Hard looks at joblessness, retirement funding, and Generation Jones

Many members of “Generation Jones,” that span of late Boomers and early Gen Xers who are in their middle years, face tough times right now. This cohort has been hit especially hard by the ongoing economic crisis, with many losing jobs in mid-career and finding it difficult to obtain new employment and to save for retirement.

Decades ago, many Gen Jonesers confronted a rough economy while launching their work lives. During the late 70s and early 80s, the economy was in severe recession, inflation ran very high, and employers were cutting back or eliminating pension plans. Academic studies indicate that graduating into a recessionary economy can impair earning power for years. So this group has been unlucky in terms of both entry-level and mid-life labor markets.

I concede my bias on this topic. I’m a member of Generation Jones, and these realities are hitting many among my age group. As the following pieces indicate, we’ve got a lot of work to do in order to rebuild both opportunity and a safety net. Here goes:

Ann Brenoff, blogging for the Huffington Post, says that she’s bombarded by advertising appeals from retirement planners, but the real problem is that most people lack sufficient funds to invest for retirement, period:

My inbox is bombarded daily with pitches from retirement planners who claim to hold the secret to my “dream retirement.”

…Here’s the problem I have with them: They ignore the elephant in the room, which is, it’s too late for most boomers to join their party. Spending less and saving more — if even possible — won’t close the gap between what we have and what we will likely need.

…What I don’t understand is why everyone isn’t talking about the crazy awfulness that awaits us — and by us I mean the vast majority of people who are woefully unprepared for retirement.

How much money do we need to save for retirement? Paul B. Brown, writing for the New York Times, discusses a new book by finance professor and investment expert Richard C. Marston, Investing for a Lifetime:

Although Fidelity Investments garnered a lot of attention two years ago when it declared that you would need eight times your current salary to “meet basic income needs in retirement,” Mr. Marston disagrees. “Despite the fact that it is very difficult to save eight times income, the goal the company proposed seemed too low to me,” he says.

If you thought eight times current income was daunting, Mr. Marston’s default position will stun you. He says it can easily come to 15 times what you are earning now.

Okay, so Prof. Marston recommends saving fifteen times one’s current income?! Only the tiniest percentage of U.S. workers have retirement portfolios on track for that. The gap between the realities facing most Americans and the numbers being recommended by personal finance experts is bonkers, simply mind blowing.

Kevin Kusinitz is a 58-year-old writer who has been unemployed for nearly two years. In this piece for Next Avenue, he reflects upon being part of an age group being passed over for jobs but too young (and broke) to retire:

Like a lot of people around my age, I really didn’t pay close attention to the unemployment situation until I was in the thick of it myself. It was only then that I started reading the heartbreaking stories of perfectly good workers in their 50s who, like me, were shown the door by middle managers all apparently sharing the title: Executive Vice President of Keeping My Own Job by Any Means Necessary.

After decades as a right-of-center kind of guy, I was shocked to wake up one day thinking, “Oh my God, now I know what Michael Moore has been talking about all this time.”

…I’m no sociologist but I predict if this trend keeps up (and, frankly, why shouldn’t it?), the next decade is going to see a spike in older people moving in with their adult children, becoming homeless or even committing suicide because they will have no other options.

Jessica Bruder, writing for Harper‘s, explores the subculture of older American workers who have lost steadier jobs and who now roam the country in vans and camping vehicles in search of extended part-time work such as seasonal tourist sites and warehouse gigs. You’ll have to get a copy of the August issue or subscribe to access the online edition, but here’s the lede from her story:

On Thanksgiving Day of 2010, Linda May sat alone in a trailer in New River, Arizona. At sixty, the silver-haired grandmother lacked electricity and running water. She couldn’t find work. Her unemployment benefits had run out, and her daughter’s family, with whom she had lived for many years while holding a series of low-wage jobs, had recently downsized to a smaller apartment. There wasn’t enough room to move back in with them.

“I’m going to drink all the booze. I’m going to turn on the propane. I’m going to pass out and that’ll be it,” she told herself. “And if I wake up, I’m going to light a cigarette and blow us all to hell.”

Her two small dogs were staring at her. May hesitated — could she really envision blowing them up as well? That wasn’t an option. So instead she accepted an invitation to a friend’s house for Thanksgiving dinner.

Tom Raum, writing for the Associated Press, examines the flattened “workforce-participation rate”, i.e., the total number of employed + job seekers, and reports that many of the long-term unemployed are simply dropping out of the labor market after efforts to obtain jobs have been repeatedly unsuccessful:

But perhaps the most significant factor is unemployed workers “who just drop out of the job market after one, two or three years of looking for work and not being successful,” said Carl Van Horn, a professor of public policy at Rutgers University who studies workplace dynamics and employment trends.

Recent surveys suggest more and more long-time unemployed workers are abandoning the search for another job and leaving the nation’s workforce.

“And they are disproportionately older workers,” Van Horn said. “We have a large number of older (unemployed) workers who are not old enough to retire, yet they are facing discrimination in the workplace and have found it nearly impossible to get another job.”

Is the Social Security system about to go under? You might believe so if you listen to hard right pundits who demonize anything to do with a government safety net, but in reality Social Security is doing much better than many private and public pension and savings plans. This article in YES! magazine offers a more sensible look at the situation. In an excellent set of infographics, managing editor Doug Pibel explains that the Social Security Trust Fund has sufficient funds to pay out expected benefits for the next two decades and that relatively manageable tax fixes can ensure its longer term viability:

Social Security will never “go broke.” As long as people are working, Social Security will have money. . . . There is now $2.8 trillion in the Social Security Trust Fund, which will fully cover expenses for about the next two decades. To make it work after that is pretty painless — we just have to decide who pays.

So far, Congress has refused to extend unemployment benefits for the long-term jobless, a policy choice that disproportionately affects older individuals who have been experiencing severe difficulties re-entering the workforce. In a piece for FiveThirtyEight.com, Ben Casselman explains that arguments against such an extension aren’t panning out:

The case against extending unemployment benefits essentially boils down to two arguments. First, the economy has improved, so the unemployed should no longer need extra time to find a new job. Second, extended benefits could lead job seekers either to not search as hard or to become choosier about the kind of job they will accept, ultimately delaying their return to the workforce.

But the evidence doesn’t support either of those arguments. The economy has indeed improved, but not for the long-term unemployed, whose odds of finding a job are barely higher today than when the recession ended nearly five years ago. And the end of extended benefits hasn’t spurred the unemployed back to work; if anything, it has pushed them out of the labor force altogether.

The so-called economic recovery isn’t that for millions of Americans. Long-time populist political commentator Jim Hightower takes issue with, among other things, the positive spin being applied to new jobs created since the worst of the meltdown:

So, it’s interesting that the recent news of job market “improvement” doesn’t mention that of the 10 occupation categories projecting the greatest growth in the next eight years, only one pays a middle-class wage. Four pay barely above poverty level and five pay beneath it, including fast-food workers, retail sales staff, health aids and janitors. The job expected to have the highest number of openings is “personal care aide” — taking care of aging baby boomers in their houses or in nursing homes. The median salary of an aid is under $20,000. They enjoy no benefits, and about 40 percent of them must rely on food stamps and Medicaid to make ends meet, plus many are in the “shadow economy,” vulnerable to being cheated on the already miserly wages.

MIT’s Institute for Career Transitions conducted a pilot project to coach and advise the long-term unemployed, with hopeful results. In order to measure the potential benefits of providing this assistance, the three-month project included a group who received help and a control group who did not. WBUR’s Benjamin Swasey reports:

Long-term unemployment — which, according to [MIT professor and Institute director Ofer] Sharone, disproportionately affects older workers — is at 2.3 percent of the nation’s workforce, a historically high level. More than 38 percent of America’s unemployed job seekers have been out of work six months or more.

. . . “We have a ton of studies showing that once you hit the six-month [jobless] point, by so many indicators it becomes a real crisis,” he says. “It’s a financial crisis. It’s an emotional crisis. And then when you get to this scale of numbers, it’s a social crisis. We’re losing out on a whole cohort of workers.”

. . .Of the group that got support, 30 percent obtained a full-time job or contract work of at least four months. That compares to just 18 percent from the group that received no aid.

“It clearly shows that the job market is very, very tough, even for someone in an ideal situation,” as “most people did not get jobs,” Sharone says. “On the other hand, I think we can say that there’s a meaningful difference to getting support.”

How do the challenges specially facing this age group connect to other social and economic policy issues? Here’s one article that helps us to grasp the bigger picture: In an op-ed piece for the Boston Globe, writer Neal Gabler predicts how historians of the future will regard the current American era, and his assessment is not a positive one. Here are a few snippets:

Historians will wonder…how the gains of social and economic equality that were a century in the making were reversed, and, above all, how the country actually became less democratic, often with the acquiescence of many ordinary Americans.

The first thing historians are likely to fasten on is the historic economic inequality in America today.

…They will look at the nation’s…reluctance to embrace health reform that would provide insurance to those who cannot otherwise afford it, its willingness to cut benefits, like food stamps, that primarily help the young and the elderly, its grudging extension of unemployment benefits to people afflicted by the economic downturn.

…I suspect that historians will view this as a terribly bleak period — another Gilded Age but worse.

…And they will wonder: Why there was so little resistance?

What to do???

If any of these articles offered clear-cut, comprehensive solutions to the crisis, I would be highlighting them. Unfortunately it appears that we’re flying without radar here. Furthermore, as Neal Gabler’s Boston Globe piece suggests, I don’t think the American public is sufficiently aware of the systemic nature of this crisis to be able to connect the dots in ways that lead to political consensus. Right now, employment and retirement remain individual challenges rather than shared priorities, reflecting the social and political ethos in which Gen Joners have spent their adult lives.

I do think that reorienting our views on community and society is an important, necessary start toward addressing the situation. Last week I wrote about competing visions of the future, one being a “technological, top-down, service society,” the other being a world of “useful work, peace, self-fulfillment, and appropriate technology leading to harmony with the environment.” We need this latter view to take hold if we are to reverse the rampant individualism and selfishness that soon may resemble passengers on a sinking ship fighting over too few spaces on the lifeboats (with a small few already having reserved seats). Either our better natures will rise to the occasion, or history will judge us harshly, and deservedly so.

******

Related posts

I’ve been writing about the burgeoning retirement funding crisis since the first year of this blog. Go here to start scrolling through those articles. In addition, here are three pieces especially relevant to this post:

The three-pronged political attack on the very notion of retirement (except for a few) (2013) — “In America, the very notion of a relatively safe and secure retirement is under relentless attack…. This is not by accident. Only when you connect the dots do you see a unifying force, and it’s very, very political. We haven’t been comprehending how the pieces come together….”

My Labor Day 2013 wish: Good, stable, bully-free jobs for Generation Jones (2013) — An extended commentary, echoing many themes raised here, covering topics such as age discrimination, workplace bullying, and mental health impacts relevant to Gen Jonesers, as well as potential public policy responses.

Suicide and the Great Recession: Will we heed the tragic warnings? (2013) — “In this era of the Great Recession, suicide has become a leading cause of death in America, especially among the middle-aged, and it is to our shame as a society that this reality is not an ongoing, dominant focus of our attention.”

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3 responses

  1. Thank you very much for sharing my Harper’s story about older American migrant workers. I met some amazing folks on the road! Trying to simultaneously express their dignity/awesomeness + the bleakness of the economy — side by side, without shortchanging either — was my mission. Still hoping I got that part right🙂.

    • Jessica, thank you for taking the time to post this note! You did a great job on the article (I’m a Harper’s subscriber, and I read it closely soon after the issue hit my mailbox), and I’m pleased to see that the piece is getting well-deserved attention. I believe you accomplished your objectives fully. You presented these people and their stories with dignity, and you painted a very stark picture of the economy, especially for older workers whose options have diminished.

      David

  2. Thank you so much for including the snippet about how financial planners talk about savings and retirement goals that are absurdly unattainable for so many people at this point. I recently switched over my 401k to a company where a friend of the family works and she’s administering my account. She keeps on saying we need to set a time to talk about my savings goals and telling me to fill out her worksheet to determine my net worth. Net worth?!?!?! Are you kidding me?! I bought a home at the height of the real estate bubble and have law school student loans, my net worth is somewhere in the neighborhood of negative several hundred thousand dollars!!

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