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."