Pay Goes Nowhere After 40

In a recent project with blogger/career guru Penelope Trunk, we examined the age at which salaries top out. It turns out pay goes essentially nowhere after age 40. Of course there are some differences across gender, degree level and jobs, but the real lesson is don't expect a raise of any real value in the 25 or so years before retirement.

In this post I will discuss some interesting insights from the data, as well as how the age at which pay growth stops differs across various worker characteristics.

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Pay Grows Longer for Men than Women

Across those who hold at least a bachelor’s degree pay stops growing after age 40. However, there are differences when we look across genders: pay tops out at age 37 for women, but continues to grow until age 45 for men.

The chart below shows the real growth of median pay from age 22 (the typical age of a college graduate) to age 67 (retirement age). It is hard to ignore just how flat pay is from age ~40 until retirement.

It is important to note this is the change in real pay, not nominal pay. In other words, it is perfectly reasonable to assume you will get raises well into your 40’s, but these raises are often barely better than inflation.

Pay by Age and Gender

In addition to pay growth stopping sooner for women, the level of pay where pay growth stops is lower for women: $61,000 vs. $95,000 for men.

However, as we’ve discussed in this blog as well as a project with The New York Times, women earn less than men on average due largely to job choice, not due to sexism in the workforce, as often touted. Common jobs among women are teachers, social workers, nurses, etc.; jobs that make the world a better place, but not jobs known for raking in the big bucks.

Pharmacists vs. Lawyers: An Epic Battle of Pay Growth

Although pay generally stops growing around age 40, it can depend on your job. Pharmacists are known for their 6-figure salaries straight out the gate, but their pay growth is essentially non-existent. In comparison, Lawyers typically have a starting pay about half of that for Pharmacists, but pay growth for Lawyers is better than most jobs.

The typical starting pay for a Pharmacist (age 24) is $104,000, while the typical pay for a Pharmacist at retirement age (age 67) is $114,000 — a total pay growth of only 10%, most of which happens in the first 10 years.

Lawyers have a typical starting pay of $56,000, but this grows to be over $135,000 — a total pay growth of 141% (14x that of Pharmacists). Furthermore, Pay growth for lawyers lasts well into their 50’s, which is longer than most jobs.

Therefore, in the above example Pharmacists represent the Hare and Lawyers represent the Tortoise in the iconic children’s story — Pharmacists start out well, but are eventually overtaken by the Lawyers.

However, since Pharmacists are paid better to start, typical lifetime earnings for Pharmacists and Lawyers are roughly the same. The real win is for Lawyers who earn pay higher than what is typical (the median) since the spread in pay between top earners and bottom earners is much higher for Lawyers than it is for Pharmacists.

For example if we look at the 75th Percentile Pay (25% earn more; 75% earn less) across age for these two jobs little changes in the way of pay growth for each: Pharmacist pay grows 9% (from $115,000 to $125,000), while Lawyer pay grows 140% (from $77,000 to $185,000).

The real difference is in the level of pay. Lawyers reach the Pharmacists’ top pay in about 10 years and then quickly pass them. Therefore, the lifetime earnings of the Lawyers exceeds those of the Pharmacists due to their higher pay growth.

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Katie Bardaro
Research Analyst, PayScale, Inc.