Men in their 30s lag behind their fathers in pay
By Greg Ip
THE WALL STREET JOURNAL
Saturday, May. 26 2007

American men in their 30s today are worse off financially than their fathers'
generation, a reversal from just a decade ago, when sons generally were better
off than their fathers, a new study finds.

The study, the first in a series on economic mobility undertaken by several
prominent think tanks, also says the typical American family's income has
lagged far behind productivity growth since 2000, a departure from most of the
post-World War II period.

The findings suggest "the up escalator that has historically ensured that each
generation would do better than the last may not be working very well," says
the study, which was scheduled for release Friday.

The study was written principally by John Morton of the Pew Charitable Trusts,
which is leading the series, called the Economic Mobility Project, and Isabel
Sawhill of the Brookings Institution. Others participating are the Heritage
Foundation, American Enterprise Institute and the Urban Institute.

In 2004, the median income for a man in his 30s, which is a good predictor of
his lifetime earnings, was $35,010, the study says, 12 percent less than for
men in their 30s in 1974 — their fathers' generation — adjusted for inflation.
Just a decade ago, median income for men in their 30s was $32,901, 5 percent
higher than 30 years earlier. The median is the midpoint: half of men earn
more, half earn less.

Sawhill said she isn't sure why men's wages have stagnated. "It seems there's
been some slowdown in economic growth. It's possible that the movement of women
into the labor force has affected male earnings, and it's possible that men are
not working as hard as they used to."

The study suggests that absolute mobility — the rate at which an entire
generation's lot improves relative to previous generations' — has declined in
recent years. But within a particular generation, individuals still can get
ahead if relative mobility, the rate at which the rich and poor trade places,
remains high. Poor fathers, for example, may have rich sons, and vice versa. To
determine whether relative mobility is high would require studying specific
parents and their children rather than broad categories. Morton said the group
will tackle that in a later analysis.

The report also found that between 1947 and 1974, productivity, or output per
hour, and median family income, adjusted for inflation, both roughly doubled.
Between 1974 and 2000, productivity rose 56 percent while income rose 29
percent. Between 2000 and 2005, productivity rose 16 percent while median
income fell 2 percent, challenging "the notion that a rising tide will lift all
boats," the report says.

Sawhill said several factors could explain the divergence: a growing share of
income going to the highest-paid workers, or to profits; an increased share of
labor compensation going toward benefits such as health care; or a decline in
the number of wage earners, or hours worked, in the typical family.

Bill Beach of the Heritage Foundation said increased immigration also could
have pulled down median wages, as most immigrants at first earn less than
native-born workers.