Why You Need Every Raise You Can Get Before You Turn 40
Long Story Short
We tend to assume that as we get more experienced and established in our careers, our earnings will rise proportionally.
As fresh-faced interns we barely scrape by, but by the time we’re moving into managerial roles in our 30s and 40s the bank balance tends to look healthier.
However, new research has indicated that we shouldn’t expect upwards trend to continue past the age of 40 because things actually start to get worse from that point on.
A report from Liberty Street Economics at the Federal Reserve Bank of New York has analysed wage growth and found that while it is pronounced and relatively rapid at the start of a career, it declines strikingly by the time you get to 40.
“Wages tend to rise early in a worker’s career, flatten out mid-career and then decline as the worker approaches retirement. By the age of 40, real wage growth has typically declined to around zero,” they said.
The logic behind the stats seems to be that once you reach the age of 40 you tend to stop learning new skills, become less willing to move in search of better pay and often have other primary focuses such as family.
The report explains that: “The fraction of the US population in the fast real wage growth phase has declined from close to 60 percent in the 1980s to the mid-40 percent range recently. A greater fraction of the US population is now in the flat and declining life-cycle phases of wage growth.”
In many ways earning money is like going to the gym. If you haven’t made big gains before the age of 40, you’re unlikely to start getting them afterwards.
So maybe it’s time to march yourself into your boss’ office and demand a raise before it’s too late…
Own The Conversation
Ask The Big Question
What about people who make career changes later in life?
Disrupt Your Feed
It seems strange that we don’t value experience in the workplace more highly.
Drop This Fact
A recent study from the University of Wisconsin found that women ask for pay rises as often as men but men are more likely to receive them.