America’s economic meltdown continues for millions: Articles worth reading

The human costs of our ongoing economic crisis continue to mount. If your primary impressions of the economy are shaped by the rise in the Dow Jones Average, you might be wondering what I’m talking about. But for countless millions of others who are more concerned with the challenges of paying their bills, feeding their kids, saving for the future, and finding work, crisis remains an apt way to describe this economy.

I’ve collected a number of articles and blog posts that help us to connect the disturbing dots:

Bob’s cousin

Bob Rosner, blogging for Workplace Fairness Weekly, writes about “Broken Hearts: Unemployment’s Devastating Impact“:

Last week my cousin died of a heart attack. After working continuously for the first two-thirds of his career, recently he’d bounced from short term jobs to stretches of unemployment. This cycle is tough enough on someone just starting out a career, but for someone in their early 60’s, it can literally be a heartbreaker.

Read what he has to say about maintaining hope through the 4 “Ps”: perspective, pride, pals, and possibilities.

Profits over people — by a longshot

But hold on, it’s not as if our economy remains in complete meltdown mode. Nope, that just applies to the vast millions who are struggling to make ends meet and to secure decent work. Derek Thompson, business writer for The Atlantic, sums up the situation in meaty blog post:

Here are two things that are true about the economy today.

(1) The Dow Jones industrial average is poised to set a new record as corporate profits stretch to all-time highs.

(2) There are still fewer working Americans today than there were before the start of the Great Recession.

He goes on to explain:

When the economy crashes, we all crash together: corporate profits, employment, and growth. But when the economy recovers, we don’t recover together. Corporations rack up historic profits thanks to strong global demand, cheap global labor, and low interest rates, while American workers muddle along, their significance to these companies greatly diminished by a worldwide market for goods and people.

The forgotten

Although the official unemployment rate continues to improve very slowly, overlooked in those figures are the millions who are no longer included in the counts. Annalyn Kurtz reports for CNN.com:

An often overlooked number calculated by the Labor Department shows millions of Americans want a job but haven’t searched for one in at least a year. They’ve simply given up hope.

. . . These hopelessly unemployed workers have just been jobless so long, they’ve fallen off the main government measures altogether.

. . . Five years ago, before the recession began, about 2.5 million people said they wanted a job but hadn’t searched for one in at least a year. Now, that number is around 3.25 million.

The future of retirement

As I’ve written frequently here, the demise of retirement as a normal lifespan experience may be one of the longer-term effects of our economic condition. Steven Greenhouse, labor reporter for the New York Times, offers a thorough look at the future of retirement in the U.S.:

While retirement has assumed myriad forms across the country, many economists and other experts on retirement see some common, increasingly worrisome trends. A growing number of workers are convinced they will not have a comfortable retirement. A Boston College study in October found that 53 percent of Americans were “at risk” of being unable to maintain their pre-retirement standard of living once they retire, up from 30 percent in 1989. A study last May by the Employee Benefit Research Institute found that 44 percent may not have enough money to meet their basic needs in retirement.

Burdening next generations

As the cost of a college education continues to climb, student loan debt rises with it. Martha C. White reports for Time on the economic repercussions of massive student loan debt:

The broader economic implications are troubling. Graduates struggling to dig out from a mountain of student debt also tend to put off getting married, buying homes, and having kids. And since a bigger chunk of their income will go towards servicing the mortgages or car loans they are able to obtain at higher rates, they’ll have less spending power when they do eventually buy big-ticket items like homes and cars.

And that’s not even addressing the psychological impact of mountainous debt and reduced hopes. Cryn Johannsen of the Economic Hardship Reporting Project writes about the spectre of suicide in connection with student debt:

Suicide is the dark side of the student lending crisis and, despite all the media attention to the issue of student loans, it’s been severely under-reported. I can’t ignore it though, because I’m an advocate for people who are struggling to pay their student loans, and I’ve been receiving suicidal comments for over two years and occasionally hearing reports of actual suicides.

Inequality = more stress and illness

America’s wealth gap is widening despite the supposed economic recovery, reports Rick Newman for U.S. News & World Report:

The problem, however, is that the recession raised the bar for success while leaving fewer haves and more have-nots. America as a whole may be just as wealthy as it used to be, but the wealth is being shared by a smaller slice of the population. And that rearrangement may end up being permanent.

In this piece for BillMoyers.com, Theresa Riley interviews epidemiologist Richard Wilkinson, an authority on the destructive public health consequences of societal inequality:

The pattern we’ve found in our research is quite extraordinarily clear. More unequal countries, the ones with the bigger income differences between rich and poor have much more violence, worse life expectancy, more mental illness, more obesity, more people in prison, and more teenage births. All these problems get worse with greater inequality, because it damages the social fabric of a society.

The end of the American dream?

Joseph Stiglitz, a Nobel laureate in economics, assessed our economy in the context of the November election:

In this election, each side debated issues that deeply worry me: the long malaise into which the economy seems to be settling, and the growing divide between the 1 percent and the rest — an inequality not only of outcomes but also of opportunity. To me, these problems are two sides of the same coin: with inequality at its highest level since before the Depression, a robust recovery will be difficult in the short term, and the American dream — a good life in exchange for hard work — is slowly dying.

Stiglitz’s public policy prescriptions “include, at least, significant investments in education, a more progressive tax system and a tax on financial speculation.”

Goodbye to trickle-down economics?

The policies that led us to this widening gap between the haves vs. the have-less and the have-nots have been at least 30 years in the making, with “trickle-down economics” being the policy mantra of the era. This concept held that if wealthy people could keep more of their money and businesses could be freed of regulatory safeguards, the benefits would trickle down to everyone else. The centerpiece of trickle-down theory was that tax cuts to the wealthy would give a jump start to America’s economic engine, an assumption rebutted in a non-partisan Congressional Research Service report discussed in this Huffington Post piece.

If you’re interested in learning more, read some of these articles and start connecting the dots for yourself. We’re at a critical economic juncture in America, and the well-being of all but the most fortunate is at stake.

Retirement party

Vinny during his last full week at Con Ed, Dec. 2012

Vin Poliseno in his Con Ed office, Manhattan, Dec. 2012 (David Yamada, photo)

Will the retirement party become a thing of the past?

I just finished a quick weekend trip to New York City to attend a retirement party for a long-time friend, Vincent Poliseno, who spent 44 years working for Consolidated Edison. Vinny and I met in 1989, when we started a master’s degree program in Labor and Policy Studies at Empire State College of the State University of New York. Both of us were great procrastinators, and it took us a loooong time to finish that degree program! But this allowed us to plant the seeds of an enduring friendship.

At Con Ed, Vinny began at the entry level, did two years of military service in the early 70s, and then returned and progressed steadily up the ladder. Most of his time was spent in Con Ed’s Manhattan engineering department, where he became a union shop steward and eventually served in a management role. His tenure at Con Ed covered many major crises facing the city, including 9/11 and Hurricane Sandy.

Celebrating in Brooklyn

At the scenic Giando On the Water restaurant near the Williamsburg Bridge in Brooklyn, Vinny’s family, friends, and co-workers gathered to pay tribute to him upon his retirement. In addition to a great meal (hey, this was an Italian retirement party, after all), we were treated to a hilarious speech by one of Vin’s colleagues and brief but warm remarks from the guest of honor himself.

Vin is the kind of person who makes the extra effort to help people in good times and bad. It showed that night: He spent the last hour of the dinner posing for pictures with people who stood in line as the cameras clicked away.

For 44 years, Vin helped to keep the lights on. (Williamsburg Bridge, Brooklyn side, photo by David Yamada)

Vin helped to keep the city’s lights on for 44 years. (Williamsburg Bridge from Brooklyn; David Yamada, photo)

Goodbye to retirement parties?

In many ways, Vin’s career represents a throwback: 44 years at one company, steadily moving up, and finishing with a retirement party and a decent pension.

Unfortunately, that relatively secure path — earning the benefits of hard work and long-term commitment to a single employer — is rapidly going by the wayside. Many people in the age group immediately following Vin’s have been caught in the web of nasty layoffs by employers who deem them too expensive or otherwise expendable. Others have scant retirement savings and will have to work much later into their lives than they anticipated.

Different stories

The website of “Set for Life,” an excellent documentary by Susan Sipprelle on the challenges facing middle age workers in America, has been collecting stories of people who have been beaten up by this economy and job market. Here are snippets from three of them:

It’s getting worse, I’m now 55 and have been out of work for a year, like others, living off of my retirement. When I was in my 30’s, I could find another sales position in a week! Now no one will give me the time of day. They say that employers cannot discriminate because of age, yet every application I fill out asks for either date of birth or year of high school graduation. . . .

***

I am a 58-year old female and I’ve been unemployed since Sept. 2011. I was released from my job as a website administrator with very little explanation. . . . Right now I’m living off unemployment that will end very soon, my savings, and my retirement fund that are quickly dwindling. . . .

***

55 and wondering who pulled the trap door. Worked Fortune 100 for 27 years and have been out of work since 2008 with no luck at finding anything remotely close to the salary I once made. There are no Companies willing to hire in our age group, and even entry level jobs dont exist.

I’m not claiming that life “owes us” a steady job capped off by a nice party and a pension at the end. But it appears that we are witnessing the rapid demise of the post-WWII American middle class dream. The idea of a life well lived and played by the rules, including a relatively secure retirement, has become an illusion for millions.

***

Related post

Not “Set for Life”: Boomers face layoffs, discrimination, and bullying at work (2012)

American elders: Human dignity and an aging population

At some point soon, America is going to have to come to grips with the massive psychological and economic implications of its aging population. It won’t be easy.

Later this week I’ll be participating in the annual Workshop on Transforming Humiliation and Violent Conflict, sponsored by the Human Dignity and Humiliation Studies Network and hosted by Columbia University, Teachers College, in New York.  In one of the sessions, I’ll be talking about American social attitudes and public policy concerning our aging population. In an abstract submitted for the workshop titled “American Elders: Human Dignity and the Aging Population,” I stated:

America’s population is aging.  The most senior members of its largest generation are now reaching traditional retirement age, and millions more are on their way.  This fast evolving reality will confront America’s cultural embrace of youth and youthfulness, and it will carry great significance for human dignity in a nation that does not naturally elevate its elders or easily accept the processes of growing older.  The aging population will implicate not only how we think about ourselves and relate to one another as individuals, but also how public policy responds to the economic, employment, public health, and human services challenges presented by these changing demographics.

My remarks will examine some of the central considerations of our aging population from a human dignity perspective, including:

Personal and Interpersonal

  • Personal attitudes toward aging;
  • Interpersonal dignity, civility, and acceptance as the population ages;
  • Avoiding “us vs. them”;
  • Creating communities of care and caring;
  • The roles of faith and spirituality.

Public Policy

  • The retirement funding train wreck (it’s about much more than Social Security);
  • Providing employment for those who work later into life, while creating opportunities for younger people to join the labor force;
  • Health care for an aging population;
  • The future of elder care;
  • Who will pay for all this?

Finding Direction

  • Let’s look to cultures with healthier attitudes toward aging.

Huge implications

These challenges will have significant implications for the world of work. They will impact the demographics of the workplace and employee benefit programs. They also will create an expanding sector of the labor market devoted to elder care and health care.

If we’re capable of philosophically redefining a crisis as an opportunity, then perhaps this is the best we can hope for. I believe these coming decades will be a test not only of our policy and economic ingenuity, but also of our hearts.

***

Related posts

Not “Set for Life”: Boomers face layoffs, discrimination, and bullying at work (2012)

Retirement expert: “Most middle-class Americans will become poor or near-poor retirees” (2012)

The press discovers the coming Boomer retirement crisis (2011)

When Boomers retire (or try to): America’s coming train wreck (2010)

For all posts on retirement-related topics, go here.

Not “Set for Life”: Boomers face layoffs, discrimination, and bullying at work

I’d like to share with you a disturbing, heartbreaking, and important new documentary, “Set for Life,” that tells the stories of Baby Boomers who have lost their jobs and who are trying to find work in the midst of our recessionary economy.

“Set for Life” is the work of journalist and producer Susan Sipprelle, assisted by filmmaker Samuel Newman (bios here). It centers on the ongoing sagas of three fiftysomething individuals searching for work, supplemented by interviews with experts and information that put their stories in context.

Introducing Joe Price, Deborah Salim, and George Ross

Sipprelle introduces her three main characters in an October Huffington Post blog post:

  • “Joe Price, a third-generation steelworker from Weirton, West Virginia, has been laid off seven times over the course of his 25-year career in the mill, but his most recent two-year layoff, which began in 2009, appears to be permanent.”
  • “Deborah Salim, of Conway, South Carolina, worked for 15 years in the records department at a local community college until she lost her job in 2008 due to government budget cutbacks.”
  • “George Ross, a Vietnam veteran and an information technology project manager in Livermore, California, lost his job in 2008. He searched for work until he was notified that his son, Jason, a Marine, had stepped on a buried mine in Afghanistan while on patrol.”

Having worked hard and done many of the right things, they believed that they were “set for life.” Sipprelle observes that recent years have taught them a harsh lesson to the contrary:

While the three main characters in Set for Life search for work in today’s daunting job market for older workers, they suffer financial woes, self-doubt, and health concerns. Thrust by the recession into a quest they never expected to face late in life, they ponder deeper questions that are relevant to everyone: What defines my self-worth? What is my definition of happiness? Can I reinvent myself? Can I prepare for and accept change?

The bottom line? For many workers, the American Dream is no more. The assumption that working hard and playing by the rules would lead to a relatively comfortable retirement has been demolished.

Discrimination and bullying

It’s not just the bad economy that is doing a number on these workers. Not uncommonly, people in mid-life face age discrimination in their job searches. In the documentary, some of the laid-off workers express concerns about not getting a fair shake in the hiring process due to their respective ages. (In fact, I wish there would’ve been more expert commentary to put that topic into focus.) I’ve heard many similar stories in recent years.

Furthermore, although “Set for Life” does not examine how older workers confront workplace bullying, I can attest that many people in their 40s, 50s, and 60s have been savagely bullied out of their jobs, with lasting consequences for their careers and financial well-being. Anecdotally, it appears that single women, especially single mothers, are especially vulnerable to being targeted.

Missing piece

Despite its significance, the underlying narrative of “Set for Life” was largely neglected by just about everyone during the recent political campaign season. We heard the usual platitudes about making college more affordable for the young and preserving Social Security for seniors, but nothing examining the confluence of factors that has smacked around this demographic group so brutally.

Maybe “Set for Life” resonates so strongly with me because it is largely about my generation — that group of late Boomers caught in this horrible recession during what should be their peak earning years. Their stories of hardship, desperation, and heartbreak are playing across the nation, and shame on us if we do not take them seriously and demand that America’s employers and policy makers do the same.

***

To order a copy

“Set for Life” has been screened at independent film festivals and other programs, but if this subject interests you, I strongly recommend buying the DVD from the website at $19.99 including shipping and handling. For a short preview video, go here.

Facebook page

“Set for Life” also has a Facebook page, here.

Review

For a review of “Set for Life” on the Next Avenue blog, here.

Working Notes: 401(k) blues, challenging unpaid internships, and Shape magazine on workplace bullying

I use this Working Notes feature to flag items worthy of attention. Here are pieces on 401(k) plans and the retirement funding crisis, unpaid internships, and workplace bullying (especially as relevant to younger women).

1. Steven Greenhouse on 401(k) plans — Here’s more evidence of the crisis in retirement funding, in the form of a thorough look at the inadequacy of 401(k) plans as retirement funding vehicles, courtesy of labor reporter Steven Greenhouse of the New York Times. It begins:

JOHN GREENE worked for 30 years at an Oscar Mayer plant in Madison, Wis., deboning hams and loading boxes of hot dogs. His 401(k) plan grew to $60,000, and soon after retiring he began withdrawing $3,600 a year from it, money that allowed him and his wife to take what he called a wondrous two-week trip to Scotland, his ancestral homeland.

But when the financial markets plunged four years ago, his 401(k) dropped to less than $18,000.

2. Plaintiff Eric Glatt on unpaid internships — Eric Glatt, lead plaintiff in a class-action lawsuit against Fox Searchlight Pictures for unpaid wages to interns working on the production of “Black Swan,” explains why he and others were not paid for their labor in this blog post for Other Words:

Because I, like scores of other workers on that film, was a relative newcomer to the industry. And being a newcomer to the film industry often means doing unpaid work, an illegal arrangement camouflaged behind the term “internship” — a term the movie industry embraces for its promise of alchemy, magically removing costs from budgets to the delight of producers and shareholders.

Eric is now pursuing his law degree at Georgetown University Law Center. I wrote up a blog post about an enjoyable brunch meeting we held in New York last December with writer Ross Perlin (author of Intern Nation) and journalist Tiffany Ap.

3. Jeannette Moninger for Shape magazine on workplace bullying — The September issue of Shape magazine includes a lengthy, informative feature on workplace bullying by Jeannette Moninger. Jeannette is a health writer who convinced the editors of Shape to devote quite a bit of space to this topic. Hat’s off to both for bringing this information to a demographic (younger women) often targeted by workplace bullying. (It’s also the first and likely only time that I’ll be quoted in Shape!). Here’s the lede:

When Stacie started as an account manager at an architectural firm two years ago, she couldn’t believe her luck. In a tough market, she’d landed her dream job at age 31, complete with a great salary, friendly coworkers, sleek high-tech offices, and a corporate gym membership. There was just one problem: Her boss was a nightmare.

Retirement expert: “Most middle-class Americans will become poor or near-poor retirees”

According to economist Teresa Ghilarducci, one of the nation’s leading experts on retirement policy, “(i)t looks like most middle-class Americans will become poor or near-poor retirees,” adding that “(t)he baby boomers will be the first generation that will do worse in retirement than their parents.”

Ghilarducci’s comments appear in The Week, a weekly news magazine, as part of an informative piece (“The not-so-golden years,” April 27 edition) spotlighting a largely neglected Boomer retirement savings crisis that has grave implications for America’s social and economic well-being.

401(k)s vs. pensions

While the economic meltdown is one reason for this crisis, the more systemic cause is the disappearance of the traditional pension plan. The Week reports that from 1980 to 2006, the percentage of private-sector workers with employer-funded pension plans dropped from 60 percent to 10 percent. The 401(k) plan — voluntary and largely employee-funded — would replace the pension as the primary retirement savings vehicle.

Unfortunately, most workers have not built 401(k) accounts sufficient to fund a comfortable retirement; the average 401(k) balance “is just over $60,000,” according to The Week. Even worse, “(m)ore than half of U.S. workers have no retirement plan at all.” Social Security payments “averaging $14,780 a year for individuals and $22,000 for couples” won’t bridge the gaps.

Consequently, it appears that many Boomers will find themselves working much later into their lives, seeking cheaper housing, and cutting back sharply on spending.

Policy options

From a policy standpoint, there are no easy choices. Below are two possibilities; the first is something of a pipe dream for now, the second is more politically viable.

Public pensions for all?

In an earlier New York Times op-ed piece in response to cutbacks in New York State’s pension plan for public workers, Ghilarducci calls upon the states to create public pension plans for all workers:

Rather than curtailing public and private pensions, New York and other states could save millions of workers from impending poverty by creating public pensions for everyone.

While the recession bears some blame for the looming retirement crisis, experts agree that the primary cause is more fundamental: Most workers do not have retirement accounts at work.

Shoring up Social Security

At the very least, we need to ensure the viability of Social Security for generations to come. The anticipated shortfalls in the Social Security fund can be addressed by raising the current cap on payroll taxes that fund the system.

Currently workers pay a flat 6.2 percent in payroll taxes, but that tax caps out on the first $106,800 of income. Eliminating or raising the cap would go a long way toward keeping the Social Security fund in decent shape in terms of paying out promised benefits.

The other option for Social Security is means testing, which would reduce or eliminate benefits for the most economically fortunate. The politics of this possibility will certainly push the “class warfare” buttons, but it wouldn’t surprise me to see proposals enter the picture as the crisis becomes more evident.

Generations at war?

In addition, there’s a potential political war looming in the not-so-far distance, one between the Boomers now facing a bleak retirement and younger generations trying to get their starts in life.

It is fair, for example, to ask people entering the workforce and starting a career to bail out their elders, while facing a brutal job market and carrying enormous amounts of student debt? As I wrote in this short article two years ago, generational battles over taxation and public spending may become ugly and divisive.

No quick fixes

Also, this won’t be solved by older Boomers suddenly deciding to save more, even assuming they are in a position to do so. Retirement funds are built by accruing returns on principal over time, and five or even ten years isn’t a sufficient period to do so, especially at a time of declining interest rates.

In addition to the individual burdens, the economic ripple effects of so many Boomers going into spending lock-down mode will be significant. What happens when a generation that built an economy based on credit and consumption suddenly puts on the brakes by sheer necessity? We may be about a decade away from finding out.

Folks, it’s not a pretty picture, but I won’t apologize for sounding like a broken record about it in the pages of this blog. It’s a crisis we’d better face earlier than later.

***

The full print version of The Week article is not available online, but a shorter version along with other pieces on the retirement crisis can be accessed here.

For more articles from this blog related to retirement readiness, Social Security, public pensions, and the economy, go here.

More dire news on U.S. retirement readiness

Margaret Collins reports for Business Week (link here) on a new study showing low rates of personal savings in American households:

About 60 percent of U.S. workers said they have less than $25,000 in savings and investments, according to an Employee Benefit Research Institute survey.

…“People get the fact they shouldn’t be optimistic, but instead of saying I’m going to save more today, they just say I’m going to defer my retirement age once I get to 65,” said Jack VanDerhei, EBRI’s research director and a coauthor of the study.

…About half of all U.S. workers don’t have access to a retirement savings plan through their employer and many younger people haven’t been saving long enough to build a large balance, VanDerhei said of the findings.

The EBRI retirement savings study doesn’t include pension plans, but before we get overconfident that pensions will come to the rescue, let’s consider the shrinking number of workers who can look forward to pensions in retirement. Last year, Emily Brandon reported for U.S. News & World that roughly 3 in 10 workers have pension plans.

In addition, many existing pension plans are teetering on the edge. For example:

City of Stockton, California

Stockton, California, is facing the real possibility of bankruptcy, which could result in the end of its pension program for city workers. As reported by Gosia Wozniacka and Haven Daley for the Associated Press (via Yahoo! News, here):

City leaders seeking a way to dig out from under massive debts have taken a step toward making Stockton the nation’s largest city to file for bankruptcy.

…Under the state law, municipalities considering bankruptcy must first seek mediation with creditors, with the goal of settling debts without filing for Chapter 9 protection.

…”If they vote for mediation, it is the first step towards bankruptcy,” former City Manager Dwane Milnes told KCRA-TV. “That means 1,000 people could lose retirement benefits.”

American Airlines

Workers at American Airlines, currently in bankruptcy reorganization, apparently have dodged a bullet fired by their employer, which originally announced that it would terminate its pension plan completely. As reported last week by Chris Isidore for CNN (link here):

American Airlines retreated Wednesday on its proposal to terminate its workers’ pension plans and dump them on a federal agency as part of its bankruptcy reorganization.

The company will freeze the plans instead.

The move, which must be approved by a judge, means employees would not accumulate any additional benefits — and American’s future contributions to the underfunded plans would be reined in.

***

Related posts

New Boomer reality: From “shop ’til you drop” to “work ’til you drop” (2012)

Notable books — February 2012 (suggested books on retirement planning and personal finances)

The humane way to fix Social Security (2011)

The press discovers the coming Boomer retirement crisis (2011)

When Boomers retire (or try to): America’s coming train wreck (2010)

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