Are Your Biggest Earning Days Over?

Here's a disturbing prediction about your future raises: Around age 40, you'll stop receiving them. On average, raises stop at age 37 for women and age 45 for men. That's according to research by PayScale.com and is based on surveys completed by about 1.5 million people who hold a bachelor's degree or higher.

The reason, explains PayScale.com lead economist Katie Bardaro, is that for many jobs, experience eventually stops improving one's productivity. "You reach a point in middle-age where there is no more learning you can do in your job," says Bardaro. As a result, you stop receiving pay increases for increased competency. (PayScale.com's figures take inflation into account; workers do receive small pay increases as they approach retirement, but they largely reflect inflation and not a real wage hike.)

There are some exceptions to this general rule: Some professions, in which experience continues to add value, continue to see salary growth. Tech-heavy jobs are one example, along with lawyers and engineers, says Bardaro. "You're constantly learning [if you're a lawyer]: How to get clients to trust you, the law, how to win cases," she adds.

In other professions, such as non-physician healthcare positions, the learning curve drops off more abruptly. For pharmacists and nurses, Bardaro says, "You learn everything you need to know to do your job in school or in the first few years of doing it, so you don't have much more to learn." Those positions tend to start off with relatively high pay but don't grow as workers get older.

The gender difference in the age at which salaries flatten is largely explained by job choice, says Bardaro. Men tend to gravitate toward jobs in which growth continues (such as engineering) while women often work in fields with flatter pay curves (such as teaching, nursing, and social work).

Workers who want their salaries to grow over time should go into fields that allows for constant learning and increasing value. Otherwise, Bardaro says, workers should know that their salaries will soon flatten and plan accordingly when making major life decisions, such as buying a home, taking on other debt, or making big purchases.

Workers can also take matters into their own hands with these six strategies to rise above those income constraints:

1. Get more education. The research is clear: More education means higher income, and a lower chance of unemployment. According to the College Board, college graduates face a lower unemployment rate (4.6 percent versus 9.7 percent for high school graduates). Meanwhile, bachelor degree holders over age 25 earn a median salary of $55,700. High school grads earn just $33,800.

Even in fields where pay flattens out, such as teaching, more education allows for a higher plateau. And research by the Census Bureau shows that for those with professional or doctorate degrees, salaries continue growing after middle age, while those with master's, bachelor's, and high school degrees experience a flattening of income.

2. Keep working full-time. One reason women experience such a steep pay gap compared to men is that they tend to take job breaks and work shorter hours after having children. A survey by the University of Chicago Booth School of Business also found that mothers tended to pursue fields that didn't pay as well as the lucrative ones men pursued. And among those women who leave the workforce, a significant portion find it difficult to ever return. According to the Center for Work-Life Policy, only 4 in 10 women who stop working are able to find full-time jobs again.

Men in the Chicago study didn't experience the same pay decline after they became fathers. In fact, fatherhood had no effect on men's earnings, work hours, or career interruptions. (Other studies have found that men's income actually increases, on average, when they become fathers, perhaps because they feel more pressure to support their growing brood.)

3. Choose your field carefully. Career blogger Penelope Trunk, who worked with PayScale.com to generate these findings and wrote about them on her blog, urges women to consider choosing male-dominated fields that continue to experience high salary growth well into middle age. Engineers, doctors, and lawyers, for example, continue to become more valuable--and more highly paid--as they get older. She also suggests specializing within your field, which can lead to higher income as well.

4. Negotiate your salary. According to Linda Babcock and Sara Laschever, authors of the book Ask For It: How Women Can Use the Power of Negotiation to Get What They Really Want, many people--especially women--miss out on higher starting salaries, store savings, and other benefits because they fail to make simple requests. In fact, Babcock and Laschever calculate that by not negotiating a first salary offer, a worker can lose over half a million dollars by the time he or she retires. Even if the salary is set in stone, asking for a better deal on benefits, flexible work hours, or vacation can result in a more appealing employment package.

5. Boost your pay with a side income. Some 6.9 million Americans, or 4.8 percent of the U.S. workforce, hold multiple jobs, according to the Bureau of Labor Statistics. "It might be a business, part-time contract work, or something else with lots of flexibility," says career coach Ford R. Myers of the ideal second job. In other words, generating multiple streams of income need not mean finishing up a 9-to-5 job then running over to a second job delivering pizzas at night. A recent survey by Elance, a website that connects freelancers with work, found that about 3 in 10 respondents hold down a full-time job while freelancing on the side.

6. Be an entrepreneur. When you work for yourself, you can give yourself raises. Tara Gentile was working in what she calls a "dead-end retail job" at Borders, earning $28,000 a year as a store manager, when she decided she'd be better off launching her own business as an entrepreneur coach. Within a year and a half, Gentile, 28, was bringing in about $150,000.

Gentile is part of a new wave of people opting to work themselves, driven by both economic necessity as well as a desire to take more control of their income. "The declining economy forces people to think more creatively about how they earn money, and in general, people are questioning the idea of job security more than ever before," says Chris Guillebeau, author of The Art of Non-Conformity. Entrepreneurial activity is at a 15-year high, according to the nonprofit Kauffman Foundation, with growth strongest among 35- to 44-year-olds.

With a little ingenuity, workers can break out of the earnings ceiling and continue boosting their income as they get older.

Twitter: @alphaconsumer



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