Americans dissatisfied, worried about economy
Even when experts were declaring the economy healthy, many Americans voiced a vague, but persistent dissatisfaction.
True, jobs were relatively plentiful over the last few years. Borrowing was easy and very cheap. The sharp rise in the value of homes and plentiful credit cards encouraged a nation of consumers to get out and buy. But to many people, something didn’t feel right, even if they couldn’t quite explain why.
Now the economic tide is receding, and the undertow that was there all along is getting stronger.
Take away the easy credit and consumers are left with paychecks that, for most, haven’t nearly kept pace with their need and propensity to spend.
The frustration of $3 gas and $4 milk, worries about health care costs that have risen four times the rate of pay, become much more real. Retirement security that is only as good as the increasingly volatile stock market seems much less certain.
Americans’ declining confidence in their economy is triggered by a storm of very recent pressures, including plunging home prices in many parts of the country, tightening credit, and heavy debt. But it is compounded by anxiety that was there all along, the result of a long, slow drip of worries and vulnerabilities.
“The economy is currently in recession or arguably close to recession and that’s certainly weighing on the collective psyche,” says Mark Zandi, chief economist of forecaster Moody’s Economy.com. “But … I do think there is an increasing level of angst that is more fundamental and is not going to go away even when the economy improves.”
What does the economic future hold? Many Americans feel increasingly unable to answer that question with assurance, and they appraise it with a sense that they are less in control of the outcome.
A year ago – months before economic alarms went off – nearly two of three Americans polled by the Rockefeller Foundation said that they felt somewhat or a lot less economically secure then they did a decade ago. Half said they expected their children to face an economy even more shaky.
Other polls have registered similar unease in the past few years, showing large numbers of Americans dissatisfied with the economy, and worried about retirement security, health care costs, and a declining standard of living.
The surprising thing about many of these readings isn’t that they’ve recently skyrocketed. It’s that in recent years they’ve registered consistently high levels of worry without ever seeming to ease.
“This has just been a period of great disconnect between what the aggregate economic statistics show and what leading politicians talk about and what ordinary Americans are feeling,” said Jacob Hacker, a Yale University professor and author of “The Great Risk Shift,” which charts increased economic insecurity.
Except for the late 1990s, pay has been stagnant for more than a generation, barely keeping pace with inflation. In 1973, the median male worker earned $16.88 an hour, adjusted for inflation. In 2007, he earned $16.85.
For many families, the stagnation has been moderated by the addition of a second paycheck as more women went to work, and their pay rose over the same period.
But the largest gains went to workers at the top of the pay scale. Now, economic worries are rising fastest in households with smaller paychecks, and that chasm is widening.
“Over the past decades, whether inflation was much higher or lower, or incomes grew faster or more slowly, there has never been such a wide divergence in the experiences” separating richer households from poorer ones, Richard Curtin, the director of the University of Michigan’s consumer survey said in summing up the most recent figures.
Worker optimism, which soared in the late 1990s, never fully rebounded after the last, brief recession. Although jobs again were plentiful, it became clear the new economy’s opportunities came with few of the old assurances.
Rennie Sawade, the son of a Michigan auto worker, majored in computer science because he saw no future on the assembly line. He was rewarded with a job at Oracle Corp. but lost it in 2005 when the company shifted his department’s work to India. Sawade, who lives in Woodinville, Wash., near Seattle, has been unable to find a full-time replacement, instead jumping from contract job to contract job.
The contractor offers a 401(k), but contributions are entirely up to workers. When Sawade’s wife was diagnosed with thyroid cancer last year he missed the equivalent of two weeks work – and pay – to take care of her. The job has health insurance but still left the family with a bill for more than $2,000. Contractors offer other jobs, but the pay is often disappointing, he says.
“It was pretty well known when I was working on my bachelor’s degree that the auto industry was going to move overseas,” he says. “Everybody said get into technology because you’ll have a career. Now it looks like the same thing is happening to technology.”
In the past decade, scores of companies have frozen or eliminated guaranteed pensions. Many have replaced them with 401(k) plans whose future worth depends on workers’ investment skill. Almost half of all households are at risk of coming up short in retirement, according to the Center for Retirement Research at Boston College.
Worry also grew about the cost of health care, with good reason. Since 2001, the cost of health insurance has gone up 78 percent – about $1,500 more per year for the average family, according to the Kaiser Family Foundation. Over the same period, wages rose about 19 percent, and inflation about 17 percent. About four in 10 people polled by the group say they are worried about paying more for health care or insurance.
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