Retirement Readiness: What the SCF Reveals

Boomers are not ready for retirement. That's the finding of a new report from the Center for Retirement Research at Boston College, which analyzes 2010 Survey of Consumer Finance data to determine the retirement readiness of older householders.

The typical household headed by a 55-to-64-year-old has only $120,000 in 401(k)/IRA savings--about the same as in 2007, according to CRR director and author of the report, Alicia H. Munnell. She warns that these households will be surprised at how little their retirement savings provides them in retirement. If a couple, for example, uses this savings to purchase a joint-survivor annuity, it would pay out only $575 a month. Except for Social Security, that $575 per month is likely to be the couple's only source of income, says Munnell, because the typical older householder has "virtually no financial assets outside of its 401(k) plan."

Source: Center for Retirement Research at Boston College, 401(k) Plans in 2010: An Update from the SCF 

I Don't Think So

Which states will be the best places to live in 20 years? Gallup threw some "metrics" in a hat, gave it a tap and a twirl, and this is what they pulled out: the best places to live in 2032 will be the West North Central states of Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, and Kansas.

Source: Gallup, Where You'll Want to Live in 2032

Glimmer of Hope?

Question: "Are they [economists] really the only social scientists with anything useful to contribute to the efficient running of a government?" asks Richard H. Thaler in an article in the New York Times (Watching Behavior Before Writing the Rules).

Answer: Of course not, but try telling that to the U.S. government.

Economists monopolize government policymaking in the United States, says Thaler. Not so in Britain, where a few years ago the government decided to try something different. It created a Behavioral Insights Team manned by other kinds of social scientists (such as sociologists and psychologists) with the aim of helping government agencies function more efficiently by making it easier for people to do the right thing--like pay their taxes on time or weatherize their home. It worked. The team has already paid for itself many times over. Let's hope the U.S. government takes notice.

The Rise of Student Debt

The percentage of households with education loans has more than doubled over the past two decades, according to new numbers from the Survey of Consumer Finances. In 2010, nearly one in five households (19 percent) had outstanding student debt, up from 9 percent in 1989. Among households with student debt, the median amount owed climbed from $5,100 to $13,000 during those years, after adjusting for inflation.

The numbers are worse for householders under age 35. Fully 40 percent had education loans in 2010, up from 17 percent in 1989. Young householders were once far more likely to have mortgage debt, vehicle loans, or credit card debt than student loans. Not anymore. The 40 percent of householders under age 35 with education loans surpasses the 34 percent with mortgage debt, the 32 percent with vehicle loans, and even the 39 percent with credit card debt.  

Source: Federal Reserve Board, Survey of Consumer Finances

Where Do Women Feel the Safest?

When women in 143 countries were asked whether they would feel safe walking alone at night in the area where they live, Gallup found big differences in feelings of security.

At the top of the list, 90 percent of women (and 93 percent of men) in the nation of Georgia say they would feel safe walking alone at night. At the bottom of the list, only 21 percent of women (and 36 percent of men) in Afghanistan feel safe. In the United States, 62 percent of women (and 89 percent of men) feel safe walking alone at night.

Source: Gallup, Women Feel Less Safe than Men in Many Developed Countries

Telecommuting: No Utopia

Be careful what you wish for. Telecommuting was once heralded as a way to reduce energy consumption, traffic congestion, and work-family conflict. Dream on. According to an analysis published in the Monthly Labor Review, telecommuting is instead being used by harried workers and demanding employers to cram additional hours of labor into an already full workweek.

About one in four employed Americans report working at least some hours at home each week, according to sociologists Mary C. Noonan and Jennifer L. Glass in their study "The Hard Truth about Telecommuting." Rather than being a benefit to workers, they write, "telecommuting appears to have become instrumental in the general expansion of work hours, facilitating workers' needs for additional work time beyond the standard workweek and/or the ability of employers to increase or intensify work demands among their salaried employees."

In their study, the authors examine whether workers use telecommuting as a substitute for office hours or on top of their 40-hour work week. They find that one-half to two-thirds of the hours workers spend telecommuting is on top of a full workweek--in short, overtime. Telecommuting is being used by workers to relocate overtime hours from the office to the home. "The ability of employees to work at home may actually allow employers to raise expectations for work availability during evenings and weekends and foster longer workdays and workweeks," they conclude.

21-Year-Olds in School

Percentage of 21-year-olds enrolled in school...

2010: 51%
2000: 40%

Source: Census Bureau, School Enrollment

Life Events among Older Americans

Percentage of Americans aged 50 or older who have experienced selected life events in the past five years...

Changed lifestyle due to medical condition: 23%
Became a grandparent: 19%
Retired from a job: 15%
Had an adult child move back home: 14%
Had a spouse/partner die: 4%

Source: AARP, How Insights on 50+ Adults Can be Useful to Local Businesses

Who's Ready to Retire?

Percentage of householders aged 50 to 59 who will be financially ready to retire (able to maintain their current living standards) by...

Age 62: 40%
Age 66: 66%
Age 70: 89%

Source: Center for Retirement Research at Boston College, National Retirement Risk Index: How Much Longer Do We Need to Work?

Homeowner Wealth

The median net worth of the nation's homeowners was $163,856 in 2010, down from $215,619 in 2005--a decline of 24 percent after adjusting for inflation, according to the Census Bureau. Excluding home equity, the median net worth of homeowners was $44,260 in 2010, down from $55,580 in 2005.

Source: Census Bureau, Wealth and Asset Ownership

New Americans

Last year, 694,193 foreign-born residents of the United States became naturalized citizens. Twelve countries account for slightly more than half the total: Mexico (13.7%), India (6.6%), Philippines (6.1%), China (4.7%), Colombia (3.3%), Cuba (3.0%), Vietnam (3.0%), Dominican Republic (3.0%), Jamaica (2.1%), Haiti (2.0%), El Salvador (2.0), and South Korea (1.8%).

Source: Department of Homeland Security, U.S. Naturalizations: 2011

Pregnancy Outcomes

More than 6 million women become pregnant each year in the United States, yet only 4 million babies are born. That's because only 65 percent of pregnancies result in a live birth. Another 18 percent end in induced abortion and 17 percent in miscarriage.

Source: National Center for Health Statistics, Estimated Pregnancy Rates and Rates of Pregnancy Outcomes for the United States, 1990-2008

Household Income Rises in May

Median household income climbed 0.7 percent between April and May 2012 after adjusting for inflation, according to the latest monthly update from Sentier Research. The May median of $50,773 was $346 greater than the April median, a statistically significant increase. Falling prices were behind the increase--specifically the decline in the price of gasoline.

Despite the increase in median household income, the May median was 5.3 percent lower than median household income in June 2009--the end of the Great Recession. It was 7.7 percent lower than the median in December 2007, the start of the Great Recession. It was 8.6 percent lower than the median in January 2000. 

The Household Income Index for May 2012 was 91.4 (January 2000 = 100.0).

Source: Sentier Research, Household Income Trends: May 2012 

Spending: The Top Ten List

The ten items on which the average household spends the most were the same in 2010 as a decade earlier, although the order had changed and spending trends for the top ten items ranged from a 47 percent increase (health insurance) to a 63 percent decrease (federal income tax), after adjusting for inflation.

Here is the 2010 top ten list in rank order, along with how much the average household spent on those items and the percent change in spending since 2000, after adjusting for inflation...

1. Deductions for Social Security: $3,903 (+44%)
2. Groceries: $3,624 (-5%)
3. Mortgage interest: $3,154 (+1%); or Rent: $2,773 (+11%)
4. Vehicle purchases: $2,588 (-40%)
5. Gasoline and motor oil: $2,132 (+30%)
6. Restaurants: $2,081 (-6%)
7. Health insurance: $1,831 (+47%)
8. Property tax: $1,814 (+26%)
9. Electricity: $1,413 (+22%)
10. Federal income tax: $1,136 (-63%)

The average household spent $48,109 in 2010, almost identical to the $48,176 it spent in 2000, after adjusting for inflation. Some notable changes in the rankings of items on which the average household spends the most: Cell phone service surged from 66th to 14th place; College tuition climbed from 24th to 16th place; and Cable television service rose from 28th to 18th in the rankings.

Source: Bureau of Labor Statistics, Consumer Expenditure Surveys

Your Chance of Going to Prison

The likelihood that you will be imprisoned at some point in your life depends greatly on your demographic characteristics...

Lifetime Likelihood of Imprisonment
Black men: 1 in 3
Hispanic men: 1 in 6
White men: 1 in 17
Black women: 1 in 18
Hispanic women: 1 in 45
White women: 1 in 111

Source: The Sentencing Project, Trends in U.S. Corrections

Telephone Status of Households

Every six months the National Center for Health Statistics (surprisingly) examines the telephone status of households. The latest numbers are out, providing a look at the telephone status of households in the last half of 2011...

53% landline and cell phone
34% cell phone only
10% landline only
  2% no telephone

The percentage of adults who live in a cell-phone-only household is in the majority for the following segments: 25-to-29-year-olds (59.6%), 30-to-34-year-olds (50.9%), unrelated adults living together (77.5%), people in households below poverty level (51.4%), and renters (56.0%).

Source: National Center for Health Statistics, Wireless Substitution: Early Release of Estimates from the National Health Interview Survey, July-December, 2011

So Much for Deleveraging

Yes, households have been paying off their credit cards, but there's another IOU they don't have under control: nonrevolving (or installment) debt, says the Federal Reserve Bank of Cleveland.

The percentage of households with a balance on their credit cards fell from 46 to 39 percent between 2007 and 2010, according to the Survey of Consumer Finances. In contrast, there has been little change in the percentage of households with installment loans--46.9 percent in 2007 and 46.3 percent in 2010. The two major components of installment debt are auto and education loans. Frustratingly, the Fed's analysis of the 2010 Survey of Consumer Finances did not examine these individual components.

For the average household with debt, installment loans are much more serious than credit card debt because they are nearly five times larger (a median of $12,600 versus $2,600 in 2010). The Cleveland Fed notes that total household borrowing as a share of disposable income has been rising since the second quarter of 2009. That's because installment debt as a share of disposable income is now at a record high.

Source: Federal Reserve Bank of Cleveland, Consumer Deleveraging May be Over

Big Cities Growing Faster

The population of the nation's cities grew 1.0 percent between 2010 and 2011, according to estimates by the Census Bureau. Interestingly, with a growth rate of 1.3 percent, large cities (with populations of 100,000 or more) grew faster than smaller cities. Among the nation's 285 large cities, only 22 lost population between 2010 and 2011.

Source: Census Bureau, City and Town Totals: Vintage 2011

The Obamacare Workforce

"Increasingly, the American economy is being defined by its healthcare sector," according to a new report, Healthcare, by Georgetown University Center on Education and the Workforce.

With or without Obamacare, notes the report, there will be 5.6 million more health care jobs in 2020 than today. Health care employment is projected to grow twice as fast as the national economy during this decade. The report looks at the demographics of the health care workforce and examines job growth by health care field, occupation, and wage.

Two Facts and a Theory that Might Explain Them

Facts
1. Fastest growing state, 2010-2011: District of Columbia (up 2.7 percent).
2. Metro with the highest median household income, 2010: Washington, D.C. ($84,523).

Theory
"Historically in nations where city economies are dying...one city remains vivacious longest: the capital city. This is because capital cities thrive on transactions of decline...transfer payments, subsidies, grants, military contracts and promotion of international advanced-backward trade...Behind its busyness at ruling, a capital city of a nation or an empire, vivacious to the last, at length reveals itself as being a surprisingly inert, backward and pitiable place."

Facts are from the Census Bureau.
Theory is from Cities and the Wealth of Nations: Principles of Economic Life, Jane Jacobs.

No More Easy Access to Crime Statistics

Get ready to say goodbye to another jewel in the demographic reference genre. The Sourcebook of Criminal Justice Statistics Online is soon to join the Statistical Abstract in the potter's field of indigent projects, victims of the defunding of American civic life.

Budget cuts at the Bureau of Justice Statistics are likely the death knell for the Sourcebook, which was compiled for the past four decades by the School of Criminal Justice at the State University of New York at Albany. The loss of easy access to statistics on crime and imprisonment is unfortunate, since the U.S. has the highest imprisonment rate in the world (743 people in prison per 100,000 population--well ahead of second place Rwanda with a rate of 595); 7 million American adults are on probation, in prison, or on parole; and federal, state, and local government spending on our bloated justice system now surpasses $200 billion a year.

Maybe eliminating easy access to these horrific statistics is the point.

Cell Phone Internet Use

88% of American adults own a cell phone.
55% of cell phone owners use their phone to go online.

Among the 55 percent of people who access the Internet using their cell phone, a substantial 31 percent use their cell phone for most of their Internet browsing. Among 18-to-29-year-olds, 45 percent use their phone for most of their browsing. Among blacks, the proportion is an even larger 51 percent. The single biggest reason for using a cell phone for most Internet browsing is convenience and availability, cited by 64 percent. Only 10 percent say it is because they have no other Internet access.

Source: Pew Internet & American Life Project, Cell Internet Use 2012

Notable Changes in Time Use

If you compare the results of the 2011 American Time Use Survey with those from 2007, before the Great Recession, you can glean the many ways in which life has changed...

• Fewer men at work: Only 50 percent of men aged 15 or older worked on an average day in 2011, down from 54 percent in 2007.
• More sleep: With more people out of work, average sleep time increased from 8.57 to 8.71 hours per night.
• More home cooking: The percentage of people who participated in food preparation and cleanup on an average day grew from 51 to 53 percent.
• More schooling: The percentage of people aged 15 or older who attended classes or did homework on an average day climbed from 7.9 to 8.4 percent.
• Fewer watching TV: The percentage of people who watch TV on an average day fell by more than 1 percentage point between 2007 and 2011--from 79.5 to 78.3 percent. Among those who watched TV on an average day, however, viewing time grew from 3.30 to 3.51 hours.
• Fewer caring for kids: As births fell from their 2007 peak, the share who care for household children on an average day fell by a full percentage point--from 21.8 to 20.8 percent.

Source: Bureau of Labor Statistics, American Time Use Survey

Fewer Shoppers

Newly released statistics from the 2011 American Time Use Survey provide a glimpse of how the Great Recession has changed daily life. Those changes, in turn, have taken a toll on the economy. The decline in shopping is a good example.

Women are the primary shoppers, and fewer women shopped in 2011 than in 2007. On an average day in 2011, 46.6 percent of women aged 15 or older shopped in a store, by telephone, or online. This compares with a larger 48.2 percent of women who shopped for goods and services on an average day in 2007. Do the math and that's 2 million fewer shoppers per day than would have been in the marketplace if the percentage who shopped had remained the same.

To add insult to injury, the women who shopped on an average day in 2011 spent less time doing so--only 1.77 hours in 2011 versus 1.92 hours in 2007.

Source: Bureau of Labor Statistics, American Time Use Survey

Support for an Atheist

Only 54 percent of the Americans would be willing to vote for an atheist for president of the United States. The percentage varies considerably by age...

18 to 29: 70%
30 to 49: 56%
50 to 64: 48%
65-plus: 40%

Source: Gallup, Atheists, Muslims See Most Bias as Presidential Candidates

The Mexican Dream

Most Mexicans do not want to live in the United States. When asked whether they would like to move to the U.S., the 61 percent majority of Mexicans say no, according to a  Pew Survey. Eighteen percent say they would move to the United States if they could do it legally, and another 19 percent say they would like to move to the U.S. even if they have to do it illegally.

Source: Pew Research Center, Mexicans Back Military Campaign against Cartels

Economic Insecurity State by State

What is the single most important ingredient needed to maintain a middle-class lifestyle? Economic security: the ability to withstand economic shocks caused by a sudden loss of income. Unfortunately, the shocks are increasingly common and the security is increasingly elusive, which explains why the middle class is shrinking. In 2010, a substantial 20.5 percent of Americans were economically insecure--up from 14.3 percent in 1986, according to the Economic Security Index (ESI)--a research initiative led by Yale political scientist Jacob S. Hacker. The economic insecurity of Americans varies greatly by state, however, and those state numbers are now available in a new ESI report.

ESI defines the economically insecure as Americans who have experienced a one-year drop of at least 25 percent in their disposable household income (the income that remains after paying for medical care and servicing debt) and who lack savings to cope with the decline.

Economic insecurity has been rising in every state without exception. But some states are worse than others. Insecurity is greatest in Mississippi, where 24.5 percent of the population experienced at least a 25 percent drop in income in 2010 and lacked savings to make it through the hard times. Insecurity is lowest in New Hampshire, where a smaller (but still substantial) 17.0 percent of the population found themselves in financial free fall in 2010. Reports for individual states can be downloaded from the site.

Source: Economic Security Index, Economic Insecurity Across the American States

Immigration = Good

Percentage of Americans who think immigration is a good thing for the country: 66%.

Source: Gallup, Americans More Positive about Immigration

Asian American Identity

Only 19 percent of Asian Americans identify themselves as Asian American. The 62 percent majority describe themselves by their country of origin rather than Asian or Asian American.

Source: Pew Research Center, The Rise of Asian Americans

Sharing a Household

A new Census Bureau report examines the widely reported phenomena of what the bureau calls "shared households." These are defined as households that include adults who are neither the householder, the spouse, a cohabiting partner, or in school.

The bureau estimates that there were 22 million shared households in 2010, accounting for a substantial 19 percent of total households and up from 17 percent in 2007. Sixty-nine million adults (30 percent of the population aged 18 or older) live in a shared household.

To understand the shared household, take a look at the characteristics of the additional adults who live there. Eighty-two percent are relatives of the householder. Forty-six percent are a child of the householder, 13 percent are a parent of the householder, 8 percent are a brother or sister of the householder, and 14 percent are some other relative. The 56 percent majority of additional adults in shared households are aged 18 to 34.

Source: Census Bureau, Sharing a Household: Household Composition and Economic Well-Being: 2007-2010

Net Worth Minus Home Equity

Take away the house, and Americans have little wealth. Median household net worth was $66,740 in 2010, according to the Census Bureau, but falls to just $15,000 if home equity is excluded. Here is median household net worth excluding home equity by age of householder...

Under age 35: $3,528
Aged 35 to 44: $11,945
Aged 45 to 54: $23,738
Aged 55 to 64: $40,990
Aged 65-plus: $28,518

Source: Census Bureau, Wealth and Asset Ownership

Nursing Home Costs

A growing percentage of people aged 65 or older are experiencing nursing home stays. According to a report by the Employee Benefit Research Institute, 8.5 percent of Americans aged 65 or older had a nursing home stay in 2010, up from 6.0 percent in 2000.

Because only 14 percent of older Americans who enter a nursing home are covered by long-term care insurance, a stay in a nursing home depletes household wealth. The median household net worth of people aged 65 or older who experienced a stay in a nursing home was $102,073 before entry. After six months in a nursing home, median net worth was just $5,518.

Source: Employee Benefit Research Institute, Effects of Nursing Home Stays on Household Portfolios

How Big a Rainy Day Fund?

When families are asked how much money they need to set aside for emergencies, the median amount they report is $5,000. But the figure rises with income from a low of $2,000 for households with the lowest incomes to a high of $30,000 for households in the top 10 percent of household income. As a percentage, however, households believe they need pretty much the same amount--10.8 percent of income socked away for a rainy day.

Source: Federal Reserve Board, Federal Reserve Bulletin, Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances

Senior Pranks

Percentage of high school seniors who did the following during the past month...

Texted while driving: 58%
Drank alcohol: 48%
Used marijuana: 28%
Smoked cigarettes: 25%

Source: CDC, Youth Risk Behavior Surveillance--2011

It's The House, Stupid!

Today the Census Bureau released its own survey findings on household wealth, confirming the bad news reported last week by the Federal Reserve Board. Median household net worth in 2010 was $66,740, says the bureau, even lower than the $77,300 reported by the Fed, and down 35 percent since 2005 after adjusting for inflation.

Anyone tempted to dismiss the decline in household wealth as "just" a consequence of the collapse of the housing market, keep in mind that housing is the single most important asset owned by the average household. Excluding home equity, median household net worth is only $15,000, according to the Census Bureau. It might be possible to dismiss the loss of housing wealth as a temporary aberration, soon to be corrected, if the demographic headwinds (downsizing boomers and struggling younger adults) were not so formidable. A rebound is unlikely for years to come.

Source: Census Bureau, Wealth and Asset Ownership

Most Do Not Own Stock

Only 49.9 percent of households own stock either directly or indirectly through mutual funds and retirement accounts, according to the 2010 Survey of Consumer Finances. This is down from the 53 percent majority in 2007. Between 2007 and 2010, the median value of stock owned by households fell from $35,500 to $29,000--an 18 percent decline, after adjusting for inflation.

Transactions accounts and retirement accounts are the only two financial assets owned by most households. The median value of transaction accounts (owned by 92.5 percent of households) in 2010 was just $3,500. The median value of retirement accounts (owned by 50.4 percent of households) was $44,000. Both declined in value between 2007 and 2010.

Source: Federal Reserve Board, Federal Reserve Bulletin, Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances

The Problem with High-Deductible Health Plans

The problem is, people won't go to the doctor or take their medicine. That's what research shows, according to a study by the Employee Benefit Research Institute. It compared access to health care among people in traditional health insurance plans versus those in high-deductible plans--with an individual deductible of more than $1,000 a year and a family deductible of more than $2,000 a year.

The study examined whether individuals had done any of the following during the past year: not filling a prescription due to cost, skipping doses to make a medication last longer, or delaying or avoiding getting health care due to cost. The results show that 42 percent of those in high-deductible plans had delayed or avoided getting health care versus a smaller (but still substantial) 31 percent of those in traditional plans.

Source: Employee Benefit Research Institute, Use of Health Care Services and Access Issues by Type of Health Plan: Findings from the EBRI/MGA Consumer Engagement in Health Care Survey

Stressed by the Great Recession

Who has been most stressed out by the Great Recession? White, middle-aged men with a college education and a full-time job, say Carnegie Mellon researchers in a study published in the Journal of Applied Social Psychology.

Little Change in Household Debt

Although the pundits suggest that Americans aren't shopping because they are paying down debt, this notion may be more fiction than fact. The 2010 Survey of Consumer Finances found only a small decline in the percentage of households with debt, with the figure falling from 77 to 75 percent between 2007 and 2010. The median amount owed by households with debt was essentially unchanged at $70,700 (including mortgage debt).

The age group shedding debt the most: householders under age 35. The percentage of indebted householders in this age group fell 5.8 percentage points between 2007 and 2010, to 77.8 percent, as homeownership declined. The age group with the biggest increase in debt: householders aged 75 or older. More than one-third (38.5 percent) were in debt in 2010, up from 31.4 percent in 2007. The median amount owed by these householders more than doubled during those years to $30,000.

Source: Federal Reserve Board, Federal Reserve Bulletin, Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances

Housing Units by State and County, 2011

2011 estimates of housing units by state and county are now available from the Census Bureau.

Northeast Leads in Wealth

Regional differences in household net worth broadened between 2007 and 2010 as households in the West lost most of their wealth. The declines were smaller in the other regions and smallest (although still substantial) in the Northeast, which is now the only region in which median household net worth remains above $100,000. Here is median household net worth by region in 2010, and the percent change in net worth since 2007 after adjusting for inflation...

Total households: $77,300 (-39%)
Northeast: $119,900 (-28%)
Midwest: $68,400 (-39%)
South: $68,300 (-33%)
West: $73,400 (-55%)

Source: Federal Reserve Board, Federal Reserve Bulletin, Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances

Who's Your Daddy?

The Chinese are more likely than Americans to think the United States is the world's leading economic power. Forty-eight percent of Chinese feel that way versus 40 percent of Americans.

Conversely, Americans are more likely to think China is the world's leading economic power. Forty-one percent of Americans feel that way versus only 29 percent of Chinese.

Source: Pew Research Center, Global Opinion of Obama Slips, International Policies Faulted

Elvis Has Left the Building

That's a metaphor, of course. By Elvis, I mean the wealth of the middle class.

I don't think it's possible to overstate the bad news in the household wealth numbers released by the Federal Reserve Board. Sure, we knew things were bad. But until the data were in our hands, we could at least hope that Elvis would return to the stage. That hope is gone. Median household net worth fell 39 percent between 2007 and 2010, after adjusting for inflation. The $77,300 median of 2010 was at the level of 1992. See my discussion of household net worth trends by age here, by income here.

The loss of family wealth is a problem that will be passed down (or, rather, not passed down) from one generation to the next. The loss of wealth destabilizes the middle class because it removes the safety net required to remain there. That safety net is the ability of families to lend (or give) a helping hand to family members when they encounter inevitable (and, according to research, increasingly frequent) economic shocks--medical bills, car repairs, unemployment, etc. The 2010 wealth data show gaping holes in the safety net ...

• The oldest Americans are now the wealthiest householders. Median net worth in 2010 peaks among householders aged 75 or older, at $216,800. This is a change from 2007, when median net worth peaked in the younger 55-to-64 age group. By rights, 55-to-64-year-olds should have the greatest net worth, spending it down in retirement. But the net worth of householders aged 55 to 64 was just $179,400 in 2010, much lower than their $266,200 net worth in 2007--a 33 percent decline after adjusting for inflation.
• It's a bad sign that median household net worth has fallen to the level of 1992. In that year, the large baby-boom generation was aged 28 to 46, with the oldest entering their peak-earning years. The small Depression-era cohort was then at the age of peak wealth accumulation prior to retirement. At that time, the demographic structure of the population was suppressing median net worth. In 2010 in contrast, the baby-boom generation is at the supposed age of peak wealth accumulation. The demographic structure of today's population should be boosting net worth. With net worth at the 1992 level despite the demographics suggests worse is to come as boomers age.
• The devastating loss of wealth experienced by younger householders means there's no rescue in sight. Householders aged 35 to 44 lost most of their wealth between 2007 and 2010, their median net worth falling by 54 percent after adjusting for inflation, to just $42,100. Householders under age 35 saw their already small nest egg fall by 25 percent during those years, to $9,300. Home equity is the foundation of middle class wealth, which is why the drop in home values is the single biggest factor behind the decline in net worth. The dire financial straits of householders under age 45, coupled with the desire of millions of boomers to downsize, will depress housing prices for years to come. 

Source: Federal Reserve Board, Federal Reserve Bulletin, Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances

The Rich Really Are Getting Richer

The latest data on household wealth is bad news for everyone except the rich. The net worth of households with the highest incomes grew 2 percent between 2007 and 2010 while everyone else lost their shirts, according to the Federal Reserve Board's Survey of Consumer Finances. Overall, median household net worth fell 39 percent between 2007 and 2010--to $77,300, after adjusting for inflation.

Take a look at median household net worth in 2010 by household income percentile, and the percent change since 2007 after adjusting for inflation...

Percentile of household income
Less than 20: $6,200 (-27%)

20 to 39.9: $25,600 (-35%)

40 to 59.9: $65,900 (-29%)

60 to 79.9: $128,600 (-40%)

80 to 89.9: $286,600 (-23%)

90 to 100: $1,194,300 (+2%)

Reports of the death of the middle class have not been greatly exaggerated. Households with incomes in the middle of the distribution (ranging from the 60th to the 80th percentile) lost the most--a 40 percent decline in net worth between 2007 and 2010. 

Source: Federal Reserve Board, Federal Reserve Bulletin, Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances

American Wealth Plunges

The latest update on the wealth of American households was released this afternoon, and the numbers are shockingly bad. Median household net worth was just $77,300 in 2010, according to the Federal Reserve Board, which fields the Survey of Consumer Finances every three years. Between 2007 and 2010, median household net worth fell 39 percent, after adjusting for inflation.

The net worth of American households has fallen to a level not seen since 1992. This is especially troubling because, as the large baby-boom generation approaches retirement, the demographics alone should have boosted median net worth to a record high. Here is net worth by age of householder in 2010, and percent change since 2007 after adjusting for inflation...

Total households: $77,300 (-39%)
Under age 35: $9,300 (-25%)
Aged 35 to 44: $42,100 (-54%)
Aged 45 to 54: $117,900 (-39%)
Aged 55 to 64: $179,400 (-33%)
Aged 65 to 74: $206,700 (-18%)
Aged 75 or older: $216,800 (-3%)

Source: Federal Reserve Board, Federal Reserve Bulletin, Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances

The Hunt for Credentials

One of the keys to making money is having credentials. Getting a certificate rather than a degree may be a short-cut to credentials and higher earnings, says a new study. Twelve percent of adults report a certificate as their highest level of education, up from 2 percent in 1984. Those with certificates and a job in their field earn almost as much as workers with an associate's degree. Otherwise, those with certificates earn little more than high school graduates.

Source: Georgetown University Center on Education and the Workforce, Certificates: Gateway to Gainful Employment and College Degrees

Youth Risk Behavior Surveillance 2011

It's that time again. Every two years the federal government surveys thousands of students in 9th through 12th grade in public and private schools across the nation. Students are asked all sorts of questions about drugs, drinking, sex, and violence--risky behavior that contributes to the majority of deaths of teens and young adults. The CDC publishes the results in a lengthy report, with details by grade, sex, race, Hispanic origin, and with data for states and 21 large urban school districts.

The 2011 results are now available, and they show plenty of reasons for parents to worry. In the past month, for example, 33 percent of high school students texted while driving, 38 percent drank, and 23 percent used marijuana. Thirty-one percent played video games for three or more hours a day. On a more positive note, only 6 percent did not eat their vegetables.

Source: CDC, Youth Risk Behavior Surveillance--2011

Changing Attitudes: Gay & Lesbian Teachers

Percent who agree: "School boards ought to have the right to fire homosexual teachers."

2012: 21%
1987: 51%

Source: Pew Research Center, 2012 American Values Survey

The Energy Pit

How much energy does the average house require to stay warm (or cool), well-lit, and functioning? According to the Energy Information Administration, the average home consumes 89.6 million BTUs per year. The average household spends $2,024 for this energy--$787 per household member, or $1.03 per square foot of house.

Source: Energy Information Administration, Residential Energy Consumption Survey

Household Income Stable in April

Median household income was about the same in April 2012 as in the previous month, according to the latest monthly update from Sentier Research. The April median of $50,486 was 0.5 percent lower than the March 2012 median ($50,765), after adjusting for inflation. The change  was not statistically significant.  

The April median was 5.9 percent lower than median household income in June 2009--the end of the Great Recession. It was 8.3 percent lower than the median in December 2007, the start of the Great Recession. It was 9.2 percent lower than the median in January 2000. 

"These comparisons demonstrate how significantly real median annual household income has fallen over the past decade, and how much ground needs to be recovered to return to income levels that existed in earlier years," notes Sentier.

The Household Income Index for April 2012 was 90.8 (January 2000 = 100.0).

Source: Sentier Research, Household Income Trends: April 2012 

Hard Times for High School Graduates

High school graduates are having a hard time. You've probably seen the media reports over the past few days. The information comes from the Heldrich Center for Workforce Development at Rutgers University, which regularly surveys American workers to determine their status. This time around, Heldrich surveyed a representative sample of young adults who graduated from high school between 2006 and 2011 and do not have a college degree nor are enrolled in college full-time. The findings are so abysmal they deserve a look (see link to report below).

In a nutshell, 60 percent of recent high school graduates are living with their parents or other relatives. Only 27 percent have a full-time job. Those with jobs earn a median of $9.25 an hour. The 56 percent majority thinks their generation will have less financial success than the generation before them.

The broader implication: Americans are in trouble, and the trouble is spreading from the bottom up. The middle-class comfort enjoyed by older generations is a relic of a more prosperous past and will not last.

Source: Heldrich Center for Workforce Development, Left Out. Forgotten? Recent High School Graduates and the Great Recession (PDF)

An Average Day: Social Networking

Nearly half (48 percent) of Internet users are on a social networking site (such as Facebook) on an average day. Here are the percentages  by age...

18 to 29: 70%
30 to 49: 52%
50 to 64: 31%
65-plus: 18%

Source: Pew Internet & American Life Project, Older Adults and Internet Use

Internet Use Now the Norm among 65-plus

This was predictable: Internet use among Americans aged 65 or older has finally passed 50 percent, according to a survey by Pew Internet & American Life Project. That's because boomers are filling the age group.

Fifty-three percent of people aged 65 or older are now Internet users, says Pew, up from 41 percent in the fall of 2011--a level that had barely budged for years. The needle is finally moving because the oldest boomers (who turn 66 this year) are bringing their enthusiasm for technology into an older market that has been inexplicably resistant to the magic.

Source: Pew Internet & American Life Project, Older Adults and Internet Use

Who's Happy?

When AARP asked Americans aged 35 to 80 how happy they are, 68 percent said they were happy (pretty happy or very happy), and 30 percent said they were not too happy.

Your happiness depends on what's happening in your life--but not exactly in the way you might imagine. As suspected, the least happy people are those who have had financial trouble in the past year--only 47 percent say they're happy. In contrast, among those who have had a child or grandchild in the past year, a much larger 70 percent say they're happy. But the happiest people of all are those with no change in their life either good or bad. Among those with no big life events, 78 percent are happy.

Source: AARP, Beyond Happiness: Thriving

This is Not a Rhetorical Question

Do older Americans know their health insurance is provided by the federal government? Apparently many do not know this, because the 61 percent majority of people aged 65 or older (93 percent of whom are enrolled in the federal government's Medicare program) say they are "concerned about the government becoming too involved in health care."

Source: Pew Research Center, 2012 American Values Survey

Support for Labor Unions

Overall, 64 percent of the American public agrees with the statement, "Labor unions are necessary to protect the working person." Here are the percentages in agreement by political party affiliation...

Democrat: 82%
Independent: 61%
Republican: 43%

Source: Pew Research Center, 2012 American Values Survey

Student Loan Debt Still Rising

After mortgages, student loans are the single largest component of household debt, reports the Federal Reserve Bank of New York. Every other type of debt has been declining since the 2008 peak. But student loan debt just keeps growing. As of March 31, 2012, Americans owed a collective $904 billion in education loans, $64 billion more than a year earlier. To put the number in perspective, that's $2,888 for every man, woman, and child in the United States.

More Bathrooms in Rentals

Builders are beginning to adapt to an increasingly upscale rental market by adding bathrooms. Among the 138,000 new multifamily rental units completed in 2011, the 53 percent majority had at least two complete bathrooms, reports the Census Bureau. Only 46 percent of units completed in 2010 had two or more bathrooms.

Source: Census Bureau, Characteristics of New Housing

Twitter Demographics

College graduates, young adults, and blacks are the biggest users of Twitter, according to a Pew Survey. Overall, 13 percent of online adults use Twitter. The figure is a larger 16 percent among college graduates, 18 percent among 18-to-29-year-olds, and peaks at 25 percent among blacks. Those least likely to use Twitter are people aged 65 or older (6 percent), whites (9 percent), and rural residents (7 percent).

Source: Pew Internet and American Life Project, Twitter Update 2011

Marijuana (Plant) Deaths

Cultivated marijuana plants eradicated in 2011 by the DEA: 6,735,519.

Source: Sourcebook of Criminal Justice Statistics Online

IRA Balances by Age

When left to their own devices, Americans are not very good at saving for retirement. The Employee Benefit Research Institute keeps track of their meager efforts. The latest report, detailing IRA account balances in 2010, reveals that the median balance per account was $17,863, and the median balance per IRA owner was a larger but still modest $25,296 (some individuals own more than one IRA account). By age, the numbers are even more worrisome because they show that even as retirement approaches, IRA balances barely exceed one year's worth of median household income ($49,445 in 2010).

Median IRA balance per owner by age, 2010
Under age 25: $5,782
Aged 25 to 29: $4,769
Aged 30 to 34: $7,229
Aged 35 to 39: $10,819
Aged 40 to 44: $14,745
Aged 45 to 49: $19,329
Aged 50 to 54: $24,505
Aged 55 to 59: $31,762
Aged 60 to 64: $42,998
Aged 65 to 69: $58,965
Aged 70-plus: $56,198

Keep in mind that few Americans even own an IRA. In 2009, only 21 percent of workers aged 21 to 64 had an IRA in their own name, according to EBRI. Among the owners, just 12 percent contributed to their IRA in 2010.

Source: Employee Benefit Research Institute, Individual Retirement Account Balances, Contributions, and Rollovers, 2010: The EBRI IRA Database™

Eating Local

Percent who have eaten lunch or dinner at the following types of restaurants in the past month...

Casual dining
Locally owned: 53%
Chain restaurant: 50%

Fine dining
Locally owned: 18%
Chain restaurant: 9%

Source: Harris Interactive, Seven in Ten Americans Cooking More Instead of Going Out to Save Money

Tooth Trouble

There are two ways to determine the health status of Americans. You can ask them and hear their hopes and dreams (as happens when people are asked about their weight or how much they drink). Or you can examine them and get the facts. The federal government does both.

Most are familiar with the government's surveys about health. Few are familiar with its mobile examination centers that set up shop at various locations throughout the country and physically weigh and measure a representative sample of the population. From those physical examinations, we know that 21.5 percent of the population has cavities--untreated dental caries (the technical term for it) in their mouth. As you might suspect, the percentage of the population with cavities varies greatly by demographic characteristic, with people aged 20 to 44 (25.1 percent), men (24.6 percent), and the poor (35.8 percent) most likely to have cavities.

Source: National Center for Health Statistics, Selected Oral Health Indicators in the United States, 2005-2008

College Dropouts

Most college students borrow money to pay for school. Not all of those borrowers graduate, however. Borrowers who drop out of college have much higher default rates than borrowers who graduate (16.8 percent versus 3.7 percent, respectively), according to an Education Sector report. Here are the percentages of borrowers who drop out of four-year schools, by type of school...

54% of borrowers drop out at private, for-profit schools
21% of borrowers drop out at public schools
19% of borrowers drop out at private, non-profit schools

Source: Education Sector, Degreeless in Debt: What Happens to Borrowers Who Drop Out?

What's Geography Got to Do With It?

The best cities. The top states. Nearly every day there's a new list showing how this region or that metro is the best or worst at something--as if geography has anything to do with it.

Ok, sometimes--but only rarely--does geography have anything to do with it. Geography, for example, has a lot to do with how much people spend on winter coats, how often they attend a rodeo, and how many pink flamingoes dot their yard.

Otherwise, it's the demographics--not the geographics--that make the difference.

Trends in Entertainment Spending

Entertainment spending by the average household climbed 6 percent between 2000 and 2010, after adjusting for inflation. Trends in entertainment spending differed greatly by age of householder, with householders under age 45 cutting their spending. Here is the percent change in household spending on entertainment by age of householder, 2000 to 2010 (in 2010 dollars)...

Under age 25: -12%
Aged 25 to 34: -5%
Aged 35 to 44: -2%
Aged 45 to 54: +9%
Aged 55 to 64: +8%
Aged 65-plus: +40%

Source: Bureau of Labor Statistics, 2000 and 2010 Consumer Expenditure Surveys

Sign of the Times

"Have you noticed? America is becoming a Renter Nation. There are now more than 100 million residential renters and we are proud to rent our homes."

So says Renter Nation, a new web site launched by Media Demographics, Inc., where current and potential renters can search for a rental, get information about rental issues such as security deposits and repairs, post questions about renting, and even register to vote.

No IPO for Them

The idea of starting a business is not all that appealing to the nation's college students. When students are asked to rate the attractiveness of starting their own company or non-profit organization in the next five years, these are the answers...

Very attractive: 17%
Somewhat attractive: 30%
Not very attractive: 27%
Not attractive at all: 26%

Why so little interest in being an entrepreneur? Maybe it's because 69 percent say they will be in debt when they graduate, owing a median of $30,000. That fact would also explain why the number-one life goal of today's college students is not finding meaningful work, contributing to society, finding a partner, or having children. The number-one goal is financial security.

Source: Heldrich Center for Workforce Development, Rutgers University, Talent Report: What Workers Want in 2012

Going Online

How many Americans are online during an average month? Nielsen can tell you. According to its tracking, 211 million Americans were active online in April 2012. They went online an average of 64 times during the month, spending 29 hours browsing the web and viewing 2,703 web pages. Average time spent on a page: about 1 minute.

Source: Nielsenwire, April 2012--Top U.S. Online Brands and Travel Websites 

Retirement Dreams

When workers are asked which one activity best describes how they dream of spending their retirement, the largest share say travel (41%).

Source: Transamerica Center for Retirement Studies, The 13th Annual Transamerica Retirement Survey, Redefining Retirement: The New 'Retirement Readiness'

2011 Births Below 4 Million

Fewer than 4 million babies were born in the United States in 2011, according to provisional estimates released by the National Center for Health Statistics. This is the first time that the annual number of births has fallen below 4 million since 1999. In 2011, 3,961,000 babies were born--1 percent fewer than the 4,000,279 births of 2010 and 8 percent below the all-time high of 4,316,233 births in 2007.

The 2011 fertility rate fell to an all-time low of 63.4 births per 1,000 women aged 15 to 44.

Source: National Center for Health Statistics, Recent Trends in Births and Fertility Rates through December 2011 

The Student Loan Mill

It is illegal for 18-year-olds to drink alcohol. But it is not illegal for them to borrow thousands of dollars to pay for college. Here are the percentages of freshmen at four-year institutions who personally signed on the dotted line in 2009-10, and the average amount they already owe with three more years to go...

All institutions: 58.7% ($7,213)
Public institutions: 50.0% ($6,063)
Private, non-profit: 63.0% ($7,466)
Private, for profit: 86.1% ($9,641)

Source: National Center for Education Statistics, The Condition of Education

Why Work after Retirement?

Among workers who plan to work past age 65 or after they retire, these are the main reasons they will continue to work...

Can't afford to retire/want the income/need health benefits: 64%

Want to stay involved/enjoy what I do: 33%

Source: Transamerica Center for Retirement Studies, The 13th Annual Transamerica Retirement Survey, Redefining Retirement: The New 'Retirement Readiness'

Government Help by Education

Percent of people who live in households that receive food stamps or cash assistance by educational attainment...

Not a high school graduate: 22.4%
High school graduate: 13.1%
Some college or associate's degree: 9.3%
Bachelor's degree: 3.2%
Graduate degree: 1.6%

Source: Urban Institute, Receipt of Assistance by Education

Morally Acceptable

Percent of Americans aged 18 or older who say the following are morally acceptable...

Death penalty: 58%
Gay or lesbian relations: 54%
Having a baby outside of marriage: 54%

Source: Gallup, Americans, Including Catholics, Say Birth Control is Morally OK

Emergency Room of Last Resort

Among adults aged 18 to 64 who visited an emergency room in the past 12 months but were not admitted to the hospital, percentage who said they went to the emergency room because they had no other health care place to go: 46%.

Source: National Center for Health Statistics, Emergency Room Use among Adults Aged 18-64: Early Release of Estimates from the National Health Interview Survey, January-June, 2011

Life is Good

When you have
1) a guaranteed income
2) annual cost of living increases
3) and government provided health insurance

These factors explain why the financial wellbeing of older Americans is better than the financial wellbeing of everyone else.

Source: Gallup, In U.S., Financial Wellbeing Improves with Age

The Stages of Housing Recovery

The worst is over for the housing market, says a report from the Demand Institute, a non-profit organization and collaboration between The Conference Board and Nielsen. The housing recovery will occur in stages, starting with growing demand from developers and investors for rental property. Young adults and immigrants will fill the rental units, and this will clear the oversupply of existing housing in two to three years. Once the oversupply is cleared, homeownership rates will rise and return to historical levels between 2015 and 2017.

I see several demographic problems with the forecast of rising homeownership. First, the student debt hangover will prevent many young adults from qualifying for a mortgage. Second, their wealth drained by helping grown children pay for college and living expenses, older generations won't have the money to help those children with down payments. Third, the desire of boomers to downsize (and the necessity to do so as they retire) will make housing a buyers market for years to come. 

Even if everything unfolds as the report predicts, the housing recovery will be uneven. Leading the recovery will be urban and semi-urban Resilient Walkable communities with local amenities, says the Demand Institute. Lagging the recovery will be Weighed Down areas such as the outer suburbs of major metropolitan areas. 

Source: Demand Institute, The Shifting Nature of U.S. Housing Demand

Just Getting By

The top financial priority of the nation's workers is "just getting by," according to the 13th annual retirement survey by Transamerica Center for Retirement Studies.

Each year Transamerica surveys workers about their retirement plans, attitudes, and readiness. In 2012, the largest share of workers--26 percent--said their top financial priority was just getting by. An additional 25 percent of workers said their top priority was paying off debt.

The Cost of Food

Are Americans fat because healthy food is more costly than unhealthy food and they're trying to save money? That's the theory. But an impressive analysis of the cost of 4,439 food items by the USDA Economic Research Service disproves the theory.

The USDA researchers examined the cost of thousands of foods in three different ways: by their price per calorie, their price per edible gram, and their price per average portion consumed. The typical way to compare food prices is per calorie. But this methodology is flawed because low-calorie items, such as vegetables and coffee, appear to cost more than high-calorie items such as ice cream and soda. Comparing the cost per average portion consumed changes the equation. Coffee, for example, is one of the most expensive items when measured by price per calorie with a rank of 4,321 out of 4,439 (the higher the number the more expensive the item). By this measure, coffee is much more expensive than regular soda (with a rank of 1,542). But when measured by price per average portion consumed, coffee is one of the cheaper items, with a rank of 231 versus 1,791 for soda.

The USDA report details many more of these reversals, concluding that healthy food is not more expensive than unhealthy food. Food cost is not excuse for Americans' weight problem.

Source: USDA, Economic Research Service, Are Healthy Foods Really More Expensive? It Depends on How You Measure the Price

Pet Spending Decline Has Begun

A recent AP article noted that boomers will be less likely to own pets as they get older, which could lead to a decline in spending on pets. In fact, the decline has already begun. The average household spent $480 on pets in 2010, down from $552 in 2009--a 13 percent decline, after adjusting for inflation.

Households cut their spending on every pet category, including food (down 4 percent), supplies and medicines (also down 4 percent), and services (down 12 percent). Average household spending on veterinary service fell the most, a 32 percent decline in just one year.

Pet ownership costs have grown enormously in the past decade as the medical and pharmaceutical industries made inroads into pet care. Average household spending on pets more than doubled between 2000 and 2009. Consumers are tapped out.

Source: Bureau of Labor Statistics, Consumer Expenditure Surveys

Non-Hispanic Whites by Age

A look at the non-Hispanic white share of the population by single year of age reveals the dramatic change in the demographic composition of the American population over the past century. According to the Census Bureau's 2011 population estimates, non-Hispanic whites account for...

at least 80 percent of people aged 79 or older
70 to 80 percent of people aged 52 to 78
60 to 70 percent of people aged 40 to 51
50 to 60 percent of people aged 2 to 39
less than 50 percent of people aged 0 and 1

Source: Census Bureau, Population Estimates

The Minority Majority Has Arrived

The first cohorts of Americans in which minorities are the majority have appeared on the scene, according to the Census Bureau's 2011 estimates of the population by age, race, and Hispanic origin. Among the nation's infants and one-year-olds, non-Hispanic whites are less than half the population, marking a symbolic turning point in the nation's identity.

The Census Bureau's 2011 population estimates, released early this morning, show that fewer than 50 percent of children under age 2 are non-Hispanic white. By single year of age, the non-Hispanic white share of the population ranges from a high of 85.7 percent among 93-year-olds to a low of 49.6 percent among infants under age 1. More than one in four infants (26 percent) are Hispanic, 19 percent are black (alone or in combination) and 7 percent are Asian (alone or in combination). Overall, 63.4 percent of the U.S. population was non-Hispanic white on July 1, 2011, down from 63.8 percent one year earlier.

The Census Bureau reports that non-Hispanic whites now account for fewer than half of births, which is why the nation's youngest children are now minority majority. Between July 1, 2010, and July 1, 2011, non-Hispanic whites accounted for 49.6 percent of the 4,008,000 babies born that year.

Source: Census Bureau, Population Estimates

Education Adds Years to Life

The higher your educational attainment the greater your life expectancy, according to the new edition of Health, United States, which includes a special feature on socioeconomic status and health.

Among men aged 25, those without a high school diploma can expect to live 47 more years. Those with a bachelor's degree have a life expectancy of 56 additional years--a 9.3 year gap. Educational attainment boosts women's life expectancy too. Among women aged 25 without a high school diploma, life expectancy is 52 more years. Among their peers with a bachelor's degree, life expectancy is another 60 years--an 8.6 year gap.

Over the past decade, the gap in the life expectancy of high school dropouts and college graduates has grown by 1.9 years among men and 2.8 years among women.

Source: Health, United States, 2011

Big Decline in Survey Participation

This is trouble: it is becoming increasingly difficult to get Americans to respond to surveys. Without the cooperation of the public, survey results are likely to be skewed. The Pew Research Center provides a detailed analysis of the problem in the report Assessing the Representativeness of Public Opinion Surveys.

In 1997, the response rate to surveys was 36 percent. Back then, survey organizations were able to contact a potential respondent in 90 percent of the households called. Among those contacted, 43 percent agreed to be surveyed, for a response rate of 36 percent.

In 2012, the response rate to surveys has dropped to just 9 percent. This happened for two reasons. First, contacting potential respondents is much more difficult because most households screen their calls. Survey organizations now manage to contact potential respondents in only 62 percent of households. Second, fewer potential respondents are willing to participate. Only 14 percent of those contacted now agree to take part in surveys, resulting in the response rate of 9 percent.

The response rate is abysmally low whether a household is contacted by landline or cell phone.

But, says Pew: "Despite declining response rates, telephone surveys that include landlines and cell phones and are weighted to match the demographic composition of the population continue to provide accurate data on most political, social and economic measures."

How does Pew know this? By comparing answers to test survey questions with answers from surveys fielded by the federal government. Large federal surveys get response rates of 75 percent or more. Federal surveys get much higher response rates because of the effort (and dollars) spent doing so, as well as the fact that households are required to participate in many government surveys--such as the American Community Survey. The ACS is the source of demographic and socioeconomic data for the nation, states, metropolitan areas, and local communities. Too bad the House of Representatives voted last week to cut funding for the American Community Survey and make participation voluntary.

Spending: Under Age 25

The five items on which householders under age 25 spend the most...

1. Rent
2. Groceries
3. Social Security payroll taxes
4. Education
5. Used vehicles

Source: Bureau of Labor Statistics, Consumer Expenditure Survey

Mass Delusion Led to Housing Bubble

The foreclosure crisis was caused by mass delusion, concludes a new study by the Federal Reserve Bank of Boston. The mass delusion was the belief that house prices would continue to rise at a rapid pace. After laying out 12 facts about the mortgage market and dismissing current theories about what caused the foreclosure crisis--such as asymmetric information (sellers knowing more than buyers) and financial innovation--the study concludes that a "massive and unsustainable price bubble in the U.S. housing market caused the financial crisis."

In hindsight, the mass delusion is obvious. During the bubble, economists gave little weight to any scenario in which house prices declined. The meltdown scenario was assigned only a 5 percent probability. The highest probabilities were assigned to scenarios that assumed an 8 percent annual growth rate in prices. "These optimistic price expectations encouraged buyers to offer high prices for houses, making the optimistic price expectations self-fulfilling--the hallmark of an asset bubble."

The unanswered question, the authors note, is "why this bubble occurred in the 2000s and not some other time...For now, we have no choice but to plead ignorance, and we believe that all honest economists should do the same." Demographers may have the answer: In the 2000s, the large baby-boom generation was aging into the peak years of homeownership, creating buyer frenzy. The rest is history.

Source: Federal Reserve Bank of Boston, Why Did So Many People Make So Many Ex Post Bad Decisions: The Causes of the Foreclosure Crisis

Recent College Graduates: How Are They Doing?

So how are recent college graduates faring in the labor market? The results of a new Heldrich Center survey are not reassuring.

Among young adults who graduated from college between 2006 and 2011, only 51 percent are currently working full-time. Another 20 percent are in grad school. Among those with full-time jobs, their median salary is $32,000. The 52 percent  majority is being paid by the hour, and 43 percent say their job does not require a four-year college degree.

If you think that's bad, read on.

At graduation, the 55 percent majority of students were in debt, owing a median of $20,000. Only 13 percent of recent graduates with debt had entirely paid off their loans. A much larger 28 percent had made no progress on their loans. Among young adults in graduate school, the situation was worse. They owed a median of $30,000 in student loans, and 62 percent had paid down none of their debt.

Debt is transforming the lives of young adults. Among recent college graduates with debt, 40 percent say they have delayed a major purchase such as a car or house. A hefty 27 percent have had to move in with parents or other family members to save money.

When asked whether there is anything about their college education that they would have done differently given what they know today, the largest share--37 percent--of recent college graduates say they would have been more careful about selecting their college major. Only 3 percent say they would not have gone to college.

Source: Heldrich Center for Workforce Development, Rutgers University, Chasing the American Dream: Recent College Graduates and the Great Recession

Working Mothers

Most women with children under age 18 are in the labor force. Here are their labor force participation rates by age of youngest child...

With children under age 1: 56%
With children under age 6: 64%
With children under age 18: 71%

Source: Bureau of Labor Statistics, Employment Characteristics of Families, 2011

Who Doesn't Want to be Rich?

Surprisingly, not everyone wants to be rich. According to a Gallup survey, 35 percent of Americans say, if they had their choice, they would not want to be rich. Here are the percentages who don't want to be rich by age...

18-29: 35%
30-49: 27%
50-64: 36%
65-plus: 48%

Source: Gallup, Americans Like Having a Rich Class, as They Did 22 Years Ago

Economic Mobility by State

If you want to get ahead, some states are better than others. That's the finding of Pew's Economic Mobility Project, which has for the first time measured economic mobility by state. To gauge economic mobility, the study examined the earnings growth of Americans born between 1943 and 1958 as they aged through their prime working years--from 35-to-39 to 45-to-49. Here are the states in which economic mobility is statistically different from the national average:

Economic mobility better than average: Maryland, New Jersey, New York, Connecticut, Massachusetts, Pennsylvania, Michigan, and Utah.

Economic mobility worse than average: Louisiana, Oklahoma, South Carolina, Alabama, Florida, Kentucky, Mississippi, North Carolina, and Texas.

Source: Pew Center on the States, Economic Mobility of the States

Early Claiming of Social Security

The percentage of Americans who claimed their Social Security benefits early (age 62) increased by 5 percentage points because of the high unemployment of the Great Recession, finds the Center for Retirement Research at Boston College. Among those newly eligible, an estimated 46 percent claimed their benefits early--up from the 41 percent who would have claimed early if unemployment rates had been similar to those of previous recessions.

Source: Center for Retirement Research at Boston College, Great Recession-Induced Early Claimers: Who Are They? How Much Do They Lose?

Youth Underemployment

Nearly one in three (32%) Americans aged 18 to 29 is underemployed, according to a Gallup survey--meaning they are unemployed or part timers who want full-time work. Among people aged 30 or older, the rate of underemployment is a much smaller 13 to 14 percent.

Source: Gallup, One in Three Young U.S. Workers Are Underemployed

Deteriorating Access to Health Care

Americans' access to medical care has deteriorated significantly during the past decade, reports the Urban Institute in a new study. Among adults aged 19 to 64, access to care fell in most states between 2000 and 2010. The percentage with unmet health care needs due to cost increased in 42 states during those years. The percentage who received a routine checkup fell in 37 states, and the percentage with a dental visit fell in 29 states. Access to care was much lower and the deterioration in access was much greater for the uninsured.

In the U.S. as a whole, 11 percent of insured adults aged 19 to 64 had unmet medical needs due to cost in 2010. This compares with a much larger 48 percent of the uninsured. Among insured adults, 70 percent had a routine checkup in 2010 versus only 38 percent of the uninsured. Fully 72.3 percent of the insured had a dental visit in 2010 compared with just 37.5 percent of the uninsured. The report details the percentages by state and how they have changed since 2000.

Source: Urban Institute, Virtually Every State Experienced Deteriorating Access to Care for Adults over the Past Decade

Support for Gay Marriage

The 52 percent majority of the public now supports the right of gay and lesbian couples to marry. Here is the percentage in support by age...

18-39: 61%
40-64: 50%
65-plus: 40%

Source: Washington Post, The Washington Post--ABC News Poll

Are Millennials a Lost Generation?

It is an exaggeration to say Millennials are a lost generation. But there is a large segment of Millennials--perhaps even the majority--who missed out on something important when they were growing up. That something is programming literacy, now as critical for success in the job market as reading, writing, and arithmetic.

Millennials are the first generation to grow up with the Internet. Most are comfortable with Facebook, Twitter, texting, browsing, streaming videos, downloading audios, and shopping online. They are adept at consuming what the Internet has to offer. They are not skilled at producing for the Internet, which is what employers of all sorts now want. To be successful in today's economy, young workers need to know how to build and maintain web sites, how to market products and services through social networks, how to write and edit code. They need to be literate in the theory and practice of programming.

Millennials know they lack these skills. In the American Freshman Survey, UCLA's annual probe into the attitudes of college freshmen nationwide, only 38 percent of freshmen say their computer skills are above average. This is a surprisingly honest assessment from these young adults, 71 percent of whom think they are above average in academic ability and 73 percent of whom think they are above average in their drive to achieve.

How did Millennials miss out on acquiring literacy in programming while surrounded by computers and the Internet? They had the bad luck to be born at the wrong time, raised by parents and taught by teachers who at best knew little about computers and the Internet and at worst were dismissive and fearful of their capabilities. The computer illiterate older generation was incapable of instilling in today's young adults a literacy in programming.   

It doesn't have to be this way. Millennials can acquire literacy, even at this late date. According to the New York Times, when the organization Fix Young America held a summit recently to discuss solutions to high levels of unemployment among young adults, one of the proposals was a massive, nationwide effort to teach young adults JavaScript, a programming language.

Spending Decline in Retirement

As people transition into retirement, their spending declines. By examining the Consumer Expenditure Survey over time, the size of the decline can be estimated. In 2010, householders aged 65 to 74 spent $41,434--considerably less than the $49,816 householders aged 55 to 64 spent in 2000 (in 2010 dollars). As households transition from one age group into another, household spending declines by 17 percent.

Source: Bureau of Labor Statistics, Consumer Expenditure Surveys

The Pluralist Generation

The naming of generations is the sport of marketers. It is also serious business, not just for companies looking for customers but for the rest of us as well. A generation's name is an attempt to identify the shared characteristics of a group of people. By naming the generations, we get a better sense of the chaotic jumble of 300-million-plus diverse and individualistic Americans.

The youngest Americans--the current crop of children--have been a generation looking for a name. There have been lazy attempts to name them, such as "Generation Z." And there have been more serious attempts, such as the iGeneration, so dubbed by demographic reference publisher New Strategist Publications. Now, the market research firm Magid Generational Strategies has added muscle to the naming business. Magid surveyed children and their parents, people ranging in age from 8 to 66, then pondered the findings. The result is a new name for the youngest Americans: The Pluralist Generation, but you can call them Plurals.

Plurals are today's 67 million children aged 15 or younger in 2012--born in 1997 or later. Only 55 percent are non-Hispanic white, making them the last generation with a non-Hispanic white majority. "This unprecedented transition to a multicultural, pluralistic society will be a major aspect of their lives," says Magid in its press release announcing the name. The pluralistic features of the society in which today's children are growing up extend from race and ethnicity to sex roles, sexual orientation, religion, family life, communication, politics, and media. The Plurals, says Magid, are the children of Gen Xers and reflect Gen X's different parenting style, which is more individualistic than group-oriented Boomers who raised Millennials. Reports Magid: "Those differences will only increase over time and solidify a new mindset separating Plurals from Millennials."

To download Magid's free white paper about the Plurals, click here.
Source: Magid Generational Strategies, The First Generation of the Twenty-First Century--An Introduction to The Pluralist Generation

The Decline of Churn

Most hiring is the result of churn--the replacement of departing workers with new ones--rather than firm expansion or contraction. During the Great Recession, churn fell significantly as workers clung to their jobs, according to a new NBER study. In fact, four-fifths of the decline in hiring during the Great Recession was due to the decline of churn.

Source: National Bureau of Economic Research, Hiring, Churn and the Business Cycle, Working Paper #17910 ($5)

Defining The Ages

If middle age is the age at which you have lived half your expected life, then middle age occurs at 40. If old age is the age at which you have ten more years of expected life, then old age occurs at 78.

Source: National Center for Health Statistics, Mortality Data