Little wonder then why there is no wage growth as employers continue hiring mostly those toward the twilight of their careers: the workers who have little leverage to demand wage hikes now and in the future, something employers are well aware of.
Do older workers really have “little leverage to demand wage hikes?” I think it probably depends on the worker and the job. For relatively unskilled, repetitive work, employers will hire whoever is most productive and reliable for the price they want to pay. They’ll pay what it takes to keep those workers aboard and still make a profit. No offense to the younger generation, but the older generation doesn’t stay out and party and shows up ready to work.
I am sure you have had something like the following experience. I walked up to the busy checkout line at the local Barnes & Noble, where a clearly elderly gentleman proceeded to check out the rather complex combination of books, gift cards, and electronic transfers I wanted to buy. He proceeded flawlessly, and I finally had the temerity to ask, “How old are you?” “Eighty-four,” came back the answer; “I like to stay active, and I get to meet a lot of interesting people.” We had a quick conversation about how much more common people like him are today, and I moved on. I got the definite impression that he could live without the income but preferred working. I also recalled my 17-year-old daughter checking me out at Barnes & Noble 20 years ago. So I walked around and sized up the present-day staff and found an age range decidedly skewed from what I remembered 20 years earlier.
Older people may simply be willing to work for less money, although I don’t think Barnes & Noble is paying high salaries to any of its retail clerks. Some have other income sources, such as Social Security. Those over 65 have Medicare, which reduces the employer’s benefit headache. Younger workers have neither advantage.
Nonetheless, I’m still surprised to see younger workers losing so much ground. I hope it’s because they’re busy learning new skills. That’s what we really need.
The Gig Economy Is the New Normal
But there may be something else happening to skew the work force age distribution. There is growing awareness of what is being called the “gig economy.” My hedge fund friend Murat Koprulu has been busy researching and documenting this phenomenon and regularly regales me with what he finds. He goes and spends evening and weekends with young gig workers, trying to figure out what it is they really do and how they make ends meet in New York City. It turns out they need a lot less to support their lifestyle than you might imagine, and they prefer working intermittent gigs, being able to do what they want, and having no boss.
A close look at the data indicates that the gig economy is indeed large and growing. Pushing this growth are Generation Xers, who typically prefer more flexible work arrangements, and Millennials, who often have no other choice. The gig economy is rapidly changing the country’s economic landscape – for better or worse.
It’s not just Uber driving or AirBnB. There are literally scores of websites and apps where you can advertise your services, get temporary or part-time work, and do so from anywhere you happen to be. Some “gigs” actually pay pretty good money, but they are for people with specialized skills who prefer to live a somewhat different lifestyle than the typical 9-to-5’er does.
There is a great deal of debate among economists about how big the gig economy really is. It doesn’t seem to show up clearly in the BLS employment data. Typically, we would expect those working in the gig economy to appear in the self-employed category, but that category is actually drifting downward in numbers, relatively speaking. So the Wall Street Journal recently published an article pooh-poohing the concept of the gig economy.