EPI News

The lost decade

Recent years have not been kind to the economic prospects of young adults, as wages fell from 2000 to 2011 among entry-level workers regardless of education level. Using data from the forthcoming edition of EPI’s The State of Working America, EPI President Lawrence Mishel highlighted the far-reaching effects the nation’s poor labor market has had on workers new to the workforce.

Simply put, when the labor market is strong for workers, the prospects for young workers are very strong—and when the labor market is weak, their prospects are very weak. It thus comes as no surprise that the wages of entry-level workers, defined as those with one to seven years of experience, have fared extremely poorly since 2000.

Mishel’s research on the topic has already garnered widespread attention in national media outlets and across the blogosphere, including the Wall Street Journal, MSNBC, CNNMoney, Forbes, Huffington Post, Washington Post, Gawker, and Politico.

  • In an interview with the Wall Street Journal’s James R. Hagerty for the article “Young Adults See Their Pay Decline,” Mishel explained the implications of his findings for young workers, namely that “new college graduates have been losing ground for 10 years.”
  • MSNBC.com’s Eve Tahmincioglu wrote, “Wages for young workers have been declining for more than a decade. They fell off a cliff during the Great Recession to levels not seen since the 1970s for certain groups of entry-level workers, according to new data from center-left think tank the Economic Policy Institute.”
  • In the article “College degree not worth what it was,” CNNMoney’s Tami Luhby cited data from EPI to demonstrate the long-term effects low entry-level wages have on young workers:

“The Great Recession has hit younger workers particularly hard. The unemployment rate for those ages 16 to 24 stands at 16%, while it’s just 7.4% for those age 25 to 54.

“And the pain can last beyond the economic downturn, as the Institute’s numbers show. It can take years for young workers to get their careers and earnings on track after graduation, leading some experts to dub young adults ‘the lost generation.’”

  • From Forbes: “According to new research by the Economic Policy Institute reported on WSJ, instead of seeing their salaries on the steady increase as they move up the corporate ladder, Millennials are becoming poorer every pay period.”
  • And Huffington Post: “Attention, young workers: It’s not your imagination. You’re underpaid. Wages for employees in their twenties took a sharp dive during the past decade, according to data compiled by the Economic Policy Institute, a left-leaning think tank, and reported in The Wall Street Journal.”

College is not always the answer

In a guest commentary for the New York Times’ online series Room for Debate, Mishel noted that college graduates comprise a minority of the workforce and emphasized the continued need to prepare students for jobs that do not require college degrees. To build the strongest labor market, “we need a nation that has and values all sorts of work and skills, which means providing decent pay and benefits for many types of jobs,” he wrote. Mishel went on to explain that this “necessitates strong labor standards, a tangible ability to obtain union representation, and mandated benefits in retirement and other areas.”

Low income a hindrance for even the highest-achieving students

In his recent blog post “Equality of Opportunity? Never Mind,” New York Times columnist Paul Krugman also assessed the benefits of higher education, but from another angle: access and opportunity. Krugman cited EPI’s data to show just how unequal access to higher education is for students from low-income households, even among the highest achievers.

Using data from the EPI study “Low income hinders college attendance for even the highest achieving students,” Krugman wrote:

“Just a reminder of how unequal access to higher education already is: low-income students with high test scores are less likely to finish college than high-income students with low test scores.”

Strengthened jobs recovery

In this morning’s release of the Bureau of Labor Statistics’ Employment Situation Summary, all the job indicators showed a strengthened recovery. The report marked two full years of job growth (excluding changes in employment due to temporary workers hired to conduct the 2010 Census). Over the last two years, the labor market has gained back nearly 3.5 million jobs, after losing more than 8.7 million in the downturn.

However, the jobs deficit remains very large. We have 5.3 million fewer jobs now than we did before the recession started, and we should also have added around 4.7 million jobs over this period just to keep up with normal growth in the working-age population. Even at the quite strong average growth rate of the last three months (245,000 jobs added per month), it would take around five years to get back to full employment in the labor market.

Work hours near pre-recession rate: a positive sign for future job growth

There is more good news to report about the labor market: The restoration of work hours to pre-recession levels is nearly complete. In this week’s Economic Snapshot, EPI labor economist Heidi Shierholz explained how, early in the recovery, employers began to ramp back up by restoring the hours of their existing workers before hiring new ones. Thus, she wrote, a positive increase in hours was a drag on employment growth. But now that we have nearly worked off the “hours overhang,” employers that need to add additional hours will be more likely to add new workers instead of increasing the hours of existing workers. This is a positive sign for future employment growth, she explained.