Amid booming economy, entry-level workers see real-wage decline
According to new analysis from human resources consultancy Korn Ferry, entry-level professionals and clerical workers at organizations have seen their real wages actually decline over the last decade. Meanwhile, mid-level and senior-level employees saw their wages increase.
LA-based Korn Ferry analyzed inflation-adjusted US employee pay data in the ten years since the Great Recession. The study analyzed data from 5.5 million employees in almost 2,000 companies across a range of industries.
The Korn Ferry study found that, adjusted for inflation, clerical and entry-level professional make an average 2.3% less than they did in 2008. The average inflation adjusted wake for clerical/entry-level workers actually declined from $46,886 in 2008 to $45,882. That means that the mostly millennial workers who occupy junior positions can afford even less avocado on toast than they could a decade ago.
The depressing finding comes amid a labor market that is closing in on full employment, after 10 years of economic expansion. And those real wages aren’t likely to increase in the future as the American economy comes to the end of its business cycle, reaching the inevitable economic contraction/recession. Mercer’s head of asset allocation, Rupert Watson, expects a “material slowdown at the back end of 2019 into 2020.”
Meanwhile, mid-level professionals and senior managers saw their real wages increase. Mid-level professional salaries grew 2.4%, from $83,310 (2008) to $85,332 (2018), while senior management salaries grew 5.7%, from $151,594 in 2008 to $160,292 in 2018. In an organizational context, the gap between rich and poor within companies grew wider, not unlike the accelerating trend of wealth inequality in the United States. The senior manager’s base salary has gone up, while his assistant or secretary’s wages have declined.
Commenting on the study, Korn Ferry Senior Client Partner Tom McMullen said, “Even though we’ve seen significant growth in the economy since the recession, salaries have barely kept up with inflation, and in the case of lower-level employees, we have actually seen real-wage decreases since 2008. While there are only slight increases for mid-level professionals and senior managers, we do see higher wage growth for those levels due to the demand for specialized, skilled employees.”
Jared Bernstein, an economist and former advisor to Joe Biden, relates that the real hourly wage for the working class in general has been essentially flat for two years. The wages of factory workers and non-managers in the service sector (82% of the labor force) have stagnated while consumer prices have climbed. Bernstein points to businesses increasing profits at labor’s expense, characterized by weakened unions and empowered corporations.
According to a report from Pew Research, real wages for non-management private sector workers (and the purchasing power therein) have remained just about stagnant since 1978. Meanwhile, the wage gains that have occurred have largely gone to the highest earners. Since 2000, usual weekly wages of the (lowest) 10th percentile of earners has risen 3%, while those in the 90th percentile (top 10%) have seen their real wages increase by $15.7%.
