In part one of this blog post series, we found that the Class of 2023 is graduating into an exceptionally strong labor market, with the lowest unemployment rate for young adults in 70 years. In part two, we found that young adults are more likely to have predictable work hours, work full time, and have only one job now than in 2019. In the third and final part of our series, we analyze how young workers’ wages have changed over the pandemic and differ across demographic groups.

We find:

• Workers of all ages have experienced stronger-than-usual wage growth in the pandemic business cycle (February 2020 to March 2023)—even after accounting for high inflation—but young workers were not left behind like they have been in previous business cycles.
• Entry-level high school graduates (ages 17–20) saw real wage growth three times as fast as entry-level college graduates (ages 21–24) in the pandemic business cycle.
• Gender and racial wage gaps already exist among entry-level high school graduates. Women are paid 14% less than men on average, while white workers earn slightly more on average than their Black and Asian American/Pacific Islander (AAPI) counterparts.
• Among entry-level college graduates, women and Hispanic and Black workers fall even further behind. Women are paid 16% less than men on average, while Hispanic and Black workers are paid 6% and 11% less, respectively, than their white counterparts on average.

As shown in Figure A below, wage growth was strong for workers of all ages in the pandemic recovery, but young workers experienced faster wage growth (5.9%) than workers ages 25 and older (4.7%). Compared with the previous four business cycles, wage growth in this recovery was extraordinarily fast for young workers. Wage growth was not only significantly above zero for the first time in the early stages of a recovery, it was also 7.1 percentage points faster than the recovery following the Great Recession of 2008 and 14.4 percentage points faster than in 1979–1982.

Policy investments at the scale of the problem in the pandemic helped many workers stay afloat while sparking the recovery. After the huge job losses in March and April 2020 (specifically in industries most likely to employ younger workers), policymakers passed large fiscal recovery packages that spurred frantic rehiring efforts, which gave workers leverage to advocate for higher wages and better working conditions. Further, pandemic relief efforts like expanded unemployment insurance coverage and economic impact payments gave these workers a savings buffer that let them be more selective than normal when accepting a job offer. This meant that, unlike in previous business cycles, young workers’ wage growth was powerfully supported by policy.

Between February 2020 and March 2023, Figure B shows that entry-level high school graduates (workers ages 17–20 with a high school diploma not currently enrolled in school) saw 9.2% wage growth, three times as fast as wage growth for entry-level college graduates (workers ages 21–24 with a college degree not currently enrolled in school). This finding is consistent with the disproportionately strong wage growth experienced by workers at the 10th percentile because workers with lower levels of education typically have lower wages and younger workers tend to have lower wages than older workers because of their limited experience in the labor market.

Figure C below shows that wage gaps exist by gender and demographic group even right out of high school, indicating that factors that some claim explain wage gaps—such as college quality or chosen major—cannot explain the wage gaps we see among those with only a high school diploma. Among entry-level high school graduates, women are paid just 86% of their male counterparts, on average. Hispanic workers are paid more than any other demographic group, while white workers are paid only slightly more than their Black and Asian American/Pacific Islander (AAPI) counterparts. Wage differentials across gender and race and ethnicity are not unique to young workers, these gaps exist for all workers and are due in part to occupational segregation, societal norms, and discrimination.

Figure D shows the wage gaps by gender and demographic groups for entry-level college graduates. As with high school graduates, the gaps here are large and persistent. Women are paid just 84% of their male counterparts on average, which affirms our recent finding that gender wage gaps did not improve over the pandemic recovery despite overall gains by low-wage workers. Across race and ethnicity, AAPI workers are paid more than any other demographic group and Black and Hispanic workers are paid 89% and 94%, respectively, of their white counterparts.

In this blog post series, we found that young workers have not only reached their lowest unemployment rate since 1953, they also have experienced a much faster bounceback than any recovery in recent history. Young people remain most likely to work in leisure and hospitality, retail trade, and education and health services, despite suffering large job losses in food services and drinking places and educational services during the pandemic recession. Further, young workers experienced particularly strong wage growth in the pandemic business cycle.

All of this should be seen as a tremendous policy achievement. The decision to use large fiscal relief and recovery packages to heal the labor market as quickly as possible after the pandemic recession has paid off enormously for the nation’s young workers.

However, policymakers need to lock in these gains for young workers. To do so, policymakers must prioritize full employment, increase the federal minimum wage, strengthen and enforce labor standards, and make it easier for workers to come together and form unions. We also need to strengthen countercyclical policy measures, such as reforming unemployment insurance, so that there’s a better safety net in place when the next recession hits, which history has told us will disproportionately harm our youngest workers.