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That nagging worry that you're not really getting ahead? It's right on. You're not. Especially if you're under 55.

The economic shakeup traumatizing American workers isn't all due to the Great Recession, says demographer Cheryl Russell.

She's the editorial director of New Strategist Publications, a former editor-in-chief of American Demographics magazine and the author of several books on demographic trends.

American incomes have been eroding for years, she says.

The reasons are familiar: "Computers, and then the Internet, have profoundly changed every industry. It is leveling incomes in the United States, because companies can go anywhere for many types of workers."

Manufacturing jobs, once the source of decent wages for people without college degrees, are no longer the bedrock of the economy.

Russell drills deep into U.S. census data for a look at what's going on.

The big picture, she says, makes it appear that we're just treading water economically: Between 1989 and 2009, all American households together gained just 3% in income, after adjusting for inflation. In essence, incomes have stood still for 20 years.

But the big picture is deceptive. It would look much worse except that the massive baby boom generation (born 1946 through 1964) is now in its peak earning years.

The big boomer salaries inflate the average.

The reality, however, is in your own wallet.

Many age groups are losing ground compared with their parents at the same age. The group of people in their peak earning years -- 45 to 54 -- lost more than 7% in household inflation-adjusted income between 1989 and 2009.

Income over the past 2 decades
 All house-holdsHead of household under 25Head of household 25-34Head of household 35-44Head of household 45-54Head of household 55-64Head of household 65+
2009 $49,777 $30,733 $50,199 $61,083 $64,235 $56,973 $31,354
1989 $48,279 $31,171 $49,810 $62,858 $69,352 $51,474 $26,341
% change 3.1% -1.4% 0.8% -2.8% -7.4% 10.7% 19.0%
Sources: Cheryl Russell; U.S. Census Bureau (adjusted for inflation)

Women are an additional wild card in these studies. "If you look at women's incomes you're going to say, 'Wow, big progress,'" Russell says. But that's not because they're paid better for the same work. It's because they got more education and got into better jobs, with bigger salaries.

"They were no longer stuck in the secretary pool," Russell says.

Women's new affluence, along with boomers' earnings, skew the statistics. If not for these aberrations, the erosion in household income would look considerably worse, Russell says.

To dig into the changes, Russell studies boomers ages 45 to 54. Their lives are easier to compare with counterparts 20 years ago. Because so much has changed -- women rising in the workplace, later marriages, delayed parenthood, job losses, adult children moving back in with parents -- it's hard to compare younger workers with those their age 20 years ago.

But when you compare men ages 45 to 54 working full time with those in 1989, you see:

  • Slippage. These are an American worker's highest-earning years, but for all men in this group, annual household income has slipped 11% (from $61,230 to $54,333, adjusted for inflation).
  • College helps, a little. Men of this age with bachelor's degrees are earning 7% less ($77,667 versus $83,453) than their dads did 20 years ago.
  • No college hurts. The worst income erosion happened among men with only high school diplomas: They've lost 31% in earnings over 20 years (from $53,395 to $37,107).

As bad as this looks, it doesn't completely take into account that some of our biggest costs have risen much faster than inflation:

  • Pensions. Few workers younger than 54 have the kind of employer-paid pensions that their parents are retired on. Today, you fund your own retirement plan, and, if you're lucky, your employer kicks in a little. Russell says research shows that private-sector workers who have traditional pensions fell from 62% in 1979 to 33% in 2009.

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  • Health insurance. Not long ago, many workers enjoyed employer-covered insurance with low co-pays and deductibles. Today, many workers have none. Others have very skimpy coverage. Everyone pays more: Average household spending for health insurance grew from $370 in 1984 (that's $764 in 2009 dollars) to $1,785 in 2009.
  • Housing. A new (median-priced) home in 1980 cost 3.5 times the median salary of a man working full time. By 2009, it was 4.6 times a man's salary (a house cost 5.5 times a man's income in 2007, at the peak of the housing bubble).
  • College education. In 1980, a year's tuition at a four-year public university ate up 14% of the median earnings of a man who worked full time. By 2006, it took 30% of his paycheck.

One guy's life

But you don't really need statistics to understand the change. You need only to listen to Dan Spencer talk about his life.

Spencer, 52, lives in an affluent Denver suburb. He has worked in electronics manufacturing for 30 years. The first 20 years were a pleasant ride through successively better jobs at benevolent workplaces with rich benefits and generous pay.

His wife, Barb, stayed out of the work force in those years to home-school their six talented kids, now ages 14 to 27, whose career ambitions include concert music performance, finance, ballet and missionary work abroad.

The past 10 years have been another story entirely. The number of printed-circuit-board manufacturers -- Spencer's field -- with plants in North America fell from 795 in 1998 to 342 last year. Spencer says he's lucky to have work after all the takeovers and plant closings. He can identify nearly a dozen colleagues who fell from affluence to bankruptcy after losing their jobs. And, having changed employers six times since 2000, he now earns just 40% of his 2003 salary.

Today, "we both work because we absolutely have to," Spencer says. Barb Spencer considered returning to school for a master's degree in her field, counseling. But, with tuition costs, lost wages and her likely salary after graduation, they concluded she's better off with her current job -- waiting tables.

Their income may have shrunk to compete in a global labor market, but the Spencer family still faces first-world expenses. And they can't help but cling to some old aspirations. Their youngest is a passionate ballerina who wears through a pair of $76 dance slippers every six weeks.

"Can we afford to have her in ballet? No. But we can't afford to pull her out," says Spencer.

Living the dream

If the pollsters from the Pew Reseach Center asked, Spencer would say he never expects to reach the life that his parents, neither of whom went to college, are enjoying in retirement. His mother and dad both worked for decades on the IBM factory floor. At 86, they have IBM-paid supplemental health benefits and full pensions.

Today's retirees may not realize it, but many of them are living the dream. People 65 and older earn 19% more than their parents did 20 years ago, Russell says. But their children and grandchildren are unlikely to replicate their success. It was built on a workplace culture that now seems like a golden age.

"They reaped all the benefits of the post-World War II economy," Russell says of the "Greatest Generation." They got on track with careers when companies were paternalistic." Unionized employers set the workplace standard, with expensive, defined-benefit pensions that guaranteed a set retirement income plus cost-of-living raises until death.

Spencer expects his retirement to be "donning an orange apron and working part time at Home Depot."

He's not bitter. "Hey, we're happy," he says. "But as far as the future is concerned for the kids, I don't know . . . When I was the age of my oldest son, I thought the world was my oyster. And I don't see much oyster out there these days."

How're we doing? Great!

This kind of lost ground is hard for any society to absorb, but ours is a nation that agrees that children should -- and will -- do better than their parents. We pride ourselves on progress.

Maybe that's why we don't -- or can't -- believe that we're losing ground. We tell researchers that we're doing great. The Pew Research Center, in 2008, surveyed people describing themselves as "middle class." Eighty-eight percent claimed they're doing as well as or better than their parents.

Are you better off than your parents?
All middle class 67% 21% 10%
Men 69% 21% 8%
Women 65% 20% 12%
White 65% 22% 11%
Black 69% 20% 8%
Hispanic 73% 15% 11%
College graduate 62% 23% 13%
Some college 69% 21% 9%
High school 68% 20% 9%
Source: Pew Research Center

Even 68% of those earning under $30,000 told Pew researchers that they're at least as well off as their folks were.

Although well over half of all groups reported doing better than their parents, those most happy with their progress were minorities, married people and those making more than $100,000 a year.

If you're wondering whether the Pew Center made a mistake, it didn't. The National Opinion Research Center, which asks the same question every two years in its General Social Survey, got the same results in 2008:

Is your standard of living better than your parents'?
 Much betterSomewhat betterAbout the sameSomewhat worseMuch worse
2008 31.6% 31% 21% 12% 5%
1998 34% 33% 22% 10% 3%
Sources: National Opinion Research Center General Social Survey, Cheryl Russell

You could argue that a lot has changed since these surveys were done two years ago. But Russell says such responses have been consistent over the years, through good times and bad, and she doesn't believe the results will differ much when the surveys are next updated.

"Actually, I've been railing about this for years. Americans have this perception that everything is progressing and they're getting ahead, and the reality is that they're not," says Russell. "It's been happening, literally, for decades for men."

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She's got two explanations for why, despite these serious losses in earnings, we say we're doing as well or better than our parents:

  • Things feel better. Many of us earn more than we did when we were younger. Salaries rise with years on the job and with increasing skills. As we accumulate some possessions, life doesn't feel like quite the struggle it used to be. We rarely measure ourselves against our parents at our age.
  • Bling is cheap. Essentials like pensions, health care, college and housing may cost more, but there's no question that our homes are bigger than the ones we grew up in and we have lots more stuff -- much of it cheap imports, computers, cell phones, entertainment equipment, toys, clothes, shoes, cars and household goods.

"Our gadgets give us the illusion of plenty," Russell writes in her monthly newsletter. "They have lulled us into accepting a lower standard of living without asking why or demanding that policymakers do something to counteract the downward trend."