What “Recovery” Feels Like
Today’s headlines are dominated by the claims, promises, accusations and trash talk of our noble presidential candidates. Each says they’re fighting for the future of middle-class Americans, a category of citizens for whom neither can admit to being a card-carrying member.
But who is the middle class, anyway? Recent research and survey trends have unleashed some interesting findings. For example, since 2000 the middle class has shrunk in size, from 61% of the adult population in 1971 to 51% in 2011. Not surprisingly, there were increases in the upper economic tier (from 14% to 20%) and lower tier (from 25% to 29%) during the same time frame.1
1[CLICK HERE to read the news release, “The Lost Decade of the Middle Class,” at Pew Research Center, August 22, 2012.]
[CLICK HERE to read the article, “Middle Class Exit ‘Lost Decade’ With Little Hope: Pew Report,” at The Huffington Post, August 22, 2012.]
Even though the Great Recession officially ended three years ago, the middle class isn’t really feeling much recovery in terms of its income – or home equity for that matter. Sixty-two percent say they had to reduce household spending in the past year due to money issues, whereas at the height of the recession in 2008, only 53% reported cutting back.1
According to data from the Federal Reserve’s Survey of Consumer Finances, American’s median net worth fell 28% from 2001 to 2010, erasing two decades of gains. From 2007 to 2010 alone, the value of middle income family assets fell by 19%.1
Mature Middle Class
From 2001 to 2011, adults ages 65 and older fared best, or so it would seem. Their incomes are higher now than in 2001, but you could also attribute this to the fact that many 65+ folks are continuing to work, whereas before they could retire.
And speaking of earning income, mature workers do not appear to be enjoying the increases their younger peers are getting. According to a new report from Sentier Research, the typical household income for people age 55 to 64 years old is almost 10% less in today’s dollars than it was three years ago – when the recovery officially began. Actually, in almost every demographic group nationwide, Americans are earning less today on average than they did in June 2009, despite our third year in recovery.
Perhaps we should reconsider what “recovery” really means.
[CLICK HERE to read the article, “Big Income Losses for Those Near Retirement,” at The New York Times, August 23, 2012.]
Who’s Getting Paid More?
A recent AOH Hewitt survey found that companies are spending less on base pay increases for all workers, opting instead to reward high-performing workers with larger bonuses. According to an AON Hewitt spokesperson, “It is unlikely that salary increases will reach pre-recession levels of 4% or higher any time soon.” Aon Hewitt projects base pay increases of 3% in 2013 for executives, salaried exempt and nonexempt workers.
However, some areas of the country are more likely to pay higher increases than the national average, including Denver, Austin, Dallas/Fort Worth, Detroit, San Diego, Houston and Kansas City. Cities expected to pay lower-than-average increases in 2013 include San Francisco, Chicago and Minneapolis/St. Paul.
[CLICK HERE to read the news release, “Aon Hewitt Survey Shows Marginal Rise in Salary Increases in 2012; Spending on Performance-Based Awards Remains Strong,” at Aon Hewitt, August 13, 2012.]
[CLICK HERE to read the Employment Cost Index news release for June; U.S. Bureau of Labor Statistics, July 31, 2012.]
As our “recovery” continues to amble along, you may feel more confident about the future by putting your savings on track for risk-managed growth opportunity – coupled with retirement income security – for the future. We’ve got strategies that can help you do that. Please give us a call.
Source: Woods Blog Old