Wage Growth Slows Down As Workers Get Older: Study

Most workers have bigger jumps in wages early in their work careers and, by the time they are in their 40s, are not seeing any increases in their wages, according to data released by the Federal Reserve Board of New York. This is becoming increasingly important as the overall age of employees — and Americans — is rising and the country gets older.

Wage growth has been slowing for 35 years, according to the Fed’s data, and will continue for years to come, the Fed’s researchers concluded.

The growth rate in wages is indiscriminate when it comes to the education level of works, too, meaning that regardless of whether the worker is a high school graduate or has a PhD, by the time he or she hits 40, they are not going to make a lot more money than they are currently making. By the time workers are 50, they are actually earning less than they did when they were younger, according to the data.

We have shown that U.S. real wage growth has been slowing down over the past thirty-five years with the aging of our workforce. Abstracting from cyclical factors impacting the labor market, this slowing is likely to continue in the years ahead as more individuals near retirement and experience negative real wage growth.