There are many injustices in the world today that motivate people into action. There are political campaigns galore in this midterm season, aimed at gaining power through the popular vote in a predominantly republican majority country. There are also plenty of injustices happening in communities of color: voter suppression, police brutality, the opioid crisis, and more.
Many young people are engaged in activism as of late, and for good reason; there are many causes worthy of fighting for justice and awareness. Yet young Americans are also facing a crisis of their own, one that has been building for quite some time. Past generations have felt the pang of wealth inequality — and indeed, even those well over the age of 60 are still struggling with it today — but now millennials (the generation born between 1982 and 2000) are facing this problem head-on.
Underpaid, overworked, and under pressure — how are those most affected finding ways to cope with wage stagnation and wealth inequality? And how does that, in turn, affect everyone?
Productivity Growth and Wage Stagnation
There’s no doubt that baby boomers were born during one of the most prosperous eras for the United States. Between 1945-1973, American manufacturing was booming, and many young workers were able to work 40 hours a week, earn a livable wage, and retire with a pension. Economists often call this the “Golden Age” of economics, as it was a fruitful time but also a statistical anomaly: one of the only reasons why it was so beneficial for Americans is because much of Europe was devastated after WWII. Americans held the number one spot for exports around the world during this time, and citizens were able to profit. The American Dream was alive and well — and people still believe it has the ability to get there again.
However, the world eventually caught up, and America since has struggled to maintain its spot in the global market. This — mixed with shady political decisions and capitalist exploitation — has caused much of the wage stagnation we see today.
A series of graphs provided by the Economic Policy Institute (EPI) show some of the staggering changes happening in the economy that are affecting low-income and middle-class workers — especially young college graduates, many of whom are classified as millennials. Some of the key takeaways include:
- Production and productivity of employees has increased dramatically since post-WWII America, but sometime in 1973 a split started to form between productivity and compensation (compensation = both pay and benefits). Now, compensation has stagnated significantly, despite productivity being 243 percent greater since 1948. With percentages, the data shows: 1948-1973 productivity rose 96.7 percent and hourly compensation rose 91.3 percent. Since 1973-2013, however, productivity rose 74.4 percent, while compensation only rose a meager 9.2 percent (total amount adjusted for inflation).
- Recalling back to the Occupy Wall Street movement of the early 2010s, another graph shows the wage increases since 1979 of the top 1 percent in comparison to the lower 90 percent. The top 1 percent’s wages increased 138 percent, while the lower 90 percent only saw a growth of about 15 percent.
- Another graph shows the disparity for college graduates in particular: wages for young college graduates have been falling steadily since 2000. It’s bad enough that college graduates have to deal with unsurmountable student debt, but now they can’t even catch a break when they join the job market? The average starting wage for both men and women in 2001 was about $18.50. That average as of 2013 is $16.99. In addition, although the average given is for both men and women, the gender wage gap is also shown, and it’s significance shouldn’t be ignored: men in 2013 are making a starting wage of about $19.15, whereas women are struggling to make $15.30.
- One of the biggest reasons for wage stagnation and the growing wage gap is the increase in pay for CEOs. Known as the CEO-to-worker compensation ratio, EPI has found that the pay average for CEOs is about 296 times that of the average for workers (based on 2013 data).
- Stemming off of the earlier graph in relation to productivity increase and wage stagnation, another graph shows that the minimum wage should be considerably hirer, if it had followed the same trajectory in relation to production, had adjusted with inflation, and increased based on the value placed on work. Following numbers from 1968-2014, and based on the Bureau of Labor Statistics data, EPI found that the federal minimum wage should be much closer to $18.50 per hour, but is instead at the federal level of $7.25 — less than half of what it should be. This adjustment (or lack thereof) also has an even greater adverse effect on women and people of color.
- Finally, another graph provided by the EPI also measure how wage stagnation is tangentially related to the declining number of people joining workforce unions. As less people unionize their workplaces, the pay of CEOs and top earners has increased.
There are some common arguments that people make in relation to wage stagnation, such as: Does this take into account the amount of self-employed people working as contractors?; Could it be in part due to globalization and the distribution of labor across the world, forcing companies to cut pay in order to stay competitive?; Does this take into account the increase of women in working positions — which typically earn less than men?
Yet all of these arguments fail to address the real problem: the influx of “trickle-down economics” policy and ideology have ruined our economic growth. Little has happened in the political world that would benefit both low-income and middle class households (such as lowering the price of higher education to help people adapt to the changing job market), whereas quite a bit has happened to benefit large banks and corporations (as well as the CEOs that run those businesses). Bailouts for banks, loan offices, and any number of large companies that the government (and many republicans) believes “builds jobs” have actually resulted in lack of internal growth, increased automation, and the prioritization of cutting jobs and pay in order to fuel profits.
Workers end up hurt and struggling — often laid off due to changing standards and needs — while CEOs relish seeing their company stocks slowly, and steadily increase. In the meantime, we — the underpaid and often unheard majority — either struggle to find scapegoats for our anger (the “MAGA” mentality) or find ways to survive despite it all. Millennials, most of all, are stuck in an especially tricky spot.
The Millennial Dilemma
The biggest issues facing millennials today are twofold: higher education is expensive and often unachievable, and the job market that exists today requires a higher-education background, but doesn’t pay nearly enough to offset the cost of paying back student loans. Millennials are thus thrown into the fray — often being the media’s scapegoat for why some markets are failing (diamonds, housing market, etc) and being forced to find ways to cope with the changing landscape of the economy.
In all, nearly half of all millennial workers have a bachelor’s degree from a four-year college. PEW Research also shows that millennials in metropolitan areas are more likely to have degrees than those that live in rural areas. Additionally, more millennial women (46 percent) have bachelor’s degrees than millennial men (36 percent), but are still — on average — paid less than their male counterparts.
Millennials are also the largest generation in the job market right now, but many are struggling to find jobs that match their educational background, and even more are struggling to find a livable wage. While some argue that millennials are changing the job market with their push for remote work, freelancing, and alternate forms of income (also known as the “side-hustle”), others acknowledge that this is really all millennials have to get by. They work hard and often, simply so they can pay the bills and feel a little more in control of their destiny — even if it’s just a false sense of hope to not feel cheated by life.
Others argue that millennials have a sense of the “entrepreneurial spirit,” but as pleasant as the idea of entrepreneurship may be — with the allure of personal and professional autonomy — many entrepreneurs get their start with both a solid educational background, as well as the help of large loans (which require good credit) or family money. Many an article may talk up the benefits of being self-employed, but there’s an assumption that people are financially stable as is and have the ability to make that leap.
Millennials, however, are struggling with college debt and lack of pay — a mixture that can create even more problems as stress, financial anxiety, and more exacerbate their living conditions. How can you take care of yourself physically or mentally when you can’t even afford to make ends meet? If rent alone takes up over half of your pay, how can you budget your life in order to remain sane and functional? How can you pursue your dreams if you’re already grasping at straws?
Shifting Cultures and Finding Ways to Make it Work
Unfortunately, many of the solutions that could help out millennials and those most affected by wage stagnation are far out of reach. Yes, voting in elections (especially local elections) can have a positive effect on the economy, but even then, growth and change can be slow and rocky. It may take years or even decades before some of the more harmful political decisions of the past twenty years can be reversed or corrected. And in that time, low-income and middle-class people will only continue to struggle. This isn’t to discourage you from voting — quite the contrary, you should always vote in elections if you can — but simply to acknowledge the damage that has already been done, and the amount of time it may take to fix it.
But when political action causes economic insecurity, cultures start to change and adapt. America may not be able to go back to the economy of post-WWII, but the people of today can find ways to adjust.
One of the biggest changes in American culture is how many people are finding ways to downsize or cohabitate as the housing and rental market continues to skyrocket. In fact, studies have shown that millennials are far more likely to cohabitate with intimate partners and put off marriage than past generations — something that is due in part to both changing social and cultural standards as well as slow income growth. It’s much easier to split a house with an unmarried partner than it is to try to find an affordable option by yourself. Additionally, getting married is far too expensive, so many young individuals just put it off.
For single millennials that can afford to rent homes and apartments — but can’t quite afford to save up for a downpayment on a house in a rapidly growing market — they often are forced to find roommates (even fitting in more people than there are bedrooms to accommodate them), live minimally and move often, or even settle for less-than-optimal (often criminal) living arrangements.
However, some millennials are also being forced to take a step back — potentially even moving back in with their parents, something that about 34 percent of young adults (18-34) are now doing. Parents (primarily baby boomers) are then in a unique position of trying to downsize for retirement while also helping their children through financially difficult times. They may even have to continue working past the typical age of retirement (55-65) in order to continue to support their families.
These shifting cultural standards are thus affecting more than just millennials — they’re affecting generations of people in multiple economic classes. Yet, while everyone is busy pointing fingers at each other, the sole responsibility lies on the government and elected officials to find a viable solution that works for everyone. States need to do more to support their workers, and luckily some states are making those changes by increasing minimum wage, investing in job training, and promoting their citizens to incentivize companies to move to that area.
And although it may seem hopeless at times when looking at the staggering changes that have occurred in this country, there is hope to be found in the way people are adapting to those changes and helping others adapt as well: whether it’s through job training and higher education in order to adapt to the changing job market, supporting children who are struggling to find affordable housing, or moving to new states in order to find better economic opportunities. Humans are resilient, and making cultural and economic changes can be a huge investment in itself. Yet it’s an investment worth making, and hopefully as the midterm elections start to take hold and seats start to change from red to blue, government officials will starting working for the people, instead of for the pockets of CEOs.