I read a story in Yahoo Finance that stated Americans should get used to living on less permanently. The author’s contention was that government deficits and mismanagement could lower our standard of living for a long time to come. Inflation is quickly starting to undermine our budgets just as our wages have stagnated. Good paying jobs that were lost in the recession have been replaced by low paying jobs in retail and restaurants.
Who is Paying for Poor Governance?
The Working Class: My contention is the standard of living dropped a long time ago. Not for the rich and upper-middle class, but for the working class. While CEOs and other executives watched their paychecks skyrocket in the past decade, the working class is struggling with a minimum wage that was flat for 10 years.
College Grads: A decade ago, college grads had hopes of making six figure incomes after getting established in their careers. Now, they are facing six figure student loans, while trying to find a job that doesn’t involve serving coffee. College grads will definitely have it better than those without a diploma. But, a college degree no longer guarantees a prosperous income.
Retirees: The elderly are struggling with Social Security payments that haven’t kept pace with the cost of living for years. Medical costs are rising rapidly, while benefits are being cut. To add to these problems, people are living longer, pensions are underfunded and workers aren’t saving enough for retirement. The recent market crash and recession has decimated many retirees’ portfolios. Artificially low interest rates make it difficult to live on income from investments.
Public Sector: Public employees are starting to suffer from the government’s missteps. The government is broke and they have no practical means for dealing with their budget shortfalls. Their inaction is only compounding the problem, as their deficits grow bigger daily. Heavy cuts in public payroll and benefits are going to be necessary to maintain public services.
Who is Living the Dream?
Entrepreneurs: In my opinion, the American Dream is alive and well, in the hearts and minds of entrepreneurs. Technology has significantly leveled the playing field where a couple of bright college students can create the next Microsoft, Dell, Google or Facebook. As opportunities disappear in older static companies, new opportunities are born in the minds of people who refuse to settle on a paycheck and a cubicle.
Specialists: The highest paying starting salaries by college degree are for engineering, sciences and medical professionals. While employees with commodity skills will continue to struggle in the new economy, technical specialists will continue to prosper. It’s simple supply and demand that keeps these salaries high. When someone needs to hire a doctor, an engineer or a chemist, they’re not looking at candidates with an anthropology degree.
Athletes & Entertainers: Just when I think the salaries couldn’t possibly get any more ridiculous for athletes and entertainers, some new disclosure boggles my mind. For instance, I just read on LenPenzo.com that Judge Judy makes $45 million per year. It can’t be that difficult to find a sarcastic judge or a left-handed pitcher. I don’t understand how it keeps going up, but it does.
Bankers & Executives: When most people think of arrogance and greed, they think of bankers and executives. How else could you explain people flying to Washington in private jets to ask congress for a bailout? Yet, it doesn’t seem like the salaries are going to come down for the upper class. The glass ceiling will keep rising, because no company can afford to hire ineffective executives. And, proven leaders are in short supply.
The Bottom Line
The bottom line is that a living wage is no longer an inalienable right enjoyed by every American. Earning a respectable income is going to take a lot more courage, effort and creativity in the future.
“In the new economy, information, education, and motivation are everything.”
Bill Clinton – 42nd President of the United States