First Decade in Workforce Heavily Shapes Future Earnings

The Federal Reserve Bank of New York has determined that the first 10 years in the workforce could have an outsized affect on future wages. Bank economist discovered that the largest growth in pay occurred in the first decade of employment as the relevant skills for a career are developed and rewarded by employers.

Workers in the 95th percentile see the greatest upswing with wages more than doubling in the 10 year period with those in the 99th percentile receiving up to a 1400 percent increase. While that is good news for the doctors and engineers of the world, the lower fifth of earners have less to be excited about. Those at the bottom of the wage scale tend to have smaller pay bumps in all periods and an earlier decline. An author of the paper offered sage advice when he said to start saving young to prepare for when your earning potential becomes reduced later in life.

See Danielle Paquette, Your Lifetime Earnings are Probably Determined in Your 20’s, The Washington Post, Feb. 10, 2015.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.