Are You Dealing With Wage Stagnation?
25th July 2006
A lot has been said about how the US economy is doing better lately. Sure, since about 2003, I’ve noticed a huge change in the economy on a personal level. The reason for that is that I work on contract, for about a year at a time at different companies, so the short term swings in the economy have a huge effect on my weekly paychecks. Here’s what I’ve noticed…
As the economy grew in the 1990’s so did my experience. The combination of the two caused my paycheck to grow. With the dot-com boom (I’m a computer guy), I made more than I thought I ever would. The bubble burst and I took a huge pay cut. Here’s how it’s broke down so far:
- My wages rose 410% from 1993 to 2000. Of course, that’s going from an entry-level salaried position, to a senior position on contract. That also reflects the peak of my earnings, which only lasted a few months at the height of the boom.
- I took a 42% pay cut after 9/11. My employer laid off thousands of contractors. I felt lucky to find a job at all. After quadrupling in 7 years, my wages were nearly cut in half in an instant. That lasted two and a half years.
- My wages have grown again, and I’m darn lucky to be at a place that’s paying me near the top of the scale for my skill set. But one simple fact remains: I’m making no more money than I did in 1999, and I’m not likely to see improvement in the near future.
I don’t mean to complain. In the short term I really can’t. But in the long term I wonder if real wages for college graduates in the US are stuck. These are the good times, and I wonder if I will face another 42% drop over the next few years.
I’ve written about offshoring or outsourcing before, and also the effect of what I call on-shore outsourcing - the bringing of cheap labor to the US (legally or not) to replace skilled and unskilled US labor. A friend of mine no longer works where I do as he was a victm of that practice.
And it isn’t just me that noticed this. I’ve come across two articles on wage stagnation today that highlight the issue. An LA Times writer (I’m linking to a Star-Telegram reprint so you don’t have to register) mentions that wage stagnation has hit college grads hard lately. The Financial Times states:
“The US is now in its fifth year of growth since the last recession. Yet median weekly earnings (wage earners who are at the 50th percentile of income distribution, with half the workforce earning more and half less) have fallen by 3.2 per cent in real terms since the start of the recovery in October 2001.”
And no, I’m not big on answers here, except as where noted in the my links above. It’s just a reminder that our career is the biggest tool most of us have to produce income and we must always be on guard.
Any experiences with wage stagnation out there? Surely someone has hit a dead end, or seen another outsourced in one form or another. Feel free to share in the comments section…
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July 25th, 2006 at 3:54 pm
You’re not the only one to see this. I also hit my peak wage in 2000, and it hasn’t recovered since even though I’m now more competent than I was six years ago. Unlike you I didn’t keep my job (you can thank Bernie Ebbers and his WorldCom creative accounting for that) and I spent the better part of three years unemployed and out of luck.
Eighteen months ago I obtained a contract position with IBM and the wage they paid me is the wage they stuck to the entire time even though I had taken on increased duties that should have warranted increased pay. I finally ended up leaving IBM a week ago for better opportunities, but still nothing to match what I made in 2000.
If you don’t already have a lot of money, you’re going to have a hard time keeping up with the increasing cost of living as wages stagnate or worse. The economy may be doing great, but I’m not seeing any of it.
July 25th, 2006 at 7:49 pm
pretty fascinating. Thanks for being so honest. I took a voluntary paycut in 2000 (switched jobs from a private sector high tech big company to private university) I’m also in the computer biz. I’m finally getting my salary back to where I was due to piddly annual raises. 3% or so. But, I too, should not complain cause I do pretty well and I like what I do. Scares me though…I don’t think I could get a job at my current salary today if I left. (which is a sucky feeling)
Liz
July 30th, 2006 at 10:00 pm
[…] Are You DealingWith Wage Stagnation? […]
August 8th, 2006 at 8:42 am
I’ve made less money every year that I’ve worked since graduating from college in spring of 2003–first, because of a change in the way they structured my pay (I got more time off, lower pay), and second, when I moved to a more expensive city but took a lower-paying job. It hasn’t been a huge change, but it is irritating. The job market is tough. I am someone who is pretty marketable, but it’s hard to compete with executives with 15 years of experience who have decided they want to get out of the corporate life. I work in non-profits.
My wage should be back up to my first year’s earnings in the next year . . . I hope.
November 3rd, 2006 at 9:10 am
I believe that the value of a college degree has been decreasing for the past few years or so. I graduated last year it’s been tough to get a job, let alone a decent salary. I’m competing against experienced professionals for entry-level positions which is pretty disheartening.