Monday, February 23, 2009

WSJ: Elderly Emerge as New Class of Workers - and the Jobless

While we don't spend too much time on some of our "really long" term thesis (that's for our future sister site: "People Wake Up and Take Back Your Country!"), but let me reiterate the one that revolves around a nation of Walmart greeters who will need to work until they drop. We discussed this in [Sep 1, 2008: Laboring Longer is Growing Trend for Americans]

This story highlights what I see as the very long term "emergency" in America - due to (long list ahead) financial illiteracy, spending over our heads, inflation costs that are far higher than wages, the "I deserve this even if I cannot afford it" ethos, healthcare costs, tuition costs, energy costs, food costs, not to mention making nothing in the stock market for at least a decade (if not outright losing a lot - see NASDAQ bubble) [Mar 26 - WSJ: Stocks Tarnished by Lost Decade], along with many losing in the real estate bubble, along with an average 401k balance in the United States of somewhere around $50K, along with the switch from company supported retirement benefits to "do it yourself" 401(k)s.

Well you get the idea - it simply is becoming much harder for the "middle class" or "working class" types to keep up in this country as more and more jobs being created are lower paying than those shipped overseas and many benefits their parents had are going the way of the dodo bird. In my opinion to make up for this many people are trying to take outsized risks to compensate which is feeding into multiple bubbles as people are "reaching" for ways to make up for the inability to save.

To steal a line from
Obama in this "ownership" society where in return for "the chance to strike it rich" (versus a much harder ability to do so in Europe for example) [Feb 18: Economic Woes Reveal a Long-Felt Unease & Denmark is the Happiest Place on Earth?] we rip apart most of the safety nets - you will see over the next 15-25 years the "cost" to the vast majority who won't strike it rich. Many of these people now will have to support both their aging parents along with helping their kids.

I call it the
Walmart greeter generation (but you can throw Lowe's, Home Depot, Kmart, Target and a few others in there) People not in the upper 5-10% are simply being squeezed from every which angle and the long term trends are ominous. People will survive but it will be a drop in lifestyle or as I call it "The Pooring of America"

There is no "one moment" or even "12-18 month" emergency with this thesis; this will be a long drawn out crisis that will grow over time. Keep in mind in addition to the litany of crisis listed above, many homeowners of a generation or two ago retired with their home paid off; so they could bring in less money during retirement and be "ok". Much of the baby boomer generation? They've extracted cash over and over to pay for "bling bling" (live for today! tomorrow is not promised!) - so they're going to have a nice fat full mortgage note/rent payment due each month instead of a goose egg.

Already in 1 generation we've gone from 1 in 5 people in their late 60s working (in mid 80s) to nearly 1 in 3 (2006) - and that was BEFORE the financial crisis.
  • Twenty-nine percent of people in their late 60s were working in 2006, up from 18 percent in 1985, according to the Bureau of Labor Statistics.
And these are among the people (in the story below) we are asking to subsidize those who put 0% down on their homes and extracted equity multiple times. I will repeat - I do not know when it all becomes too much for the "average Joe" to bear but the long path we're heading is not pretty.

The Wall Street Journal follows up with a new story
  • Mary Appleby, 76 years old, lost her job in January as a cashier at a courthouse cafeteria here. She is now looking for minimum-wage work. Mary Bennett, 80, began filling out applications for fast-food restaurants and convenience stores after she was laid off last March as a machinist. Fred Dase, 81, a bartender until last summer, also needs another job.
  • During past recessions, older workers simply would have retired rather than searching want ads and applying for jobs. But these days, with outstanding mortgages, bank loans and high medical bills, many of them can't afford to be out of work. With jobs so scarce, people in their seventh and eighth decades are up against those half their age in a desperate scramble for work.
  • Among workers 65 and older, the jobless rate stands at 5.7%. That's below the national average, but well above what it was in previous recessions, including the recession of 1981, when it reached at 4.3%. (key point, even with the government's faulty employment statistics, now massaged to hide some of the pain - we are already worse in this statistic than in the pre Clinton era, when numbers were more pure)
  • As people live longer and stay in better health, some of them merely want the stimulation and challenge of a job. But for workers like Ms. Appleby, Ms. Bennett and Mr. Dase, the motivation is financial necessity.
  • Fewer people than in years past are covered by defined-benefit plans, such as company-sponsored pensions that guarantee them specific monthly income for life. (step 1) Those with retirement investments have seen their values erode with the stock-market tumble. (step 2) Others worked for smaller companies, or were self-employed, and never had pensions. Many are outliving whatever savings they might have had, especially by the time they reach their mid to late 70s. Mortgages and medical bills push others into the job market because Social Security and Medicare, though helpful and critical, aren't enough.
The rest of the story, if interested, speaks to a lot of individual cases and how the person got there and how they're trying to deal with it.

[Dec 2007: Do the Bottom 80% of Americans Stand a Chance?]

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