Study: ‘New economy’ arrests worker mobility

The promise of upward mobility — a centerpiece of the American dream that anyone can get ahead with hard work — may have disappeared with the 20th century.

“Of all the changes in the economy over the last 30 years, this one is perhaps the most important: we have created a deeply polarized job structure, where growing numbers of workers are permanently stuck in low-wage and dead-end careers, with little chance of entering the middle class. This growth in immobility is the signature theme of the new economy,” says Annette Bernhardt, a senior researcher at the Center on Wisconsin Strategy.

Bernhardt, one of the authors of a new study in the book “Divergent Paths” said 90 percent of white male workers can expect to have lower wage growth over their lifetime than the cohort that preceded them.

Bernhardt and co-authors from the University of Washington and New York University analyzed data from a national survey that tracked two groups of men, each for different 16-year periods, through the early, key wage-earning years of their careers. Nearly 5,200 men were involved.

Their key findings indicate that in contrast to previous periods of economic growth, the new economy has not distributed prosperity equally, causing inequality in lifetime wage growth to rise rapidly in the 1980s and 1990s. The gap between the high and low achievers has widened by some 20 percent.

Most college graduates see lower wage gains now than in the past. Only those in the small “finance, insurance and real estate” sector are consistently posting higher wage growth.

Men with some college education, such as an associate degree or technical training, have lost even more ground. Few now see any payoff in a two-year degree, and the typical man in this group can now expect their wage growth to look much like that of a high school graduate.

Perhaps the most troubling new phenomenon is the striking increase in low-wage careers. The percentage of workers caught in dead-end, badly paid jobs over the long run has more than doubled — from 12.2 percent of workers entering employment in the late 1960s and early ’70s, to 27.6 percent of workers in the ’80s and early ’90s.

Growing job instability seems to be one of the main factors driving these changes. The rewards for changing jobs early in the career, a traditional route to upward mobility, have evaporated. And the rewards to building tenure with an employer in later years are being lost, because job instability has nearly doubled among workers in their mid-30s.

Bernhardt said their study had to be restricted to white males because of limitations in the data collected in the first survey — women were not consistently asked the same set of questions as men, and more than half of the minority sample dropped out of the survey. That made meaningful statistical comparisons impossible.

“This study tells us that the negative impact of economic restructuring is not just happening at the fringes of the work force,” says Bernhardt. “It is happening to white men, traditionally the most protected group, at the heart of the work force.”