A new analysis from the Economic Policy Institute shows what a lot of younger Americans have probably noticed for themselves: even if you're lucky enough to have a job, it's still tough to get ahead. Over the last decade, wages for younger male college grads have plummeted by 11 percent, while women college grads saw their paychecks drop by 7.6 percent. Overall, wages overall rose 3 percent during the same period. That's not great, but at least it's not in negative territory.
European economies are infamous for sky high unemployment and low wages among younger workers, but problems have been brewing here too for quite a while. The TV show Friends may not be widely-recognized for its economic forecasting, but a 1995 episode called "The One with Five Steaks and an Eggplant" actually seems prescient in summing up the situation younger Americans face some 15 years later.
In case you haven't caught any of the seemingly endless reruns lately, three of the characters (Chandler, Ross and Monica) are reasonably well off. They're on the road to promising careers in fields that seem to offer a solid future, and they're generally financially comfortable. By contrast, Rachel, Joey, and Phoebe cycle through a series of bummer jobs, often struggling to make ends meet.
In the steak/eggplant episode, the six go out to dinner to celebrate Monica's recent promotion. At a posh restaurant, the more prosperous friends enjoy a good meal and generally make merry. Meanwhile, their economically-stretched pals nervously scan the menu for the cheapest selections, but even chicken is pricey. Outrageously pricey. At one point, Joey asks "What are these, like famous chickens?"
The uncomfortable dinner out is a reasonable analogy for what's happening to younger people in today's workplace: If you're well-educated and in the right field, you're probably on your way. If you're not, living the good life could be out of reach.
The amount of education you have is the starkest dividing line. Despite the generally bleak jobs picture in 2010, college graduates with doctoral degrees had an unemployment rate of less than 2 percent and typically earned more than $1,500 a week. If you had a B.A., the jobless rate was just over 5 percent, with pay averaging more than $1,000 weekly. For workers with just a high school diploma, unemployment topped 10 percent with weekly wages of $626. The Bureau of Labor Statistics lays out the gaps in a graph tellingly entitled "Education Pays."
But the kind of education you have matters too. As the New York Times recently reported, healthcare majors graduating in 2009-2010 had an unemployment rate of 5.4 percent, well below the overall national average. Graduates who majored in the humanities and the arts faced a tougher job market. The highest unemployment rates were for architecture grads -- a stunning 13.9 percent.
And the importance of picking the right field is likely to become even more crucial. In the past, technology and globalization mainly affected less-well-educated workers. Now, the potential job loss is creeping up the education ladder. A study by the National Academies reported that Australian radiologists already read MRIs of American patients, Costa Rican accountants help prepare the tax returns of U.S. businesses, and big companies like GE do much of their R&D overseas . In years to come, if a college-educated Brazilian or South Korean can sit down at a computer and do your job just as well as you can, then your economic future is at risk.
And in another cruel fact of economic life, younger Americans who got snared in the Great Recession may not be able to bounce back even though the U.S. economy seems to be recovering. Economic studies show that people who come into the workplace in a "bad" jobs market often have lower salaries over their entire career. When the job market is tight (and when you have college loans to pay) there's pressure to take a job quickly even if it doesn't use all your their skills and education. But according to Austan Goolsbee, former chair of the White House Council of Economic Advisers, younger employees tend to establish their base salary and accumulate much of their wage growth in their first decade on the job. When you spend years languishing in a job that don't pay much or offer much room for advancement, you may never be able to catch up.
In the Friends episode, there's a brief spat over the how to split the bill for dinner, but by the end of the program, the six friends are all friends again. It's that kind of show. Real life is another matter. There are a lot of angles to the jobs crisis, but this is one of the most important: if we don't start thinking seriously about to build an education system, a counseling system, and a job market that offers genuine opportunity for younger workers, both we -- and they -- will be paying the price for decades to come.