During a recession, these workers actually see an increase in salary

Want a raise the next time a recession happens? Get a job with Uncle Sam.

People who take a job with the government during a recession tend to see more long-term wage growth compared to those who take a job with the government when the economy is expanding, according to a paper by Duke University researchers recently distributed by the National Bureau of Economic Research.

When the unemployment rate increases one percentage point, new college graduates and other employees working for the government see a long-term wage growth of 1% compared to those who work during a “boom,” the report said.

Long-term wage growth refers to how much an employee’s salary increases over time. In this case, that growth takes three to four years but continues for 10 years thereafter. The researchers looked at 24 years of U.S. federal government employee data for college graduates and other new employees.

Comparatively, individuals who work in the private sector during a recession see long-term negative effects on their wages. Citing 2012 Canadian college graduate data, researchers said every 1 percentage point increase in the unemployment rate, average wages dropped 1.5% initially and then recovered. Wages stabilized after 10 years.

Government hires also see a wage dip during recessions, but their wages bounce back much faster, after just a year, the Duke researchers found.

Don’t miss: Declining fertility rate may predict the next recession

Also see: These 7 states still have fewer jobs than before the recession

Companies are more likely to cut wages than employment as a first reaction to a recession, according to another 2017 research report from the IZA World of Labor, a research network run by the Institute for the Study of Labor, an independent economic research firm. Companies can also cut bonuses, the report suggested.

The good news: The U.S. is on a record-breaking track for the longest amount of time without a recession, going on eight years and 10 months in May (the longest expansionary period was 10 years during the 1990s).

Some experts, however, say a recession is coming. Ray Dalio, the billionaire founder of investment firm Bridgewater Associates, said earlier this year the risks of a recession are rising and he expects one in the next 18 to 24 months.

“Frankly, it seems to be inappropriate oversight to not be talking about the chances of a recession and what that recession might look like prior to the next election,” he said.

Filed in: Top News Tags: 

You might like:

Why real-estate investors should steer clear of Turkey Why real-estate investors should steer clear of Turkey
NewsWatch: Meet the tech-savvy upstarts who think they can finally give Realtors a run for their money NewsWatch: Meet the tech-savvy upstarts who think they can finally give Realtors a run for their money
The Wall Street Journal: Trump slams social-media companies for ‘censorship’ of the right The Wall Street Journal: Trump slams social-media companies for ‘censorship’ of the right
Economic Preview: Sky is clear for sunny U.S. economy, but clouds are forming Economic Preview: Sky is clear for sunny U.S. economy, but clouds are forming
NewsWatch: The questions every investor should ask about Trump’s proposal to radically change how companies report earnings NewsWatch: The questions every investor should ask about Trump’s proposal to radically change how companies report earnings
Saving in a 401(k) for the first time? Here’s what you need to know Saving in a 401(k) for the first time? Here’s what you need to know
The Wall Street Journal: Kofi Annan, former UN secretary general, dies at 80 The Wall Street Journal: Kofi Annan, former UN secretary general, dies at 80
What you probably don’t know about Social Security What you probably don’t know about Social Security

Leave a Reply

Submit Comment
© 2018 Stock Investors News. All rights reserved. XHTML / CSS Valid.