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Most American men see their earnings plateau after 35 — but not the top 2%, says an economist

Oct 17, 2023, 12:34 IST
Business Insider
Most American men see their earnings plateau after 35 — but not the top 2%, says an economistGetty Images
  • Top-earning US men experience an "astonishing surge in earnings" between the ages of 35 and 45.
  • That's according to an analysis written by economist Serdar Ozkan and published Monday.
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Top-earning American men experience an "astonishing surge in earnings" between the ages of 35 and 45 while other men see their incomes plateau, according to an analysis by economist Serdar Ozkan published Monday.

American men in the top 2% of earners saw their earnings increase by 150% between the ages of 35 and 45, wrote Ozkan, who is an economic policy advisor at the Federal Reserve Bank of St. Louis.

On the other hand, the median and the bottom 2% of male earners only saw a 15% growth between the ages of 35 and 45.

Most workers see the bulk of their wage increases in the first decade of their careers, and wages grow minimally or plateau after the age of 35, wrote Ozkan.

"In contrast, high-earning individuals continue to witness income increases, albeit at a declining pace, extending until age 55," he added.

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Ozkan's analysis is based on male wage data from Internal Revenue Service tax forms filed between 1978 and 2013, tracking how their wages have changed between the ages of 25 and 55. The study focuses on men due to challenges in getting uninterrupted earning histories for women, per the author.

The difference in wage growth is starker earlier in life. From ages 25 to 35, top earners experience a 435% rise in earnings, compared to a 65% increase for median earners. The lowest earners see only a 16% growth in this period.

Overall, this means the lowest earners earn an average annual income of $15,000 — adjusted for 2005 dollars — across their working lives, per the study.

In comparison, median earners average $50,000 annually across their working lives, while the top 2% earn about $400,000 annually in the same period.

A previous study by the Washington-based Economic Policy Institute on wage inequality published in 2022 showed that the top 10% of earners — including both men and women — are the only group to have seen their income share grow since 1979.

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However, the pandemic also saw bottom earners enjoying higher wage growth than top earners in percentage terms between January 2020 and September 2022, according to a National Bureau of Economic Research paper published in March. However, these increases have been short-lived, per the Federal Reserve Bank of Atlanta.

Ozkan did not immediately respond to a request for comment from Insider, sent outside regular business hours.

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