Entry-Level Wages Fell Over Past Decade

March 14, 2012 Updated: October 1, 2015
Young job seekers attend a career fair in Midtown Manhattan
Young job seekers attend a career fair in Midtown Manhattan last month. According to a report by the Economic Policies Institute, entry-level wages have declined steadily for young workers over the last decade. (Spencer Platt/Getty Images)

Wages have been dwindling the past decade for workers just entering the labor force, according to a recent study by the Economic Policies Institute. Wages for every entry-level group began declining as early as 2000 to 2007—even for college degree holders.

“Young college graduates who finished their education in the last 5 years or so are earning significantly less than their older brothers and sisters who graduated in the late 1990s,” the study states.

The author of the report, Lawrence Mishel, categorized wages of males, females, high school graduates, and college graduates.

Mishel compared the recent findings to the 1973 to 1995 period when the “most dramatic” overall decline in wages occurred. After that period of decline, a “booming of wages” happened from 1995 to 2000.

After the 2000 to 2007 wage decrease, a “steep” decline continued from 2007 to 2011 due to the recession, according to the study.

“Young workers are having to work longer hours for less money. They are holding multiple jobs and tolerating more dangerous working conditions,” wrote Al Ekblad, executive secretary of the Montana State American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), in an email.

“They are better educated than earlier generations, but are suffering with less opportunity and less dignity,” Ekblad wrote.

The study highlighted the benefit of a college education. Despite the wage boom in the late 1990s, entry-level workers with only a high school degree face a wage of nearly $4 per hour (in 2011 dollars) less than a high school graduate in 1979. A recent male high school graduate will be paid 25.3 percent less than his equivalent worker in 1979.

Entry-level wages for female college graduates fell by 1.6 percent from 2000 to 2007, while male college graduates experienced a 2.5 percent decline during the same time period. Entry-level workers are defined as people with 1–7 years of experience.

Although female wages continued to decline by 4.4 percent from 2007 to 2011, female college graduates experienced an overall long-term wage growth of 15.4 percent, or $2.50 per hour, from 1979 to 2011.

Within the five boom years of the late 1990s, young male college graduates experienced a 20.3 percent wage increase.

Temporary Low Pay

According to the Social Science Computing Cooperative, a service provider from the social sciences department of the University of Wisconsin-Madison, there is no need to be “overly concerned” that recent entry-level workers are earning less than they did during the boom. Gaining experience is tied closely to career wage growth.

According to the Emerging Workforce Study, backed by Harris Interactive polls, entry-level workers are generally between the ages of 18 and 24. Close to 68 percent of workers stay at their entry-level jobs for 0–2 years, gradually moving on to higher pay as they gain more experience.

According to a 2011 study by Dr. Bradley R. Schiller of the Economic Policies Institute, 40 percent of minimum wage employees are young adults or teens who have support from parents or relatives.

For older people with children who continue to hold minimum wage jobs, 77.5 percent of the group contribute to less than 20 percent of the total household income. Most people in the group are married to a spouse who earns the central household income, according to Dr. Schiller’s research.