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February 19, 2002

Ninety percent of young male workers now doing worse than they would have 20 years ago

The promise of upward mobility — a centerpiece of the American dream, which fosters the notion that anyone can get ahead with hard work — may have disappeared with the 20th century.

Prospects for upward mobility were on the decline long before the current economic downturn and the aftereffects of the Sept.11 terrorist attacks, contends Martina Morris, a University of Washington professor of sociology and statistics.

Morris, one of the authors of a new study printed in the book “Divergent Paths,” said 90 percent of young white male workers can expect to have lower lifetime wage growth than the previous generation.

Morris and her co-authors from the UW, the University of Wisconsin and New York University, analyzed data from a national survey that tracked two groups of men, each for 16 years, through the early, key wage-earning years of their careers. Nearly 5,200 men were involved.

Other key findings indicate that:
* The new economy has not distributed prosperity equally, in contrast to previous periods of economic growth, so inequality in lifetime wage growth has risen rapidly in the 1980s and 1990s. The gap between the high and low achievers has widened by some 20 percent — not because those at the top are doing better, but because so many of these men are now doing worse.
* While some college graduates are achieving higher wage growth in the new economy, surprisingly most are actually seeing lower wage gains now than in the past. Only those in the small finance, insurance and real estate sector are consistently posting higher wage growth.
* Men with some college education, such as an associate of arts degree or technical training, have lost even more ground. Few now see any payoff to their investment in a two-year degree, and the typical person in this group can now expect his wage growth to look much like that of a high school graduate.
* More workers are now being funneled into low-end, low-paying jobs in sectors such as retail trade and business services. These types of jobs tend to trap workers in low-wage careers.
* The net result is a 40-percent decline in the fraction of men who can expect to achieve the kind of economic standing that defined America’s middle class in the 1970s.
* Growing job instability seems to be one of the main factors driving these changes. The rewards for changing jobs in the early part of the career, a traditional route for wage growth for workers, have evaporated. And the rewards to building tenure with an employer in later years are being lost as job instability has nearly doubled among those in their mid-30s.

Data for the study was drawn from two national surveys that were launched in 1966 and 1979. Both tracked young men from their teens into their mid to late 30s. The National Longitudinal Survey of Young Men tracked a group from 1966 until 1981 and the men were interviewed annually except for four missed years. The National Longitudinal Survey of Youth tracked the second group annually from 1979 through 1994. The first group entered the U.S. labor market in the late 1960s, a time of prosperity and stability. The second began working in the early 1980s, at the birth of the new labor market marked by deregulation, globalization and a drop in the power of organized labor. The two surveys were conducted with support from the federal Bureau of Labor Statistics

Morris said their study had to be restricted to white males because of limitations in the data collected in the first survey. Women were less likely to work outside the home in the late 1960s and so were not consistently asked the same set of questions as the men. Minority men were included in the original survey, but over half of them dropped out over the 16 years. That made meaningful statistical comparisons impossible.

“We know from other studies that women and minorities made some gains during this period, but inequality also grew within these groups, much as it did with white men. This growth in inequality appears to be the signature theme of the new economy.

“What the findings from this study tell us is that the negative impact of economic restructuring is not just happening at the fringes of the work force,” said Morris. “It is happening to white men, traditionally the most protected group, at the heart of the work force.

“With the kinds of declines in hourly wages that we find here, it is a bit of a puzzle why there has been so little public outcry. One reason may be that people are working more hours and there are more women in the work force now. The net result is that total household income levels have held steady, but it takes more effort to bring in the same income. This kind of new economy may preserve living standards, but it is not family friendly. As it sucks more and more resources out of the home, we are seeing rising stress on families, and declining time for being with children.”

Morris said such factors as the decline of labor unions and the increased trends of downsizing and outsourcing by businesses has produced a climate in which the American economy is producing more low-paying jobs than high-end ones.

“The service industry produces a lot of low-wage jobs and we are churning them out,” she said. “The No. 1 job for projected growth in the coming years is cashier. As a result we can now make things cheaper here, but we are beginning to lose our middle class. And many more Americans work to live, not live to work.”

While “Divergent Paths” paints a bleak picture, Morris said she hopes the research provokes people to think about national priorities and to recognize that there is a cost to having shareholder profits as a top priority.

“The facts that 90 percent of white males are now doing worse economically and that more than one-quarter of the workers in the second survey did not even manage to double their wages after more than 15 years in the labor force should give us a reason to pause and reflect on the path we are on,” she said.

“We have choices to make here — and we can choose a system in which prosperity is shared, and the reward for hard work is at least a living wage. It is a question of distribution and equity. Economists will say that is a political question, and they are right. This is a political choice, and it determines where American society will be in the future. For many decades, regulated economic growth was the rising tide that lifted all boats. But that has clearly changed now. Upward mobility has deteriorated to the point where workers face much more limited and unequal wage growth, even when the economy grows at record rates as it did in the 1990s. On the international scene, the recent experiences of Russia and Argentina also make it clear that the social costs of a free market approach can be very high, without producing the promised economic development. If we continue on the trajectory found in our study, it will make the gulf between the rich and the poor nearly unbri!
dgeable. That would truly be the end of the American dream. Is that really the choice we want to make?”

Co-authors of the book are Annette Bernhardt, senior research associate at the Center on Wisconsin Strategy at the University of Wisconsin, Madison; Mark Handcock, professor of statistics and sociology at the University of Washington; and Marc Scott, assistant professor of educational statistics at New York University.