Young earners face intense financial challenge

Parent Cafe
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<p>Some lines from the article…</p>

<p>“They will be the first generation who won’t match the prosperity of their parents.”</p>

<p>A college degree “will determine the size of their paycheck, the safety of their neighborhood, the reliability of their car and … the opportunities they will be able to provide for their own children.” However, it is that education, increasingly required for even low-paying jobs, that is hard to finance and can take more than a decade to pay off.</p>

<p>Yet, with diplomas in hand, most college graduates start out with years of debt in front of them and confront:</p>

<p>Intermittent periods of unemployment.</p>

<p>Limited chances for corporate upward mobility.</p>

<p>Stunted wage growth.</p>

<p>Thus, bouncers are born.</p>

<p>This group moves between jobs in pursuit of the elusive trifecta: decent pay, ample benefits and the chance to scale the corporate ladder.</p>

<p>One young worker described in the book “bounced” through five jobs in six years. She then did the once-unimaginable and moved back in with her mom to save money.</p>

<p>At 30, she has yet to make more than $35,000 a year in any job. As she states, “When times are down, that’s when your car needs tires.”</p>

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<p>well, there’s always teaching … or applying to become a stevedore on the West Coast. Last time I heard, the pay and benefits are pretty good -as in presidential when computed by hour worked.</p>

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<p>“They will be the first generation who won’t match the prosperity of their parents.”</p>

<p>Actually I don’t think my generation is doing too well
Mergers- off shoring- moving whole companies overseas, my brother in law with multiple advanced degrees and who has been a CFO of several national companies, is still having to borrow money from his brother in law to live on, and is selling group health insurance.
While my father in law who drove a delivery truck at the time of his retirement, is able to travel, his son who has a higher skilled job, has seen benefits shrink and a living wage paycheck that depends on working 3 weekends amonth and longer days.</p>

<p>BUt I know what she means when she comments on the car and the tires. It is always something- the roof or the transmission. Can’t do both.</p>

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<p>I wonder how much of this is due to the college degree that the person has and the watered-down nature of that degree. It used to be that by virtue of having a college degree (the major was not all that important) it set you apart from the masses. It was your certificate that said that you were smarter/better educated/more driven than your competition who did not have the degree. However, now with the increasing number of people who have the degree, unless the degree is in a specialized, career-oriented field, you are now just one of the masses. I believe that the liberal arts degree is becoming the modern equivalent of the high school degree from 30 or 40 years ago - it doesn’t make you special from an employer’s perspective. I wonder how many of the “bouncers” were Engineering or Accounting majors versus English or History majors?</p>

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<p>You are correct. According to the Department of Labor, 86% of the jobs requiring college degrees won’t require a single skill actually taught in college. What is has spawned, though, is a massive new education industry.</p>

<p>Engineering is pretty “iffy” - lots of it being outsourced.</p>

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<p>Fundingfather, I have reasons to doubt that today’s liberal art college is what a high school degree was 30-40 years ago on a ACADEMIC level. I also doubt that the “masses” of hard to employ people are all coming from non-technical fields.
I believe that they may also come from the the countless downright awful professional schools that emerged in the past thirty years. Not every degree is created equal and a MBA degree from Waxahachie Baptist University does not necessarily make you more employable. Nor does a degree in a technical field that has become obsolete. How many people who hold similar watered-down degrees are really capable of writing a “decent” report or exhibit a modicum of critical intelligence. </p>

<p>Isn’t true that an individual is better defined by his character and savvy than by the type of degree he holds?</p>

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<p>They also stand to collect Billions in inherited wealth when we all die. If we don’t blow it all first.</p>

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<p>Xiggi, I wasn’t trying to equate the academic quality of a BA in liberal arts with a high school degree, but rather the fact that a generic college degree is not what it used to be in the eyes of an employer. I also am not saying that “all” of the bouncers are coming from non-technical fields. Certainly no one believes that. I am surmising that people with career-oriented, college-based skills likely are under-represented relative to their percentage of the total college educated population - and conversely, those with LA degrees are over-represented. At this point it is a theory with the only supporting data being that starting salaries for engineers and the number of engineers who graduate with jobs is still quite high (mid $50K for EE from Cornell)- regardless of the “outsourcing” scare.</p>

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<p>Fundingfather, I was saying that exact thing to my daughter the other day (I guess our mutual perspective on this is based on having been alive back then.) The thing is, when a kid has to go through the extra four years of college to be in the same general position as a high school graduate was back in our day that person will be four years closer to wanting to start a family, buy a (ridiculously expensive) house, etc. - and likely already in debt. It’s not a pretty picture. I’ve told my kids that I can get them through those first four years, but they’re likely to want to obtain an advanced degree - just to put them in the same position a college graduate was in forty years ago. It’s nuts.</p>

<p>And Barrons - you know I’ve been harping on the fact that those billions are being concentrated in a smaller and smaller number of families as time goes on. Add to that the increase in lifespan and cost of medical care (particularly at the end of that lifespan) and a lot of today’s kids are going to get shorted on that, too.</p>

<p>I’m a Dad, first and foremost. And I’m not happy about the shape of the world we’re creating for our children’s generation. I honestly think we’ve failed them.</p>

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<p>I just read that over 34 million households have net assets-- Excluding Homes-- of over $100,000 and 8.8 million Households have over $1,000,000 in net worth excluding homes. That’s about a third of all US households with some decent net worth.</p>

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<p>A friend of mine’s son graduated with a degree in journalism about a year and a half ago from a 4-year university (no loans to pay back). He went to work for a builder with a starting salary of $50,000 plus benefits (medical, vacation and matching 401K). After one year, they gave him a $20,000 bonus and a $20,000 increase per year…not too shabby for right out of college :slight_smile: </p>

<p>But I do believe that he is the aberration and not the norm :(</p>

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<p>Richard Florida wrote an excellent book - cannot remember the title but it describes the "creative class’, has excellent information for anyone who plans to enter or remain in the U.S. workforce for the next 30 years or so. </p>

<p>I’ve been guiding D to do a few things - plan to have multiple streams of income, strategies to build wealth (vs. just basic saving), and recognizing and leveraging time as a function of financial security. I think maybe half of it is sticking.</p>

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<p>It’s a sad state of affairs from a cultural point of view as well. The more pinched we feel, the more our lives are dominated by purely practical considerations, and the more cribbed and confined our consciousness becomes.</p>

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<p>Barrons, I would not say $100K is very significant in terms of net worth. That’s one major medical crisis away from zero.</p>

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<p>$100,000 in cash plus perhaps $200,000+ in home equity is a pretty nice nest egg for most people. I’d bet most people who can accumulate that much have insurance. You don’t get that working at Micky D’s–unless you own the store.</p>

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<p>OMG - something must be wrong! I agree with FundingFather on a point :eek:. Xiggi, you have a point, but applying for a job has changed drastically these days. Now, your initial evaluation of an application/resume will be done by a computer, which will decide if - on paper - without regard to your character, etc - you have enough to set you apart so that the resume will be delivered to a person. And the purpose of that machine is to eliminate as many applicants as possible.</p>

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<p>… and once that initial process is over and you’ve worked for a few years, then jobs will come via people who already know you, or via the recommendation of a mutual colleague.</p>

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<p>

Well, barrons - I doubt that you’d consider it a nice nest egg for you, would you? It’s not enough to send two kids to state college, or to retire on comfortably, is it? And yet, those are routine life stages that will have to be dealt with for most people. Pretty much any economic bump in the road which isn’t covered by insurance (flood? earthquake? medical problem your HMO decides isn’t covered? job loss?) will wipe that out in flash. And yet, they are the lucky ones. 2/3 of the households don’t even have that much. (Note: without knowing how “net assets” or “households” are defined it’s really hard to draw a lot of conclusions from this third hand report, although it sounds about right to me.)</p>

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<p>I personally agree that $100K is not that large of a nest egg, but I fear that the significant percentage of those who have that amount saved feel as if they are very comfortably set. Our society has become, on the one hand so focused on instant gratification, must have all the toys NOW, and on the other hand, presumptuous of the government being there to bail them out if they get in over their heads, that many people think having $100K is more than adequate.</p>

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<p>As I was referring to inheritance I am assuming this is a post kids in college amount. Believe it or not there are many areas in this country where you can retire comfortably on two SS checks ( which many states don’t tax), assuming you both worked a decent job most of your lives, using the $250k equity from your expensive city house to buy a nice 3br home for CASH and still have $100,000 left over. That other $100k in assets provides some additional cushion and can be used for luxuries like overseas travel and such. Just move to Oregon before blowing all you cash on that end stage nursing home care if you know what I mean.</p>