Wage Inequality and the Rise in Labor Force Exit: The Case of US Prime-Age Men

[brooklynite]

Federal Reserve Bank of Boston

Data indicate that more frequent labor force exit among men without a four-year college degree has been driving the decline in the US prime-age (25 to 54) men’s labor force participation rate over the last 40 years. At the same time, non-college men’s earnings measured as a share of the average earnings of all prime-age workers have fallen by more than 30 percent since 1980. In light of these parallel trends, this paper investigates whether prime-age noncollege men are more inclined to leave the labor force when their expected earnings fall relative to the earnings of other workers in their labor market. The empirical model takes into account that a job not only provides economic security but also affirms a worker’s social status, which is tied to their position relative to their age-range peers. The sample consists of state-occupation-level panel data on labor force exit rates, occupation earnings, and job loss risk matched with information on the state-level earnings distribution and a set of state socioeconomic controls over the period 1980 through 2019.

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[TheBlackAdder]

1. From the IT side, those over 60 working on legacy systems see pay increases and jobs into their 70s.

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Younger people shy away from "legacy systems" who have been deemed dinosaurs since the 80s, yet still power most banking, financial exchange and insurance environments to some degree, with little chance of sunsetting in the foreseeable future. While the younger talent sees vast competition and job instability with newer and super-saturated fields, the legacy systems are still running as they always have and the exit of those in that niche only further reinforces the stability of those remaining. Younger talent who train in those legacy areas will then become the senior staff in 5-10 years, by that time their average annual pay will be around $200K or more.

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[Midnight Writer]

2. As a High School only graduate, I dropped out of the labor force at the age of 50.

I had a plan since I was a teenager to "retire" early, and I followed through on it. Saving and investing over 30+ years. Thanks, Mom, for teaching me the value of saving and investing. 24 years later, I have more wealth now than when I quit.

I ain't rich, far from it, but despite my low income, I have enough stashed back that I ain't worried.

I'd rather spent my time chasing my own happiness than busting my ass serving a big bossman.