Workers of all ages are getting pay raises — a huge relief for those worried about their everyday bills getting more expensive these days — but older employees’ increases can’t compete with inflation, a new study found.
Older workers, defined as ages 55 and up, saw their wage growth trend upward at the end of 2021, but when adjusted for inflation, that wage growth was actually negative in the last year, according to a Schwartz Center for Economic Policy Analysis report. Midcareer workers, between the ages of 35 and 54, also dropped below 0% during that time frame, while workers 16 to 34 years old saw inflation-adjusted wage growth move upward.
The wage growth for older workers was slower than their younger, midcareer colleagues, though that is a pattern that has persisted during the pandemic, researchers said.
Aside from fatter checks, another positive result of increasing wages is that the pay gap between lowest and highest earners is diminishing, the researchers found. Those in the lowest-paying jobs were the ones with the highest wage growth, while older workers in the middle had about the same median wage growth in the last six months as they did right before the pandemic began in the early months of 2020. There was no significant difference when this wage growth was broken down by gender, race or education.
Although the lowest-paid workers did see the highest raises, they were also more at risk of being pushed out of the labor force because of the pandemic. “Their plight is not reflected in the wage numbers,” the researchers said. “Of the many older workers who disappeared from the labor force during the pandemic, most belonged to this lowest-paid group, which is about one million workers short of what we would normally expect, absent the COVID-19 shock.”
Americans are seeing rising inflation in higher gas prices, grocery bills, rents and other everyday spending. The U.S. inflation rate hit a 40-year high of 8.6% in May. In response to this harrowing situation, the Federal Reserve announced a half-point hike in the federal-funds rate, which would combat inflation but also push interest rates up for borrowers using credit cards or looking to buy homes or cars.
Some retirees are changing their minds about retiring, potentially due to high inflation and market volatility deflating their investment account balances. While there aren’t as many people coming out of retirement as there are people who left the workforce during the pandemic, the rate of “unretirement” did reach its record level in more than a decade, the study found.