

There is a reason why Corporate America has been so enthusiastic about women in the workforce and about mass immigration. They have both been very, very good for the owners of capital at the expense of workers.

8 Careless September 17, 2017 at 2:24 pm

in 1967, the median income at age 25 was $33,300; in 1983, it was $29,000. Twenty-five-year-olds did better during the 1990s, but then the slide returned. In 2011, the median income for 25-year-old men was less than $25,000

So early Gen X did better than Baby Boomers, but late Gen X/Millennials have done worse

9 prior_test3 September 17, 2017 at 4:24 am

‘perhaps it is always easier to talk/pay a woman to do a quality hour’s additional work than to talk/pay a man to do the same’

As long as one can convince a mother that it is better to spend time at work when an infant is 6 weeks old.

But why talk about maternity leave, which is so clearly a burden on companies that employ women, right?

10 Tim Worstall September 17, 2017 at 4:43 am

I’m very, very, dubious about this finding.

Take one thing we know about wages. They peak at different times of life for different types of work. Blue collar wages peak earlier, a decade or more, than white collar. Further, age 25 wages are going to be heavily influenced by college or not. 7 years work experience at age 25 or 2 perhaps?

As a whole the society has been moving from blue collar to white, with that later peak in wages, plus we’ve near the majority now going to college, something that just wasn’t true 50 years back. Then we measure wages at age 25 and 35.

No, sorry, not convinced.

That’s before we get to the manner in which PCE (they use PCE, not CPI) still overstates inflation. Plus, as they themselves say, taking compensation rather than wages reduces the gap.

It wouldn’t surprise me at all to find that adjusting for these three, lifetime earnings patterns, inflation and compensation makes the finding disappear entirely.

Obviously, it would need someone with a great deal more technical skill than I to prove it but that’s another matter.

11 ChrisA September 17, 2017 at 5:15 am

Adding to Tim’s point – work just isn’t as hard as it used to be. There are much more service type jobs and much less manufacturing jobs. To state the obvious working 9 to 5 in an office is not the same as digging coal by hand. So even if the wage for the 9 to 5 is the same as digging coal, life for people is much better.

12 Mark September 17, 2017 at 8:01 am

The thing with service jobs is that they are not 9 to 5. When you want the service 6 am or 6 pm dictates the workers hours. I am familiar with order fulfillment work like Amazon(but not Amazon) and this work has gotten more demanding on workers the past 5 years. Weekend work that used to be rare is now more common and mandatory since the customer has gotten used to Amazon standards on how long a wait an order takes to be received. Computers are used more to monitor where things are at and also how fast workers are working. They don’t lessen the lifting, walking and reaching. Ironically, the jobs I see robots taking over in the near term are also the less physically demanding jobs because the jobs they would be doing are the jobs that don’t require human hands to do the lifting. Back to guys, where I work the overwhelming male dominated department just doesn’t get paid much more then the departments that can rely on both sexes. This seems a bit crazy because you only have half the pool to recruit from but that is the way it is.

13 ChrisA September 17, 2017 at 11:35 am

Yes working weekends sucks – but it’s not like digging ditches 6 days a week like many of our forefathers.

14 ʕ•ᴥ•ʔ September 17, 2017 at 9:01 am

I kind of get your life arc argument, but I worry about this paragraph. Income *at* age 25 should include a lot of college graduate starting wages which should be (straight off) higher than unskilled work:

“According to one conservative measure of inflation, in 1967, the median income at age 25 was $33,300; in 1983, it was $29,000. Twenty-five-year-olds did better during the 1990s, but then the slide returned. In 2011, the median income for 25-year-old men was less than $25,000 — pretty much the same as it was in 1959.”

This would not have been my prior but .. a union job was better than “college light?”

15 ʕ•ᴥ•ʔ September 17, 2017 at 12:01 pm

Another story today supports that idea: “The day that destroyed the working class and sowed the seeds of Trump”

http://nypost.com/2017/09/16/the-day-that-destroyed-the-working-class-and-sowed-the-seeds-for-trump/amp/

16 Swami September 17, 2017 at 1:36 pm

Adding on to Tim’s skepticism…

There are actually four items which need to be combined in the adjustments to paint an accurate picture:
1) Proper inflation rates (PCE)
2) Non wage compensations and transfers
3). Household size
4). Increasing proportion of immigrants after 1964.

Like Tim, I believe that these factors cumulatively overwhelm the trends. Average and median incomes have been increasing in the US, though at a slower rate than in the “good old days” of racism and sexism, labor cartels and low immigration. Sarcasm intended.

17 ʕ•ᴥ•ʔ September 17, 2017 at 3:13 pm

See new graduate data below.

18 Swami September 18, 2017 at 4:23 pm

Nope, some of the same mistakes as above. Pretty sure they say they are using CPI rather than PCE. In addition, back in the 60s a degree was an elite certification which meant something with few acquired. Today, substantially more people get them and they are watered down.

IOW, a 1960s apple was substantially more elite than a current apple even before watering it down with the correct inflation index.

19 rayward September 17, 2017 at 7:24 am

Adding to Nick’s comment, my good friend works for an elite law school, and students who graduated during the great recession are experiencing what may be a lifetime of depressed earnings as compared to students who graduated before or after the great recession. Readers may recall the mini-scandal when it was discovered that several elite law schools were paying part of the recent graduates’ compensation. While some may believe it was essentially fraud (because it mislead current and future students), according to my friend the motivation was a sense of obligation to the students who had the misfortune of timing. In any case, where one starts on the income scale seems a very good indication of where one will end up.

20 dearieme September 17, 2017 at 7:35 am

“according to my friend the motivation was a sense of obligation to the students” very chuckle worthy.

21 ChrisA September 17, 2017 at 7:48 am

Isn’t the “lifetime of depressed earnings” just a reflection of the fact that there are too many lawyers needed at the time they graduated? This is how supply and demand work surely. Sure if they had graduated at a tighter supply and greater demand period then their prospects would have been better, but that is obvious. Unfortunately for your friends this system of “signalling that we have too many people of particular skill set by lowering their wages” is the best we have come up with. Guaranteed wages turned out not to work as well.

22 ChrisA September 17, 2017 at 7:49 am

* are not too many…

23 Todd Kreider September 17, 2017 at 9:20 am

“…students who graduated during the great recession are experiencing what may be a lifetime of depressed earnings as compared to students who graduated before or after the great recession.”

The silver lining for those who became lawyers in 2009/2010 and are mostly around 35 to 37 years old today,is that they won’t have depressed earnings in ten years as a lawyer since a ton of current lawyers won’t be needed by the time they reach 45 to 47 years old in 2027/2028. Weak A.I. in the legal field will be *very* good by then. Of course, the same applies to lucky ones who are mostly in their late 20s/early 30s today who won’t be working in law after 45 as they are just starting out at 25 or entered the profession in 2009/2010. I’m not sure how many current lawyers will be looking for work outside of law in 2029 but at least half seems like a reasonable estimate.

24 Ted Craig September 17, 2017 at 9:45 am

You don’t even need weak AI:

http://www.familycircle.com/family-fun/relationships/divorce-goes-digital/

Looking back on the past 10 years, I wonder how much economic weakness was from the financial crisis and how much was from the introduction of the iPhone.

25 A Truth Seeker September 17, 2017 at 8:26 am

So that’s it: women vs men, the richest country in the world is too small for both of them prosper together… America has given American workers a bad check, a check which has come back marked “insufficient funds.” The bank of justice is bankrupt. There are insufficient funds in the great vaults of opportunity of the nation.

26 Caipirinha September 17, 2017 at 9:52 am

Sure, Thiago, zzzz.

27 Mike W September 17, 2017 at 9:34 am

I wonder how Professor Cowen arrives at his “very good…piece” rating? It seems to be a fairly common MSM “hollowing out of the middle-class” story supported by the usual cherry-picked statistics and quotes by such-n-such academic. What makes it “very good”?

28 Caipirinha September 17, 2017 at 9:53 am

Answer: Because its self-recommending 😉

29 Brian Donohue September 17, 2017 at 10:09 am

+1. Tyler is smart, this is one of those occasional head-scratchers.

30 ʕ•ᴥ•ʔ September 17, 2017 at 10:22 am

And in response to every parallel data set “no it’s not” is just so convincing.

Data, priors, human psychology in action.

31 Brian Donohue September 17, 2017 at 12:24 pm

No, it’s just that the so-called analysis is hopeless.

It’s not unusual for people who are better with words than numbers to mischaracterize numbers. Journos do this all the time. Sad.

According to the data, the median full-time male worker earned $53,356 in 1973 and $51,212 in 2015. That’s an annual decrease of 0.10%.

Are our tools (in particular, comparing $s in different years) precise enough to make a strong conclusion here?

What about employer-provided health care? The gated paper abstract says “Accounting for rising employer-provided health and pension benefits partly mitigates these findings but does not alter the substantive conclusions.”

Maybe, but per capita health care costs in 1973 were maybe $1,000 per heard and they’re more like $15,000 per head now.

So, I can’t see the gated paper or the longitudinal data hinted it therein, which sounds maybe interesting, but I’m not taking the word of some NYT dingbat on it.

But ok, lets agree on a theme: the past 50 years hasn’t been a time of greatly improved outcomes for the median American man.

Didn’t we know this already? Isn’t the long-term devaluation of brawn taking a tool on men everywhere? And isn’t a workplace that increasingly accommodates females part of the story here? The bleak story of male workplace stagnation is contrasted by huge increases in working women and the money they are making.

32 ʕ•ᴥ•ʔ September 17, 2017 at 12:38 pm

“But ok, lets agree on a theme: the past 50 years hasn’t been a time of greatly improved outcomes for the median American man.”

Sure, but in my defense, I worried about “immigration and outsourcing” affecting the middle class before it was cool, back when the main argument from the left was “more transfers,” and the main argument from the right was “less taxes.”

If anyone was right it was minority voices from each side (or independents) who weren’t arguing the party platform of the day.

Today we aren’t doing much better. The left might be a little on target if they are again becoming worker friendly, but the right has been conned into thinking a wall will MAGA.

Oh, and coal.

33 ʕ•ᴥ•ʔ September 17, 2017 at 12:44 pm

Oops. I meant “automation and outsourcing.” I did and do not worry about immigration. I think is is an excuse.

FWIW though I think we should have immigration policy we can stand to enforce, and then enforce it. Work visas would probably be a part of that. Without them you can’t have both law enforcement and Florida oranges.

34 CH September 17, 2017 at 1:11 pm

It’s always amusing to watch the mask slip with these you-know-whos.

35 ʕ•ᴥ•ʔ September 17, 2017 at 1:21 pm
36 Ricardo September 17, 2017 at 12:38 pm

You are not disproving the assertion that male salaries are stagnating and are instead pointing to a possible contributing factor: the rapid growth in health costs compared to other developed countries.

37 Todd K September 17, 2017 at 1:38 pm

If insurance was about $1,000 per person in 1973, you need that in today’s dollars which is aound $6,000.

A lot of low wage immigrants have entered the U.S. over several decades and that keeps pushing the median wage down, something Cowen knew in his complacency video series, but dismissed it as just “other things going on.”

The last 50 years have been greatly improved outcomes for the median American man:

1) As with women, they have greater social freedom with respect to marriage and divorce.
2) Higher incomes once properly adjusted
3) Male life expectancy has increased several years
4) ESPN

38 ʕ•ᴥ•ʔ September 17, 2017 at 3:12 pm

Here are long term data on starting salaries of college graduates. Hard to see a clear win vs 1960:

http://www.naceweb.org/job-market/compensation/salary-trends-through-salary-survey-a-historical-perspective-on-starting-salaries-for-new-college-graduates/

Hard to pin that on “low wage immigants.”

39 Todd K September 17, 2017 at 10:31 pm

The starting salaries of college graduates doesn’t help because the ratios of American students getting degrees in areas that pay well have significantly changed. For example, compared to 1979, what ratio of international students were computer science majors relative to Americans who would work in the U.S. compared to in 2015? The difference holds for physics, chemistry and many engineering subfields.
The reporter hand waves with respect to health and retirement benefits. Then there are Tim Worstoll’s arguments.

40 Todd K September 17, 2017 at 10:31 pm

The starting salaries of college graduates doesn’t help because the ratios of American students getting degrees in areas that pay well have significantly changed. For example, compared to 1979, what ratio of international students were computer science majors relative to Americans who would work in the U.S. compared to in 2015? The difference holds for physics, chemistry and many engineering subfields.
The reporter hand waves with respect to health and retirement benefits. Then there are Tim Worstoll’s arguments.

41 Urso September 18, 2017 at 11:58 am

Yet people consistently report that they are more miserable. Despite ESPN, despite widely available cheap ethnic food, and despite the joyful “freedom” of divorce. Mainstream economics is not even wrong.

42 chuck martel September 17, 2017 at 10:35 am

We keep hearing that everyone wants a job but now it turns out that they actually want more money, unless all these post-moderns are happy with their declining income. And, gee whiz, passing the state bar exam doesn’t necessarily mean a new BMW in the cul-de-sac and a vacation home in Aspen. The secular society has room for only so many priests, everyone can’t make a living administering the canon of the godless religion of the nation/state, somebody has to dig up the potatoes and pick the peaches.

43 A Truth Seeker September 17, 2017 at 11:28 am

So that is it. Priests and peasants. Icons and potatoes. Such is life in America.

44 j mct September 17, 2017 at 11:13 am

An article about said topic that doesn’t mention immigration cannot be anything other than garbage.

45 Thanatos Savehn September 17, 2017 at 11:50 am

Apples and oranges. The 25 year old men of today are not the same 25 year old men who were working 50 years ago. Take contractor maintenance crews at the refineries. Today they look like the same people who frame up houses and work on the chicken carcass lines. They’re young and invariably speak Spanish.

Because the unions were racist, blacks until 35 years ago could only join the Laborers Local. Yet even the Laborers enjoyed pay well above the minimum wage and they got a pension. Nowadays I see labor contractors get reimbursement rates that work out to ~ $10.50/hr in the pocket of the workers. And almost all of them have Hispanic surnames.

Thanks to limitless cheap labor the companies finally broke the union’s back.

The Democrats think they’re just substituting brown voters for white and black ones but fail to appreciate the organizational skills of the old unions which functioned almost as church and family. Now, without the union apparatus and group loyalty that meant a dozen men could always be found to swear “I was looking right at him and he was definitely not smoking while he turned that valve”, it’s easy to fire contractors for safety infractions, sleeping on the job, etc. The result is a workforce that works harder (and safer), is paid less and has no pension. One interesting upside is that a lot of these guys have risen to the ranks of foreman and superintendant and some have even started their own companies; several of which are (I’m told) excellent.

46 ʕ•ᴥ•ʔ September 17, 2017 at 12:08 pm

There could be an argument that employers should monitor employee immigration status more closely, and face penalties when they do not.

But in that argument you couldn’t use so many “colors” to describe the problem. And you would have to recognize that it ain’t just Democrats who buck that employer responsibility.

Even today, it is a “wall” and not fines for Conoco-Phillips.

47 A Truth Seeker September 17, 2017 at 12:22 pm

Truth is, the system “works” as it does because malefactors of great wealth profit from it.

48 CH September 17, 2017 at 1:16 pm

“There could be an argument that employers should monitor employee immigration status more closely, and face penalties when they do not.”

You’re the first person to ever think of this. Do you want a medal?

“And you would have to recognize that it ain’t just Democrats who buck that employer responsibility.”

Pretty sure he realizes it, genius.

49 ʕ•ᴥ•ʔ September 17, 2017 at 1:25 pm

Nope. That was a racist and “blame it on Democrats” tirade designed to *hide* that Republicans are as responsible for a lack of enforceable immigration law.

GWB tried, but his party rebelled.

50 CH September 17, 2017 at 2:10 pm

Not everyone’s a partisan shill like you. And I’m guessing ʕ•ᴥ•ʔ handle represents a strawman.

51 ʕ•ᴥ•ʔ September 17, 2017 at 3:05 pm

What party am I shilling for when I say: “If anyone was right it was minority voices from each side (or independents) who weren’t arguing the party platform of the day.”

52 Thanatos Savehn September 17, 2017 at 3:53 pm

It’s certainly obvious to me that the Republican businessmen who rely on illegals to dig ditches, spread fresh cement, hydroblast the inside of tanks, etc are as much to blame as anyone. Perhaps more so if demand informs supply. I just think it’s especially cynical that the Dems, who once relied on the sort of people who thought Springsteen was singing about them when he’d sing “The River” and “Born in the USA”, now call those same people deplorables (because the Dems calculated, erroneously, that Mexican Americans wouldn’t climb the same ladders to the middle class and become in their turn white bourgeoisie too). The Dems are terribly lucky that the Repubs are so stupid else they’d be completely screwed.

53 ʕ•ᴥ•ʔ September 17, 2017 at 4:10 pm

No, the Deplorables are a subset: The people who care more about “Hispanic surnames” than that this might be someone whose family has lived in the American southwest for longer than it has been “American.”

54 M September 17, 2017 at 1:32 pm

How consistent is all this with the complete refusal to accept that immigration constitutes a “reserve army of the underemployed”?

“Lump of Labour” – sex = yes, migration = no?

55 Butler T. Reynolds September 18, 2017 at 7:53 am

But you know what’s really important? Getting more girls to become engineers and programmers, even if they’re interested in other things.

56 Anon September 18, 2017 at 1:38 pm

CNTL-F “Immigr”
returns one sentence referencing Trump, nothing on the main thesis of the article.

If 60 million extra people doesn’t lower wages, than nothing in Economics is valid, we need to abandon all of micro (macro already trash) and start over with something else.

57 Anonymous October 5, 2017 at 5:16 am

A sizable minority of young men are now working like women.

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