The Earnings Arc

The truth of the matter is, while most graduates believe that their earnings will continue to rise and eventually peak as they approach retirement, research shows that most employees reach their highest earning potential mid-career and then stagnate. This is a curious yet explainable phenomenon.

According to a report published by Payscale.com, “full-time workers with Bachelor’s degrees tend to make the most money in their 40s and 50s.” Recent graduates are seen as having less current ability but a higher potential for continuous learning, growth, development, and career advancement. That being said, they are compensated early in their career at a lower rate but with room to grow. For most young employees, the rate of growth depends on their ability and willingness to take on new challenges, stretch for opportunities, and even test the boundaries of thought, practice, and judgment. With each advancement in knowledge and experience, the rate of pay sometimes increases exponentially as employers perceive their earning potential to be commensurate with their capabilities.

At some point, however, as humans, our desire to excel and drive to keep learning and growing tapers off, and therefore, so does our potential for future advancement and increased salary. Think about a bell-shaped curve that slowly arches upward through time. At approximately the middle of a person’s career, most people are no longer driven to pursue greater responsibility and higher levels. They become content with their success and accepting of their salary. They may even lose interest in the work or industry.

As the arch begins to make the downward turn on a bell-shaped curve, so does the salary of many typical employees. You may consider changing careers or industries only to find that you must start at a lower salary than you were making previously. For many, deciding to switch employers all comes down to salary and earning potential, the weight placed on the former rather than the latter. Why? At the mid-point of our careers, we have become comfortable with our lifestyle and financial position. We may have a small nest egg for the future and plan for retirement as it comes closer into view.

However, again research shows that raises to employees later in their career are few and far between as growth potential diminishes. Employers begin to see the value in hiring new talent to take things to a new level and undervalue the learned experience and expertise of seasoned employees. In other words, management begins to view older employees from the perspective that “you can’t teach an old dog new tricks,” and therefore, they are more willing to spend their budget dollars on younger, more malleable employees.

Let’s take a look at the earning potential of a world-class soccer player. As they progress in their career, improving their skills and their game, in other words, taking advantage of their growth potential, they have a high market value and can demand a high salary. However, as their body ages, no longer having the ability to perform at a high level, they can no longer command an excessive rate of pay and, in fact, have a significantly reduced transfer value.

If you are that employee just obtaining your degree, look at the benefit of your drive, desire, and willingness and capitalize on it. Companies are always looking for new talent with a fresh perspective and new insight.

On the other hand, if you are already at or approaching the mid-point in your career, it is time to take action. If you want to take control of your career and the trajectory that your earnings take, consider what your next move will be and where you place your values. Do not fret! Just because you have reached what some may call the pinnacle of your career, it does not mean that you have to accept the downward slide of earning potential as the inevitable.

1. Are you willing and able to learn new technology and processes?
2. How do you feel about stepping outside of your comfort zone and explore new opportunities?
3. What can you do outside of your traditional career? What are you passionate about? Can you start a side hustle?

For many professional athletes, although their sports career and therefore earnings potential in that industry is dramatically reduced, they now are presented with new opportunities to earn the same if not more money in a different capacity. What capacity are you willing to take on to ensure that the earnings arc does not apply to you? Ageism does not have to be used against you like a stigma that suppresses your potential but rather as an opportunity for growth, advancement, and ultimately, greater earning potential.