First jobs matter more than ever, and the ones young people get today aren’t great

Working for a living.
Working for a living.
Image: Reuters/Brian Snyder
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Most of your career earnings take place before age 40, so if you don’t land a high-paying job early, odds are you will be stuck on a lower-earning track for life. First jobs matter, perhaps more than ever before.

A recent academic paper took Social Security records and tracked lifetime earnings for people who started work between the 1950s and 1980s. The economy in the 1950s was more forgiving; there was less inequality among twenty-somethings, and they earned more than their counterparts in later generations, as pay rises steadily shrank for young workers over this period.

For recent graduates, the early signs aren’t good. Inequality is worse and young graduates are paid even less than their parents were at their age. That makes the cost of starting a career in the wrong job higher than it used to be. Lower starting salaries and less job mobility are a bad combination. In 1983, more than 25% of American workers had been in their job less than a 1 year. In 2014, less than 20% had short tenure (pdf, Figure 6).

So where are twenty-somethings getting their start in today’s high-stakes economy? The chart below shows where 23 to 29 year-olds who are not enrolled in school worked in 2016, by job type. The share of men in these roles is in the right-hand column.

The census regularly reclassifies occupations, so job data is not directly comparable across years. But comparing the numbers we have gives us a sense of general trends. Here is where twenty-somethings worked in 1983:

The data reflect our changing economy. There are fewer jobs in manufacturing and administration, which once paid relatively high salaries for Americans without a college degree. Meanwhile, there are more jobs in low-skilled services (food service, retail, and sales), health care, and construction.

Women are still mostly found in lower-skilled jobs, with the notable exception of high-skilled services, like management, law, finance, and business. Aside from that, young men tend to be in higher-paying occupations, particularly technology and science jobs. That suggests that the gender pay gap will persist, and so will income inequality.

On a more positive note, in the 1980s there were fewer people on a professional track—more young workers today have high-skilled service jobs or work in science and technology. This is consistent with data that show some of the widening income disparity comes from more people in the upper-middle class and fewer in the middle class.

Compared with 1983, wage growth is stagnant across many industries, even in relatively well-paid jobs:

Looking ahead, there are even more reasons to worry. Some popular jobs for young workers, administration and transport, could largely be done by machines in the not too distant future. And the growing ranks of people on professional tracks aren’t safe from automation, either.