11/9/2010 4:19 PM ET|
Getting ahead? You only think so
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.
- 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."
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