Rogé Karma

they looked at how has the age pay gap, they call, changed over time.

So this is the gap in pay between workers under 35 and workers over 55.

And basically what they find, again, they're looking at wages here, not employment, but they find that in the United States, over approximately the last 40 years, the age pay gap has increased by 61%.

In Italy, it's increased by 96%.

In some European countries, it's actually even higher than in the U.S.

And that is functionally the equivalent of if you're a young worker making the median salary $50,000, $60,000, a 61% differential means you're functionally losing out on a $10,000 to $20,000 bonus every single year.

And that is basically this longstanding structural trend that has been happening for decades now.

The primary explanation they give in the paper is it's exactly because of the aging of the population.

We were talking earlier about this sort of game of musical chairs in the economy.

You can think about this game of musical chairs also within firms, right?

With older workers, as they age out of the labor force, they give up their positions.

Then the middle manager below them ends up taking their position.

And then everyone moves up and a new young person gets hired.

And what has basically been happening is as life expectancies have increased, older workers are just hanging on to their jobs longer, right?

And what that has basically done, it has not destroyed the game of musical chairs, but it has slowed it down.

It has made it so that the jobs are opening up five, 10 years later than they otherwise would because workers are staying in the workforce longer.

And basically what that means, the upshot of this from the paper is that

There is this concept that economists use called peak earnings.

And it really matters not only what you end up earning over your lifetime, but when you earn it.

Because that determines when you can afford a home, when you can start a family.