A Warning For Young Workers: The Up-Escalator May Be Broken
By Steven Greenhouse - July 2, 2008, 9:30AM
My 22-year-old daughter graduated from college in May, and I'm worried about her as she enters the workforce--actually I'm worried about her whole generation as it enters the workforce. Many young people don't realize that they face a far less friendly workplace than when my generation entered the workforce in the 1970s.
To tell the truth, when I began researching my book, The Big Squeeze, Tough Times for the American Worker, I wasn't planning a separate chapter on the nation's young workers--by that I mean, workers under age 35, and especially young Americans who have recently entered the workforce. But as I proceeded with my research, I was surprised and chagrined to learn how tough things have grown for young workers--and that was before the current economic downturn. As a result, I added a chapter, "Starting Out Means a Steeper Climb."
One especially dismaying study found that men in their thirties have a median income 12 percent lower, after factoring in inflation, than their fathers' generation did when they were in their thirties. That study, sponsored by the Pew Charitable Trusts, said, "There has been no progress at all for the younger generation . . . . The up-escalator that has historically ensured that each generation would do better than the last may not be working very well."
In my chapter on young workers, I write about a depressing trend: two-tier contracts in which newly hired workers are permanently consigned to a lower pay scale than older workers. I profile John Arnold, a 29-year-old forklift driver for Caterpillar, the tractor manufacturer. Because Arnold is on the wrong end of a two-tier pay scale, the maximum he can ever earn is $14.90 an hour or $31,000 a year--some 25 percent below what the fifty-somethings who work alongside him earn.
Another unfortunate trend is that entry-level wages for college graduates and high school graduates fell from 2001 to 2006, after factoring in inflation. Not only that, in families with at least one parent aged twenty-five to thirty-four, median income slipped by $3,000--by nearly 6 percent--from 2000 to 2005, according to the Census Bureau.
Today's young workers face these wage problems partly because they are the first generation to come of age after the high-tech bubble burst, after the offshoring of jobs to India exploded and after millions of factory jobs disappeared in a new wave of deindustrialization. Moreover, today's young Americans are entering a workplace in which the job security that my parents' generation largely took for granted has all but evaporated. Nowadays the unspoken message is that you have to bust your butt and perform well to make sure your employer keeps you. You also have to earn your pay increases because automatic raises are increasingly a thing of the past. As one business school professor put it, "It's an, 'If you give, you'll get' model,"
Longer-term wage trends have been just as troubling. From 1979 to 2005, entry-level wages for male high school graduates without college degrees slid 19 percent (after inflation); for their female counterparts, they fell 9 percent. For young workers with college degrees, entry-level wages did rise during that quarter century, although modestly and still far more slowly than wages for most older workers.
The changing mix of jobs--think Wal-Mart stockers and Starbucks baristas--is undercutting entry-level wages for those who do not go to college. "In the 1960s and 1970s, you saw high school graduates getting good jobs at Ford and AT&T, jobs that in inflation-adjusted terms were paying twenty or twenty-five dollars in today's wages," said Sheldon Danziger, a professor of public policy at the University of Michigan. "Nowadays most kids with just high school degrees will work in service-sector jobs for ten dollars or less. That's where you see a big drop."
Their wages may be falling, but one thing has certainly increased as young Americans struggle to maintain a middle-class lifestyle: their debt burdens. In households headed by someone aged twenty-five to thirty-four, average debt has climbed to over $55,000, up 70 percent from the 1980s (after accounting for inflation). Indeed the average debt load for young Americans--comprised largely of housing debt and college loans--actually exceeds their annual household income, a sharp change from two decades ago.
And the safety net for young workers is in sorry shape. All told, more than one-fourth of the 45 million workers under age thirty-five do not have health insurance from any source--by far the highest rate of any age group. As for young workers with just high school degrees, two-thirds do not receive health coverage in their entry-level jobs, up from just over one-third in 1979.
Corporate America's increasing tightfistedness over pensions is also hitting young workers hard. The share of workers twenty-five to thirty-four participating in an employer-sponsored pension plan or 401(k) slid to 42 percent in 2005, down from 50 percent five years earlier.
As Anya Kamenetz points out in her book Generation Debt, the Internet Generation will enter the prime of life in a nation as gray as Florida is today, and as a result that generation will face an unprecedented burden in sustaining the Social Security system. In 1960, sixteen Americans were working for each retiree. Today there are four active workers contributing taxes to Social Security for each retiree. In 2030, there are expected to be just two-and-a-half workers per retiree. Today's young workers may well face a double squeeze--to keep Social Security solvent, Congress might increase the younger generation's payroll taxes as well as trim their Social Security benefits. Also disturbing is the fact that the folks in Washington are building mountainous budget deficits, and they're simply passing the bill to their children's and grandchildren's generations. How fair is that?
All these trends have fostered considerable pessimism. Forty percent of voters surveyed in exit polls conducted on Election Day, 2006 said that life would be worse for the next generation, while just 30 percent said it would be better. Still, it is important to remember that some things are better for the younger generation--longer life spans, lower crime rates and wondrous developments like the Internet.
Labor unions often pay scant attention to the struggles faced by twenty-somethings, and many young workers do not relate to unions. Many labor leaders are in their sixties and seventies and don't talk young people's talk or issues. Sometimes I think that every labor union should have a youth division that focuses on reaching out to young workers--and union should have spokeswomen (and men) who know how to connect with young workers.
To be sure, some young workers are doing very well. That's especially true for those who get the most advanced or prestigious diplomas, especially M.B.A.'s, law degrees and medical degrees. At some corporate law firms, starting pay for twenty-five-year-olds out of top-notch law schools is $145,000 a year. Frank Furstenberg, a sociology professor at the University of Pennsylvania, said that young adults increasingly feel "that having just a B.A. isn't going to get you a really good job as it did three or four decades ago." The message is, to get ahead, you need more and more education, preferably at elite and expensive schools--and to get that education you generally need affluent parents or to go deeply into debt.
With good jobs increasingly requiring specialized skills, it appears that young workers without college degrees will generally end up in worse shape than those without college degrees did in the past, while those with superior credentials will do better. "You're much better off as a young worker today if you're the child of the well-to-do and you get a good education, and you're much worse off if you're a child of a blue-collar worker and you don't go to college," Professor Danziger said. "There's increasing inequality among young people just as there is increasing inequality among their parents."
I keep wondering what, if anything, are young Americans going to do about all these problems. |
