Although people ages 25 through 34 have the highest level of educational attainment among Indianapolis residents, they do not also have the highest incomes. Older residents, especially those ages 45-64, earn more. People over 65, who are mostly retired, have an income distribution similar to that of young people.

Source: American Community Survey

This chart depicts income for Indianapolis households, sorted by the age of the primary householder. It shows that higher incomes follow age. Experience is a powerful factor in the labor market, and incomes rise with years.

Among households where the primary householder is younger than 25, only 12.5 percent earn more than $50,000. This includes single people just out of college and young married couples in which both are working, as well as dropouts. In the 25-44 cohort, the share earning above $50,000 increases to 45.1 percent. The share earning low incomes falls by more than half, from 52.7 percent to 24.8 percent. Since relatively few workers get additional education or training after age 25, it seems probable the rise in incomes and drop in low-income households after age 25 is a function of job experience and seniority. It could, however, also be explained by more double-income households in the older group.

What happens above age 45? Workers of the 45-64 cohort – which would include most workers up to their retirement – earn the highest wages of all. Just over 50 percent earn above $50,000. The share of workers earning above $100,000 increases to 16.6 percent among the 45-64 cohort. Since this older group is likely to have fewer new marriages, the increase over the 25-44 cohort cannot be attributed to new double incomes. The best explanation for the income increases observed here is the value of experience and seniority.

We often hear today that young people expect high wages from the start. They don’t want to “pay their dues” or “work their way up the ladder.” Rather, they “want it all, and they want it now.” This table shows that the labor market and wage structure isn’t set up to accommodate that wish for the majority. The rewards are available, and about 5 percent of workers under 25 earn more than $75,000. But for most, premium wages will come only with time.

  
 


   
     
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