Young PA Workers Today Earn 10 Percent Less Than Their Counterparts Nearly 30 Years Ago

Greater Education Offers Little Protection for Young Workers While Union Membership Significantly Boosts Wages for Young Workers

(HARRISBURG) – Despite being better educated, young workers in Pennsylvania now earn 10 percent less than their counterparts did some 30 years ago.

According to a new report co-released by the Keystone Research Center in Harrisburg and the Center for Economic Policy and Research in Washington, D.C., Pennsylvania workers between the ages of 18 and 29 have seen their wages stagnate and the quality of their jobs deteriorate since 1979.

Mark Price, Ph.D., labor economist at the Keystone Research Center, said that after adjusting for inflation, a typical young Pennsylvania worker today earns $1.24 per hour less than similar workers did in 1979.

The decline in the earnings of young Pennsylvania workers took place despite a substantial increase in their educational attainment, the new report notes. Between 1979 and 2007, the share of 18-to-29-year-olds with at least a four-year college degree increased from 13 percent to 22 percent. Over the same period, the share of young people without a high-school diploma fell from 14 percent to 11 percent.

“The fact that the wages of young workers have dropped over a period in which those same workers have become more educated is deeply troubling,” said Price. He explained that wage stagnation is linked to the erosion of policies and institutions that once ensured the sharing of economic prosperity among various age groups and income classes. “Things like a steadily increasing minimum wage, labor unions, and an economy dominated by large, stable companies providing quality jobs are no longer as central as they once were,” Price said.

Falling unionization, the decline in the value of the minimum wage, the growth in low-wage work in small workplaces, changes in trade policies, and deregulation have all exacted a heavy toll from young workers, according to the CEPR report. These shifts mean that young workers in entry-level jobs only see their wages rise when unemployment is very low—and unemployment has not been low for most of the last three decades, the reports finds. What’s more, Price added, unemployment is unlikely to be low for the next several years.

The decline in unionization has been one of the most important forces affecting young workers, the report says. This is because young workers who are represented by unions earn more—and are also more likely to receive workplace benefits.  “The typical, young union-represented worker in Pennsylvania earned $15.20 per hour in 2007,” Price noted. “This is $4.22 more per hour than their non-union peers, a difference that, for a full-time worker, adds up to more than $8,000 over the course of a year.”

But only 10 percent of young workers in the commonwealth are represented by labor unions, Price added. “Policy changes that allow workers to more easily unionize would be the most straightforward way of reversing the wage stagnation that has left young workers so much worse off than they once were,” he said.

Other key findings of the report include:

• Between 2004 and 2007, about 10 percent of young Pennsylvania workers were represented by unions. Unions represented 18 percent of older workers (between the ages of 30 and 64) in the commonwealth. 
• Between 2004 and 2007, the median earnings of young Pennsylvania workers represented by unions were $15.20 an hour. Young workers that were not represented by a union earned just $10.98 an hour. 
• Using standard statistical techniques which control for age, education, gender, the state workers live in, and the industry they work in, the report finds that union representation:
  
  
  • raised the wages of young workers by 12.4 percent
  • increased the likelihood that young workers have employer-provided health insurance by 17 percentage points
  • increased the likelihood that young workers have an employer-provided pension by 24 percentage points
  • raised the wages of young men by 14.4 percent and those of young women by 10.2 percent
• increased by 10.2 percent the wages of young workers employed in a group of 15 low-wage occupations—CEPR defines its group of low-wage occupations to include child-care workers, home-care aides, janitors, nursing and home-health aides, security guards, housekeeping cleaners, food preparation workers, cashiers, cafeteria workers, cooks, packers and packagers, ground maintenance workers, stock clerks, teachers’ assistants, laborers, and freight workers.