Article 43

 

Saturday, February 02, 2013

Voices Of The Long-Term Unemployed

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“I try to be optimistic. I try to believe that things are gonna get better. After a couple of years, you start wondering...”
- Bill Davis

“Underemployment just means that you’re spending your time working, not getting enough money to pay the bills...”
- Mark Moore

“It’s not like I’m 22 and just starting out and looking to move up the ladder. I just want a job that I can go to every day and earn a paycheck.”
- Sheila Cooper

“When the unemployment stops, I’ll be looking for a nice comfortable box to live in, if I don’t have a job by then.”
- William Flemming

“I’m over 50 and lost everything you can lose in this life except my actual life. Thank God, I found a security job and have been doing it for 2 years. Fear I’ll lose it every day. Have 3 college degrees and was a lawyer. My life was ruined under this regime.”
- Bill

“To even insinuate that people would rather sit on their butts and collect unemployment is insane.”
- Pam Buckley

“It was a real eye-opener to see the caliber of people we were in line with - very educated with vast skill sets,” Easton said in an e-mail. “Afterwards, we went to the restaurant located in the same hotel and it was filled with unemployed professionals sharing their story, from engineers to graphic designers to marketing professionals.”
- Amber Easton

“The gym is a real EYE-OPENER to the SEVERITY of the unemployment problem.  I go there the same time every day, and work out alongside the same people, so we all pretty much know eachother. The mid 50’s guy who spots me on the bench press is out of work two years. His wife’s paycheck keeps his family going. The 40 year old lady on the stair machine next to me has a job, but her husband who worked on the SHUTTLE AT NASA - doesn’t.  Another lady - a 55 year old layed off bookkeeper - can’t find any work other than a part time job at the local supermarket - 20 hours at $8.50/hr = $170 per week.  STORIES like these are the norm.”
- Me, May 19 2012

“There comes a time in life when a person stops moving forward, and looks back. Maybe that’s what it means to give up. I took my last trip to visit my elderly mom this Thanksgiving. When I told mom I still don’t have a job, and don’t have the money to fly up to see her anymore, and may not have a house for her to come live out her old age - she started crying. I didn’t. The inner pain is so bad, it’s like my emotions finally turned to ice after over eight years of DEALING with the economic realities THAT HIT middle-aged TECHIES LIKE ME real HARD. I’m too numb inside, and feel too worthless to experience love or compassion. My heart.  My soul.  Every cell of MY BEING. Is almost DEAD. I’m ready to give up.
- Me, Thanksgiving 2012

“I need a job! I have been searching for months and nothing! I’m ether over qualified or not what they are looking for! After working my back end off for the last 31 years and ending up where I am now, I REFUSE TO GIVE UP ON MY HOPE FOR SURVIVAL! Obama doesn’t know who I am or have a clue what any of us are going through.
- America Lugo, January 2013

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What’s it like to be an OLDER long-term unemployed American with tons of SKILLS AND EXPERIENCE ready to trade FOR A JOB?

In a word - HOPELESS.

The first article below was written two years ago. It could have just as well been written yesterday or a decade ago, cause things haven’t changed since the exodus of highly-skilled professionals CAME INTO THE SPOTLIGHT ten years ago when Kevin Flanagan killed himself after watching his job get OUTSOURCED TO INDIA.

I wonder what’s going on with these people forgotten by society, government, and God.

How many are living in their CARS today? Or TENT CITIES? Or BOXES?

How many ATTEMPTED - or will attempt - SUICIDE?

HOW MANY more will SUFFER?

Keep reading. Someone finally made a movie on the ones still alive.

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Down but not out: Voices of the long-term unemployed

By Zachary Roth
Yahoo News
July 14, 2011

You can read all the stats you want on America’s long-term jobless crisis. More than 6.3 million Americans have been out of work for more than half a year. The average jobless stint now lasts longer than nine months. We could go on.

But no facts or figures bring home the grim human dimension of this epidemic better than an account we received from an unemployed Iraq War veteran. “I have led men in combat, but my last job was a temporary cashier position in the women’s department at Nordstrom’s,” he wrote. “I don’t get many interviews, but when I do, I get a lot of handshakes and a ‘Thank you for your service, but you’re not what we’re looking for.’”

Nor can they top this description from a reader of what it’s like to go for months searching fruitlessly for work: ”You start to hear a voice in your head that tells you, ‘Perhaps you’re just not good enough.’”

When we asked readers recently to share their personal stories of being out of work for an extended period, we expected to get a lot of responses. But we didn’t foresee the flood that ensued. “I imagine that you will have to hire more staff to wade through all the emails you get in response to this article,” one reader wrote. It turned out she was right: That’s exactly what we did.

The thousands of anecdotes you sent us offer a heart-rending glimpse inside the reality of long-term joblessness during the Great Recession and its aftermath. They convey sadness, anxiety, anger, shame, and despair, but sometimes also humor, generosity, and a quintessentially American determination to roll with the punches. And they offer a portrait of out-of-work people who are smart, articulate, motivated, and resilient--a useful corrective to some of the negative stereotypes that too often shape perceptions of this huge group of Americans.

We want to thank all the thousands of readers who took the time to share their personal stories. For reasons of space, we can only publish here a fraction of the number we’d like to. So we’ve set up a separate website, ”DOWN BUT NOT OUT,” to showcase many more in full. [ Click here for readers’ own tales of long-term joblessness at “Down But Not Out.""]

Meanwhile, here at the The Lookout, we’ve picked out portions of a smaller number of the most compelling responses, and organized them around some of the major themes that readers highlighted--from accounts of how they lost their job in the first place, to the emotional toll that being without work for so long can take, to the rare and unexpected silver linings that some respondents discovered.

Many readers described how they first became jobless, with tales that often seemed ripped from the bleak headlines of the last few years--taking in everything from the mortgage meltdown to the housing bust to government budget cuts.

George C. from Brea, Calif., told us he worked for a bank that had a division that made sub-prime loans. After the housing bust hit, “the federal government ordered the company to cease & desist from all sub-prime operations, because they didn’t like banks that were also sub-prime mortgage companies, so that division of the company was shut down,” George wrote. Ultimately, the other divisions of the bank were sold, “at which time there was no more work for me to do.”

“I was a steel building detailer with just over 14 years of experience,” Tom W. from New Haven, Ind., told us. “When the economy imploded in 2009, nobody was building anything. With no work, my employer was forced to lay off everyone.”

Shannon B., a teacher and school administrator from Phelan, Calif., wrote that she lost her job in February 2009. “When the budget slashes hit, my position was the first to go.”

Jerry, from southern California, told us he had worked in the electrical distribution industry for more than 25 years. “I lost my job in August of 2008 when the housing bubble and second Great Depression were hitting hard. The branch I worked in closed, since the industry relies heavily on new construction.”

“I never saw being let go coming,” wrote Elizabeth M., who worked at an educational center. “I simply showed up less and less on the work schedule. Then, after 2 weeks of not appearing at all, I received a voice mail via my cell phone that informed me they were actually letting me go. (Whatever happened to telling someone to their face?)”

Your tales of losing long-held jobs--often with minimal advance notice or human consideration--were bracing. But more compelling still were the numerous accounts of how long-term joblessness has affected you personally and psychologically.

Perhaps no testimony was bleaker than a note we received from Peter K., who said he used to be a middle manager making over $100,000 a year. His life now? “Stay up too late at night and sleep too long in the morning. Drink way too much, stare at the computer screen, stare out the window, stare at your image in the mirror, stare at the ceiling fan. Social life--none. I’m no fun. Sex--none. Women would sooner hear you have Hepatitis then learn you’re unemployed Depressed--big time. Think suicide every day.”

Scott V. told us that when his money began to run out and he didn’t know how he was going to feed his children, he had the same thought. “To be extremely honest I thought of taking the easy way out, which probably many people have. I read an internet article a couple of weeks ago about some 22 (?) year old ending her life because she had no job and too many bills that she couldn’t handle. Of course I didn’t do that, because I consider myself a strong person and I have a lot to live for.”

Most of the time you can barely get out of bed because you worry so much about your future,” wrote Todd L. of Houston, Tex. “I feel so behind, especially when talking to my peers. Several of them have already moved on from their first job to their second one. Many are in long-term relationships, something I know I can never have without a job and financial stability. I feel so ... behind. I have grown much more ENVIOUS OF OTHERS lately.”

Stefan K., from South Bend, Ind., told us he’d been out of work for going on two years. “After a few months pass by, you start to take it personally,” he wrote. “You start to hear a voice in your head that tells you, ‘Perhaps you’re just not good enough.’ You know it’s not true, but it feels true. You then began to feel ASHAMED when people, who know of your situation, keep asking if you’ve found a job yet.”

Paul K. described how both he and his fiance, who is also contending with a long-term bout of joblessness--have seen their RELATIONSHIP SUFFER as a result of their shared plight.  “It’s very depressing and has caused many arguments and led to a very unhappy life for us for the last 2-3 years,” he wrote. “We now sleep late because we have no money to do anything. Gas costs too much so most days we stay home and just watch TV. It’s making me anxious, depressed, and my confidence is all but gone. I pray for a miracle at this point.”

The pain of long-term unemployment doesn’t only affect layoff casualties--it’s also assailed many first-time entrants into the job market. Jill B. of Jonesboro, Ark. got a master’s degree last year, but it didn’t help her. “The hardest part of this experience has been having to come home, tail tucked, as a failure,” she wrote. “Out of necessity, I am now living with my parents again in a rural, Arkansas town. For financial reasons, I had to leave the thriving job market of Austin, Texas to come back to a place where there are no jobs at all.”

“I hide my emotions, but deep down I feel I am dying off,” wrote Jeremy L., from Waupaca, Wisc. “I smile less. Friends don’t call me anymore to do things because I can’t afford to. I feel like a hermit living under a rock. I feel worthless. I feel like I’m pulling my girlfriend and daughter into a hole with me. Our once loving relationship has turned bitter and sour.”

Of course, there’s no way to overstate the financial impact of being without a steady income for an extended period. The notes and comments you submitted show the remarkable lengths that some of you have gone just to keep your heads above water.

A 62-year-old Ohio man, W.M., told us he’d been forced to take contract work in South Carolina and Indiana. “I am the new migrant worker,” he wrote. “I get home to see my family when I can. I have about 1/3 less salary and no benefits but I can pay my way.”

Some readers said they were selling their possessions to support themselves. “I have also sold my clothing, many of our belongings, and baby items on Craigslist and in consignment shops,” M.N. wrote. “I add oatmeal to many of my dishes to extend the idea of ‘beef’, as well as buying generics. We’ve [gotten rid of] all memberships to gyms and cable TV. We are trying to live a more simple life.”

Some have been relying on family or friends. “I am in default for last year’s property taxes, and now stand to lose my home of 23 years,” wrote Vicki J. of Garland, Tex. “Had it not have been for a friend of mine helping me, I wouldn’t have even had electricity or food for the past three months.”

Others are seeking a fresh start. “We can’t afford the house payments anymore, but our house lost about 50% of its value, so we can’t sell,” wrote Shannon B. “We simply cannot live on my husband’s salary. We are filing for bankruptcy.”

Judy J. from Catawba, N.C., described paying for groceries with WIC checks--a form of government assistance--and worrying about delaying people behind her in line. “A few times I offered to let someone cut because ‘this is going to take a while,’” she wrote. “[B]ut they say, ‘No, it’s okay. I’m on WIC, too, so I understand.’”

Karen P. from Maryland told us she had to move back in with her mother at the age of 40, and that her jobless benefits will run out in January. “I am scared to death of what lies ahead,” she added. “I have no idea if I will find a job or not.”

And in a harrowing detail that evokes the hardships of an earlier time, M.C. wrote: “My family is eating stir-fried dandelions out of yards to keep from starving.”

We asked whether employers were wary of hiring readers when they found out how long they’d been jobless—a form of discrimination that appears to have been on the rise lately. “Very much so,” replied Susan W. “As if it were my fault I was unemployed, regardless of the fact that I had put out hundreds of resumes and applications.”

Many readers described a daunting level of competition for openings. “In my area, Elkhart County, Ind.., unemployment had gotten so bad that 1200 people applied for 10 openings at one company,” wrote Jason G. (Incidentally, if Elkhart rings a bell, that might be because it’s where President Obama launched his effort to get the economy moving again almost two and a half years ago.)

“I applied at one place that literally handed out raffle tickets and the winning 100 tickets were the only ones that got to apply,” wrote M.O. “Of course my number wasn’t one of them.”

An enormous number of older readers said they think their age is part of the problem for employers. Paula S., from Acworth, Georgia, who said she was “sixty-something,” described “two eye-opening experiences of blatant age discrimination . . . . One twenty-something supervisor asked me if I had ever thought about coloring my hair . . . . Another manager told his assistant with the door open when I showed up to complete an application and interview: ‘We can’t hire any more old people.’ ”

Britt S. said he’d tried to transition into another career after getting laid of from his newspaper job. But, “if an employer has a choice between a 27-year-old with a degree and 3 or 4 years of experience and a 57-year-old with the same degree and no experience, who is most likely to get the job?” he asked.

Even Dan H., a skilled telecommunications technician in Scottsdale, Ariz., who’s not exactly long in the tooth, told us he thought his age worked against him. “I do believe that being 37 was a factor in being passed over for jobs,” he wrote. “[T]echnology is a young man’s game. Potential employers thought I may be rusty with my skills Trained to an expert level, but no one can afford to hire me.”

Many readers who had ultimately landed a job were eager to share what worked for them.

Network, network, network.  I can’t say it enough,” wrote E.S., from San Diego, Calif. “LinkedIn is awesome, but enlist your Facebook contacts, or join a networking group. I know it’s horrible to ask your friends to keep their eyes out, but in the end that’s how I got hired. When you know someone who knows someone, who can vouch for you, you have a much better chance of getting a job with the company you want/in the field you want.”

Kurt G., from Seattle, Wash., thinks the face-to-face meeting is the key. “It doesn’t matter what skills you have, and it doesn’t matter what skills the employers say they want,” he wrote. “What matters is having the skills that get you through the interview process. Focus like a laser on the interview process. If you’re successful there, you’ll get an offer, and after that, it’s up to the employer to retrain you.”

Susan W. suggested making a nuisance of yourself. “I selected three companies I really wanted to work for, applied and kept going back and going back until they either told me to leave me alone or hired me,” she told us. “Two told me to leave them alone, the third hired me.”

Chris C. of Modesto, Calif., had a different strategy: moving into a field traditionally dominated by women—a trend that’s said to be increasingly common for male workers on the job market. “I researched the employment situation where I am living and decided to retrain in something it appeared people would want,” he wrote. “After I received my nursing license it took me 3 months to find a full-time job.”

And Cindy S. advised job-seekers not to be too picky. “Don’t be afraid to downgrade your expectations,” she wrote. “Right now, any job is a good job. When the economy recovers, it will be time to stretch out and seek a job for which you are qualified and paid well for, but right now, income is income.”

A lot of readers had thoughts about how to fix the long-term jobless crisis--or at least how to make things easier for its victims.

Many respondents lamented the problem of having to compete with cheaper foreign labor. “Make it more difficult to offshore work, or to hire foreign workers at a discount,” wrote Kurt G., in a typical comment.

Yvonne P., from Spring Hill, Tenn. suggested that the government give a “small tax incentive to businesses who hire people who have been unemployed for 6 months or more. Call it, ‘Americans Back To Work Tax Break.’” Not a bad idea.

“There aren’t enough resources for retraining, especially of college-educated people,” wrote E.S. “The vast majority of us are on our own.”

And Todd L. asked for a little more heart from employers. “I want companies and those who represent them to realize that job applicants and the long-term unemployed are not just resumes in a system,” he wrote. “We’re real people too. Please treat us like one.”

As is no doubt clear by now, the picture that most readers painted of long-term unemployment was overwhelmingly bleak. But that doesn’t mean there weren’t some respondents who had the strength of mind to also take note of the positives.

Stephanie B. of Memphis, Tenn., told us she works three part-time jobs and is left on a tighter budget than when she was on jobless benefits. And yet, she wrote: “The one thing that has come out of this experience that I am thankful for and hope I won’t ever forget, is the closeness we feel as a family. We can sit down to a checker tournament and play for hours. We can pull out the paper and crayons and create artwork we never had time to do before. There’s no more running around nonstop all week long. Most days feel like Saturday when school’s out. We entertain ourselves and each other on very little, and I think we have made some memories that are priceless.”

Dan H., who rallied to the challenge of unemployment by working with his wife to start a new business, told us: “If you cannot get a job, make one I guess. In the last year, in order, we’ve moved for a ‘better life’ across country, had a child (when we conceived all was good), lost job, had car repo’d, borrowed money from family to get wheels, went on public assistance, cried a river over my manly short comings, was inspired by my wife and am now an entrepreneur. Scary how quick life changes.”

Todd L., too, was able to look on the bright side. “I am blessed to have my family,” he wrote. “They support me financially and emotionally I have become more religious. I pray everyday, asking God for a job and a girlfriend. Does it help? Somewhat. It is better than no religion at all. Most of the time it just makes me feel better. God has given me time and comfort. But I am still waiting for a miracle--a job and a girlfriend.”

And Scott V., who’s now working after being jobless for more than two years, told others not to give up. “It does suck, but you can make it,” he wrote. “I have been humbled by losing my job almost 3 years ago.  Having ZERO dollars in my bank account and very little cash in my wallet. Without the support of my family and the love of my life, to help me get by, I would not have made it this far. I do thank God for all his good graces he has bestowed upon me, which I know I don’t deserve. So whoever is reading this, DO NOT sit around waiting for something to happen, make it happen.”

SOURCE

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Website - Over 50 And Out Of Work

OVER 50 AND OUT OF WORK is an ongoing multimedia PROJECT that documents the stories and impact of the Great Recession on jobless Americans, 50 and older. The projects goals are to improve the cultural perception of older workers, inform the public policy debate and make it easier for older Americans to re-enter the workforce.

After the Great Recession, older Americans are out of work at record rates and for longer periods of time than ever before. Boomers, who began turning 65 last year, were born into a postwar era of prosperity and optimism, but the economic downturn and its aftermath UPSET THE EXPECTATIONS held by many members of this iconic generation. Today’s unemployed boomers anticipate living longer than prior generations, but are not well prepared to do so. As their needs escalate, government at all levels is cutting back on programs and services to reduce budget deficits, while GLOBALIZATION races ahead.

The stories that boomers tell are not only about the hardships they have faced due to joblessness, but also about their hopes and fears, their expectations and disappointments, their resilience and their dreams. Their individual stories combine into a remarkable mosaic of experiences that captures the past 50 years of seismic social and economic changes in American history. Their lives have been shaped by the Sixties, Vietnam, the civil rights movement, the decline of U.S. manufacturing, Reaganomics, corporate mergers and restructuring, OUTSOURCING, 9/11 and globalization.

Boomers, often regarded as self-centered and indulgent, have left a distinct impact on the United States as they have navigated their way through the turbulent social and economic history of the country’s past half century.

Unexpected depths of courage, faith, perseverance and resilience emerge out of the lives of the boomer generation.

OVER 50 AND OUT OF WORK has completed the interviewing portion of our multimedia project, and we are now editing our feature-length documentary.  The film will focus on three of our original 100 interviewees, who are all over 50 years of age and lost their jobs as a result of the Great Recession.

THE FILM’S three main characters struggle with the most common difficulties that our 100 interviewees have experienced the shock of sudden, unexpected joblessness; worries about paying bills, especially mortgage payments; loss of health insurance; a prolonged and frustrating job search; depleted or exhausted savings, as well as diminished optimism about the future.  They each resolve or adapt to the devastating impact of extended unemployment on their lives differently, but the issues of health insurance coverage and homeownership dominate their concerns and fears, as they do for many Americans who are 50-plus and jobless.

SOURCE

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It’s pretty sobering to read how disconnected the author below is into thinking people like me can find a job, and arrogant and ignorant to suggest we’re the problem.

Are Baby Boomers To Blame?
Behind a lot of our current economic woes and hanging over the future is a simple problem: A huge generation that has to keep working because it hasn’t saved enough for retirement

By Anthony Mirhaydari
MSN Money
May 23, 2012

You don’t have to be a hedge fund manager or a Wall Street CEO to know that something’s very wrong with the economy and the stock market right now. I’m not talking just about the embarrassingly bad Facebook (FB) initial public offering. Let me count the problems.

Inflation-adjusted wages have been steadily falling over the past few months, the first time that has happened in a nonrecession environment, as people turn to credit cards and tap savings in response to higher food and fuel prices. Last year, we had the weakest nonrecession annual growth of gross domestic product since the 1940s. The credit channel is broken. Home prices are down to 2002 levels. And the stock market has yet to retake its 2000 or 2007 highs.

Beneath all this is a simmering government debt crisis, as long-postponed hard choices on debt and deficits in the rich world come home to roost. Europe is on the front lines of this. Here at home, a combination of higher taxes and spending cuts in early 2013 worth nearly 4% of GDP—the ”FISCAL CLIFF” I recently WARNED OF—is set to throw America back into recession.

The longer-term picture is even scarier: If nothing is done, by 2024—according to a Credit Suisse estimate—100% of U.S. tax revenues will go to entitlement spending and interest payments on the federal debt. That’s it. Nothing left for tanks, jets, food stamps and SEC regulators. Nada.

While this seems intractable, the root of the problem is really quite simple: too many old people.

Specifically, the nearly 80 million members of the baby boom generation are quickly aging, with most in their mid-50s now. This simple dynamic is the undercurrent beneath many of our problems, from a stagnant stock market to a bleak jobs outlook and the debt/deficit problem. Here’s why.

Not to spoil the surprise or anything, but you’ve probably gathered that I’m not a boomer. And I’m not here to go after boomers on social issues, or on the way they wasted the Greatest Generation’s legacy: America as the world’s sole superpower, a dynamic economy, a vibrant middle class and state-of-the-art infrastructure. OK, maybe I’m a little miffed.

Although there are grounds for an intergenerational fight, I’m more interested in the tragic nature of all this. Boomers, fully committed to the postwar consumerist culture and suffering from the rise and fall of two epic asset price bubbles, haven’t saved enough for retirement. They also didn’t have enough kids—you know, sexual revolution and all. I’ll have more on that in a minute.

Rising life expectancies make the problem worse. And long-stagnant wages for the middle class haven’t helped.

The 2012 Retirement Confidence Survey (.pdf file) by the Employee Benefit Research Institute paints a grim picture. Only 14% of workers are very confident they will be able to afford a comfortable retirement. Some 60% of workers report that the total value of savings and investments, excluding the value of their primary residence, is less than $25,000. And while 56% expect to receive benefits from a defined-benefit plan in retirement, only 33% report that they or their spouse currently has such a plan.

Clearly, false hope and procrastination are at work.

Thus, instead of enjoying the twilight of life atop a Harley or upon white sandy beaches, a lot of these folks will be STAYING IN THE WORKFORCE—often at low-paying, menial positions—just to survive. The percentage of respondents expecting to retire before the age of 60 has fallen from nearly 20% in 1991 to just 8% now, while the percentage of workers expecting to clock out at 70 or older has jumped from 9% to 26% over the same period.

With the stock market coming off its worst 10-year performance since the Great Depression and with housing still in the tank, that’s not surprising. But here’s the kicker: By clogging up the job market, this army of gray labor will make it harder for the cohort of would-be workers ages 16 to 34 to get any traction. And that will only get worse, because the oldest boomers are now 66.

Younger workers are the folks who put money into housing and the stock market; they’re the buyers who allow older folks entering retirement to cash in those assets. They also pay the taxes that keep entitlements like Social Security going.

It’s a vicious cycle. Boomers are working longer because they can’t retire, and they can’t retire because their homes and nest eggs aren’t holding their value, much less gaining. This keeps younger folks from taking over their jobs, which would allow the younger folks to buy those homes and start building their own nest eggs, pouring fresh cash into investments. (Instead, it seems, a lot of those younger folks are moving back in with their boomer parents. The cycle of misery is complete.)

No wonder net household wealth in the U.S. is down 15% from its pre-recession peak.

Young and old, both going nowhere

I saw this demographic debacle in action last week at the Las Vegas MoneyShow. Attendees were—how should I say this—of a certain vintage: baby boomers and even older. What I heard was a far cry from the popular excitement with which investing was viewed back in the 1980s and 1990s. The people who are still actively managing their investments are focused on capital preservation, thrift and income—as they should be as they age—not capital gains and investing fads like social media.

The young, bloodthirsty risk-takers were MIA.

The shift can be felt in many ways. Here at MSN Money, reader traffic often spikes during market meltdowns, while quiet uptrends are largely ignored. Since the recession ended, the action has focused on things like bonds and dividend sources as money is pulled out of equities. Mutual fund data show that over the past three years, private investors have been net redeemers of stocks two-thirds of the time as they sell into rallies and tuck the cash into more defensive, income-producing assets.

So it’s not surprising that New York Stock Exchange primary market volume has fallen to levels not seen since the late 1990s. It was then that the share of the population focused on risk and capital growth (those ages 25 to 49) peaked at around 39%. Since then, the share of the capital preservers (ages 50 to 74) has grown from around 20% to 28%.

In short, investors are checking out. Data from the Investment Company Institute show that the portion of financial assets in retirement accounts peaked in the late 1990s at around 35% and has been flat-lining ever since.

You can see it in the labor market, too, as Gluskin Sheff economist David Rosenberg recently pointed out in a note to clients. Since the Great Recession ended, folks 55 years old and older have seen their employment jump by 3.8 million; for everyone else, employment has dropped 8.2 million.

Labor participation rates suggest that boomers are keeping youngsters out of jobs. The employment-to-population rate for the 55-and-up crowd has hovered near 38% over this time; for everyone else, it’s dropped from 73.3% to 68.5%. As a result, the unemployment rate for teens ages 16 to 19 is a Europe-like 25%, while for the 20- to 24-year-olds it’s a painful 13%.

Rather than fight their parents and grandparents for jobs, many choose to hide out in college, pushing up tuition costs and student indebtedness. Total STUDENT LOAN DEBT has reached more than $1 trillion. Now, 94% of those graduating with bachelor’s degrees are in the hole, versus 45% two decades ago.

That’s why these post-baccalaureates are LANDING on their parents’ couches.

Feeling sick yet?

The other dynamic here is that as the boomers age, they will put increasing strain on the social entitlement system, since there are fewer young workers available to pay into the programs. At the same time, the biggest bugaboo—health care—is suffering massive cost inflation. We’re just beginning to feel the pinch. Right now, the ratio of those 65 and older versus those 15-64 is right around 20%. By 2035, it’ll be closer to 35%.

The math gets ugly when that happens, according to Credit Suisse economist Neal Soss. The surge in retirees pushes up costs for Social Security and Medicare (cost as a percentage of taxable income) while the income rate (tax revenue as a percentage of taxable income) remains more or less flat.

Looking only at Social Security, the cost exceeded tax revenues in 2010. Should this continue, the disability insurance fund will run out in 2016 and the Social Security trust fund will be empty in 2033.

Given the situation with retirement savings, more and more people depend on these funds for basic expenses. Indeed, the share of income for those 65 and older from Social Security has increased from 31% in 1962 to 37% now. Given the data I just outlined, this is likely to continue to rise. So cutting benefits isn’t a realistic solution.

Politicians will probably choose to raise taxes on younger workers—the ones who can find jobs and are repaying their student loans. The Social Security Administration’s 2012 trustees report projected that if the payroll tax rate were immediately increased by 2.67% of income, the trust could keep going through 2086. Just try to sell that to indebted, underpaid youngsters. We’ll have our own version of Spain’s indignados movement.

It’s the same story with health care. Health expenditures in the United States are among the highest in the world—and focused overwhelmingly on the very old, courtesy of the government—while spending on the 20- and 30-somethings, the people we need to keep healthy to pay those Social Security taxes, is relatively low.

Still, until we find a solution to the underfunded entitlement programs, the government’s overall debt/deficit problem isn’t going away.

Stuck in limbo

So, what’s the takeaway from all this?

For investors, stocks probably won’t break out of their 12-year funk until young workers start generating enough income to pay down debt, overcome high tax burdens, buy homes and start saving for retirement in a big way. And they won’t be able to do that until other structural issues—especially the debt/deficit problem—are resolved. We’re in a trader’s market, searching for special stocks going up rather than marketwide gains, and we’ll be there a while.

For all of us, it’s time to pressure politicians to take action and break this cycle. We’re only 12 years from all tax revenues going to aging boomers and interest payments. We’re only 21 years from the Social Security trust fund running dry.

And we can see these moments coming. They’ve been in the cards since the first boomer was born on New Year’s Day in 1946. There’s no excuse for not getting ready. And now, my generation will have to pay for it.

SOURCE

Posted by Elvis on 02/02/13 •
Section Dealing with Layoff • Section Dying America
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