On Labor Day, U.S. workers are feeling more confident about their jobs than they have in three decades. Even more, job pay satisfaction has surged among young workers.
Millennials and Generation Z are happy to have a job and to get the pay they want.
According to a new survey by The Conference Board, a business research organization, the overall share of workers who are satisfied with their paychecks rose from 43 percent in 2017 to 46 percent in 2018. That mirrors federal data indicating wage growth has started to accelerate.
However, among Millennials (born 1981 to 1996) and Gen Z (1997 to recently) worker pay satisfaction skyrocketed an impressive ten points (from 36 percent to 46 percent). When nearly half of young people are satisfied with their pay, arguments in support of a strong economy may resonate with those voters and arguments that the economy is doing nothing for workers will ring hollow.
We do note that Gen X workers have the highest wage satisfaction at 48 percent, but the growth over the last year has just been a few percentage points. For Baby Boomers and older workers, there was no increase in wage satisfaction at all.
That underscores just how much young workers have reaped the benefits of the recent rise in wages compared to other generations.
Two important factors driving pay increases for (young) American workers:
A strong jobs-creating economy.
Better-skilled labor force.
Young people tend to move from job to job as they acquire skills and experience. Pay increases are a benefit of that. With over 7 million unfilled positions right now, a young person can leave their job and have confidence in their ability to secure a new one.
In a slow economy and a sluggish job market, job mobility is not there and workers will hunker down in their jobs — fearful they won’t be able to get another one.
With fewer applicants for available positions or to retain quality talent, employers are increasing salaries and boosting benefits. This kind of pressure is driving wage growth nationally.
Skills also matter. Young people with coveted skills are more easily able to land a better-paying job.
This story in the Wall Street Journal explains:
Ira Blossom graduated from Villanova University in 2013 after studying psychology, computer science and cognitive science, and having completed several internships during his college years. An early job doing user experience design for a government contractor in a rural town—“I literally saw tumbleweeds on my drive to work,” he says—paid well and put him in a strong position to negotiate future compensation.
Mr. Blossom, 28, moved to New York City and in early 2015 started a job at Alphabet Inc. ’s Google, making a base salary of around $110,000. Following two promotions and experience working on large products, his salary has increased by more than 50%. Bonuses and stock grants bring his total compensation to more than $250,000.
“I feel great,” said Mr. Blossom, who is now a research manager with Google Cloud. “I’m right on market value if I were to switch to another top tech firm.”
That’s the sweet spot for workers, but unfortunately, there are many workers who lack the skills for available positions where they live.
Retraining and workforce development initiatives will be critical in helping these workers advance, but so will a social change in perceptions about life-long learning and the need for every kid to go to college.
If the economy continues to be strong, we can expect that the rising pay will help Millennials and Gen Z pay off debt, start families, and purchase homes – all activities that will stimulate the economy further and set these generations on a stronger economic footing.