Nearly one-third of middle class suffer downward mobility

Tami Luhby of CNNMoney.com wrote in January 12, 2012:

Nearly one third of Americans who were raised in the middle class dropped down the economic ladder as adults -- and that's before the Great Recession hit. Pew looked at children born in the early- to mid-1960s and assessed their economic status roughly 40 years later.

Being middle class in the parents' generation meant a household income of roughly $33,000 to $64,000 in 1979. But their children had to earn between $54,000 and $111,000 to maintain their relative standing in society in the mid-2000s. (These figures are adjusted for inflation.)

The middle class is defined as those between the 30th and 70th income percentile.

Things have only gotten worse in recent years. The Great Recession has likely made it harder for many people to remain in the middle class, experts said.

Long-term unemployment has devastated the ranks of the middle class, with many people losing their homes and forced to turn to food banks and government aid after they run through their savings. It takes nearly 41 weeks, on average, for the jobless to find new work. Also, the steep decline in home values has hurt many in the middle class.

Young adults may find it particularly difficult to hold onto their parents' middle class status. That's because they are having a much harder time landing jobs, particularly well-paying positions in their field. The unemployment rate for 20- to 24-year-olds was 14.4% in December, compared to the national 8.5% rate.

This could hurt their earning potential for decades to come, which has earned them the nickname "The Lost Generation."

http://money.cnn.com/2012/01/11/news/economy/middle_class_mobility/index.htm

Where is the American Dream today?

On November 16, 2011, Tiziana Dearing, CEO of Boston Rising, questions whether or not the American Dream is still alive.

Post-recovery is taking longer than the past. From 1945 to 1990 it took on average six months for jobs to return to their pre-recession levels. In the recession of the early 1990s, it took fifteen months. In the early 2000s, it took 39 months. Today we are on track for jobs to come back 60 months (five years) after the economy has recovered.

According to the Brookings Institute, the poor in the U.S. grew to an historic high of 46.2 million, and in extreme-poverty neighborhoods, where at least 40% of individuals live below the poverty line, the population rose by one-third from 2000 to 2005-09. The American Dream is receding. Americans are no longer dreaming the same Dream.

http://www.huffingtonpost.com/tiziana-dearing/us-wealth-gap_b_1093582.html

Amid unemployment and inequality, is the American Dream at risk?

On October 26, 2011, Zachary Ross, The Lookout, wrote about the economic results of the Great Recession on the Future of the American Dream. Zachary writes:

For well over a century, the American Dream has acted as a beacon of hope to people around the world: the notion that by working hard and playing by the rules, anyone can build a secure, comfortable life for themselves and a bright future for their kids. But as the country struggles to shake off the Great Recession, amid persistent joblessness and growing inequality, is that idea at risk?

In May, a Pew poll found that just 47 percent of Americans think their kids will enjoy a higher standard of living as adults than they themselves do. As recently as 2009--the height of the economic downturn--that number was 62 percent.

This growing pessimism isn't hard to explain. Fourteen million Americans are officially unemployed, and the number spikes to around 26 million if you count people who have grown discouraged and given up looking for work. The average duration of joblessness is now at a record nine months. Meanwhile, GDP growth has been limping along since the official end of the recession over two years ago.

The young have been especially hard hit. Unemployment for Americans in their 20s has skyrocketed in recent years. And a growing number are moving in with their parents as they struggle to make ends meet.

At the same time, Americans have also been debating the thorny question of inequality--an issue spotlighted lately by the Occupy movement. A CBO report released Tuesday--just the latest in a series of studies to confirm the massive rich-poor gap--found that income for the wealthiest one percent of Americans had exploded since 1979, by a whopping 275 percent. Meanwhile, income for the poorest 20 percent grew by just 18 percent in the same period.

But the heart of the American Dream has always been about mobility. As long as people feel they have a fair shot at building a better life, they've usually been able to put up with periods of economic turmoil, even with relatively high levels of inequality.

Of course, concerns about the flickering of the American Dream are hardly new. Back in the recession of the early 90s, Generation Xers graduating from college were told they'd struggle to do better than their parents had--a prediction that wasn't borne out.

But this time may be different. Economists say that even once growth gets back to normal--whenever that may be--employment will likely come back lower than we've grown used to, thanks in part to increasing offshoring of jobs and automation. And our political system appears even more dysfunctional than it did even back then.

"It's time to reclaim the American Dream," then-Sen. Barack Obama declared back in 2007. At this point, it looks like we've got a long way to go.

http://news.yahoo.com/blogs/lookout/amid-unemployment-inequality-american-dream-risk-200141836.html

2011 - 2012

It’s been awhile since I updated the latest economic news. The Great Recession ended over two years ago, yet the economy is only slowly coming back. Let’s look at a few headlines and stories.

Scituate Harbor in winter

Mister Kitty Stretches

What is some advice for the younger generations?

Plan for the long run. Save money while you are young. Teach yourself the discipline to save 5% of your salary toward the long term. You may think your earnings will continue on an upwards trend. In reality, your earning potential will peak and begin to decline after you turn 45, unless you are really fortunate.

Use more technology and be current in your skills. Constantly update your skills – don’t wait for a job or your boss to plan your professional development or update your skills. Stay current and learn new things.

Make the effort to connect with people regularly and have conversations in your chosen career and industry, and also in other industries where you have interests. Keep building your network. Leverage social media through LinkedIn, Facebook and Twitter.  

Create a new American Dream for yourself. Recessions and depressions will happen again. It’s very cyclical. Look at the other decades. Life is important, build relationships where people reach out and really help each other. Stay in touch with your network. Pay it forward and help someone.

Count on the need for a rainy day fund and build one. Be careful with spending frivolously and understand financial risks. Don’t want too much “stuff” and don’t overspend your lifestyle.

And remember, your identity is not your job, your identity is you.

How will we view our career, retirement and professional development post-Great Recession?

There is no fast money. You need to chart your own career. There is a long-term impact to your decisions. Understand the long-term fit and chart how your career progresses. Don’t wait for someone else to build your career.

In J’s case, retirement is ten years away. There is no financial security to carry through his retirement years. He needs to build a new nest egg since he spent most of his long-term savings on survival and conducting an extended job search. Even with retirement in ten years, J has no desire to stay at home. He’ll continue working part-time to use his brain power.

It’s now about personal brand image vs. company loyalty. It’s what we offer the company vs. what they offer us. With the significant economic impact of the Great Recession and many companies downsizing, we need to focus on “my brand” and think of it first. With current technology, you can find out about people instantaneously. There are serious ramifications to your self-image, and you need to mange that image.

You need to stay loyal to yourself, not your company, and have an ongoing and continuous job search. Watch the signals for job changing needs and planned staff reductions. It can happen to you at any time. Define yourself, your personal skill set, and work for yourself vs. the institution.

Continue to redefine yourself. We all need to work until 80 now, not 65. Can we afford to dream? Dreams we had at the start of our career have disappeared.