Young US workers see downshift in pay gains amid job scarcity

WASHINGTON – Wage gains have cooled to some of the lowest levels in more than a decade, with young US workers bearing the brunt of the slowdown, according to a report by the JPMorganChase Institute.

While all age groups have seen weaker raises since the peak levels of the pandemic, it’s been most pronounced for those aged 25 to 29, the report showed on Oct 29. Their annual income growth slowed to 5.2 per cent in September – one of the slowest paces since 2011, when the institute started collecting data and the economy was still recovering from the Great Recession.

“These dynamics show a downgrade in purchasing power growth for all individuals and a meaningful loss of momentum in early-career earnings advancement”, according to the report.

The researchers said the younger population can provide a signal for the state of the overall labour market, which has largely been characterised by low hiring and low firing.

Such a lack of dynamism has also been evident in more workers clinging to their positions, fearful of job security.

That is created a unique challenge for early-career employees, who typically rely on job-hopping to boost pay and climb the corporate ladder, the report said.

On top of hiring freezes, young workers are also facing the rise of some entry-level positions being replaced by artificial intelligence. 

Smaller income gains are particularly challenging for younger generations, who are less likely to own homes and haven’t been invested in the stock market long enough to benefit as much from the past decade of strong returns, the report said.

“Without stronger income gains, they may need to wait even longer for their budgets to catch up to their financial goals,” the authors wrote. BLOOMBERG