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Economists have found that entering the workforce during a downturn yields lower earnings for life.
UCLA Economist Till von Wachter found that Americans who entered the labor market when unemployment rates rose by five points—about the same as in the 2007-09 recession—saw their cumulative earnings fall by 10% over the first decade of a career.
“The effects have health and lifestyle consequences well into middle-age,” said Prof. von Wachter. He reviewed four decades of earning data in his study, which was conducted with Hannes Schwandt of Northwestern University.
Location: Was Midvalley Oregon; Now Eastside Seattle area
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DS entered the workforce in 2008-09. His academic and internships' resume would make your head spin and make you wonder. It was very bad 2008-2009. Not as bad 2010-2012. Took him till 2016 to catch up to "glassdoor's" pay scale.
DS entered the workforce in 2008-09. His academic and internships' resume would make your head spin and make you wonder. It was very bad 2008-2009. Not as bad 2010-2012. Took him till 2016 to catch up to "glassdoor's" pay scale.
Thanks for this honest post. My daughter graduated in 2012, she’s now finally caught up and maybe ahead for her major.
My other kid is much luckier, she graduated in 2017 and held a job nearly two years. Looking for another job for salary increase. I’m hoping the economy stays healthy for a while.
Since there's next to nothing an individual can do about this - even the best aim on entering college can be subverted by events over the next few years - it would seem to be an argument for choosing a career and a major that suit your interests and aptitude over the (all-too-)common method of putting your bets on what's supposed to be hot and in demand in four years. If you can't make the biggest of big bux, you can at least have a career that lets you sleep at night... except when you can't wait to get back to it.
Economists have found that entering the workforce during a downturn yields lower earnings for life.
That's not news, nor is it surprising.
Over the last 10 years, I've mentioned that maybe 2 dozen or more times on the Economics Forum (not counting the PO&C Forum).
It's been well-established for a few decades. It was taught in economics courses when I got my degree a few years before the recession.
In fact, you can read about it from 6 freaking years ago.
My response was that the recession did skew the life-time earnings of those graduating at the time of the recession, and that raising the retirement age would have the same effect. France raised its retirement age from 62 years to 70 years, was plagued by perennial high unemployment rates, then lowered it to 65 years (which is probably the optimum retirement age for all developed countries), and the unemployment rate dropped.
02-16-2013, 06:58 PM
Quote:
Originally Posted by Mircea
You now have an entire group of people under 35 whose Life-Time Earnings are less than they would have otherwise achieved.....and that group is growing day-by-day, month-by-month and year-by-year.
In other words, instead of earning $1.75 Million over the course of their life-time (~35 years) they will only earn between $1 Million and $1.5 Million.
By raising the retirement age, all you do is thwart younger people from entering their career field and you destroy their life-time earnings power.
And you cannot tax what people do not earn....so this manifests itself in about 20 years and continuously thereafter as shortfalls in revenues.
I guess my question would be: What kind of economist would waste valuable time, money and resources attempting to prove something that was proven decades ago?
That is not an economist I would want on my pay-roll.
Anyway, the key is this:
Quote:
Originally Posted by Mircea
And you cannot tax what people do not earn....so this manifests itself in about 20 years and continuously thereafter as shortfalls in revenues.
Those shortfalls manifest themselves in HI (Medicare) revenues, Social Security revenues, and State and federal income tax revenues.
The worst case of this has been my cousin's experience during the Great Recession, even though she's been at the top of her industry (architecture) since the mid-90s. She took a 50% paycut for 5 years during the recovery; new hires were getting paid more than her. She spoke to one of the principals and they slowly restored her compensation to market and gave her several bonuses as an apology of sorts. She's now a partner at the firm but damn the company doesn't seem to care much about pay-equity. My cousin is 48 years old and lives with her mom; I don't think she would have survived the Recession without that living arrangement.
Another case of bad timing was my wife's grad school housemate. She earned her architect's license in 2009 and had to work odd jobs through 2012 with $240K in student loan debt. She was literally working in the intimates department at Nordstrom when a customer took very warmly to her. She knew our friend must have had higher education and asked what she studied. It turns out the customer owned a design firm that does parks and playgrounds, and offered her a job on the spot. Years later, she finally got a job as a architect for a contractor in compliance and safety for multi-unit dwellings in the Bay Area. It took 7 years for her finally earn an architect's starting salary. She also lived with her parents until she her career got started.
The worst case of this has been my cousin's experience during the Great Recession, even though she's been at the top of her industry (architecture) since the mid-90s. She took a 50% paycut for 5 years during the recovery; new hires were getting paid more than her. She spoke to one of the principals and they slowly restored her compensation to market and gave her several bonuses as an apology of sorts. She's now a partner at the firm but damn the company doesn't seem to care much about pay-equity. My cousin is 48 years old and lives with her mom; I don't think she would have survived the Recession without that living arrangement.
Another case of bad timing was my wife's grad school housemate. She earned her architect's license in 2009 and had to work odd jobs through 2012 with $240K in student loan debt. She was literally working in the intimates department at Nordstrom when a customer took very warmly to her. She knew our friend must have had higher education and asked what she studied. It turns out the customer owned a design firm that does parks and playgrounds, and offered her a job on the spot. Years later, she finally got a job as a architect for a contractor in compliance and safety for multi-unit dwellings in the Bay Area. It took 7 years for her finally earn an architect's starting salary. She also lived with her parents until she her career got started.
When I was in high school, I took some classes in architecture and enjoyed it. I’m glad I dodged that bullet of a career.
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