This is a tale of two age groups, the one overcome by a wave of economic change and the other triumphantly riding the wave —or so it might seem.
Those tumbling in the wave are 35-to-44-year-olds, the age group now filled with the youngest boomers (this year boomers span the ages from 42 to 60) and the oldest generation Xers (aged 30 to 41). Those riding the wave are 55-to-64-year-olds, the age group filling with the oldest boomers.
The socioeconomic trends among 35-to-44-year-olds are grim:
1. Men's incomes are shrinking: The median income of men aged 35 to 44 was not only lower in 2004 than in 2000, it was also 3 percent below the level of 1990, after adjusting for inflation. In contrast, the median income of the average man rose 7 percent between 1990 and 2004, according to the Census Bureau's Current Population Survey.
2. Household net worth is declining: The net worth of households headed by 35-to-44-year-olds fell 16 percent between 2001 and 2004, after adjusting for inflation—the only age group to lose ground during those years, according to the Federal Reserve Board's Survey of Consumer Finances.
In contrast, take a look at the trends among 55-to-64-year-olds:
1. Men's incomes are growing: The median income of men aged 55 to 64 grew nearly twice as fast as the average between 1990 and 2004 (up 13 percent) and even grew 5 percent between 2000 and 2004.
2. Household net worth is rising: The net worth of households headed by 55-to-64-year-olds increased by an impressive 29 percent between 2001 and 2004, after adjusting for inflation—the greatest gain among age groups and far above the paltry 1.5 percent gain for the average household during those years.
But 55-to-64-year-olds may be riding a wave into a rocky shore. Behind their growing incomes and net worth is greater labor force participation as pension benefits shrink and retirement recedes. The labor force participation rate of men in the age group rose 2 percentage points (from 67 to 69 percent) between 2000 and 2005. Among women aged 55 to 64, the labor force participation rate rose even more (from 52 to 57 percent) as career-oriented boomers filled the age group.
Working more because retirement benefits are shrinking (a de facto pay cut) is not good news for the millions without substantial retirement savings, although it will delay by a few years the rocky landing that lies ahead.
1 comment:
Cherie, these figures are dramatic and not revealed in news bites about our so-called strong economy. I guess rising property values in recent years have contributed to the higher net worth of older boomers, who are more likely to have larger equity in their homes. But what's contributing to men's lower incomes? Is it the widespread exporting of service and management jobs to cheaper labor outside the U.S. forcing those out-of-work middle managers to take lower-wage positions? All the new job growth in the US clearly isn't helping those workers. (Hello Wal-Mart.) But it's the deminished retirement security that'll blow the whole system. It's fairly distressing.
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