American Consumers Newsletter

by Cheryl Russell, Editorial Director, New Strategist Press
September 2006

The Decade of Retreat

1. Hot Trends: THE DECADE OF RETREAT
2. Q & A: WHO WILL GET HURT BY HOUSING?
3. Cool Research Link: 2005 INCOME DATA, COLLEGE COSTS
4. BOOKS FOR 2006: The updated AMERICAN GENERATIONS SERIES
5. A NEW LOOK AT SPENDING: The all new WHO’S BUYING BY AGE

 

BET YOU DIDN’T KNOW

The median income of men aged 45 to 54 fell 7 percent between 2000 and 2004, after adjusting for inflation.

1. HOT TRENDS

The Decade of Retreat

If the 1990s are known as the Decade of Affluence because household incomes reached a peak, then the first years of the twenty-first century may well be called the Decade of Retreat– especially for the American worker. Hardly a day goes by without more evidence of workers falling behind.

The recently released 2005 income data from the Census Bureau’s Current Population Survey show a significant decline in the earnings of men and women who work full-time. Wages and salaries now account for a smaller share of gross domestic product than at any time since 1947, according to an analysis by The New York Times not only are wages falling, but the percentage of Americans with employment-based health insurance is slipping, and those with insurance must pay more for it. In fact, the value of employee benefits is failing to keep pace with inflation, according to the Times.

Americans are feeling the pain. According to a Pew Research Center survey (http://people-press.org/), 59 percent of the public thinks today’s workers must work harder to earn a decent living. Fifty-six percent say employers are less loyal to workers. Fifty-one percent think retirement benefits are not as good as they used to be. A comparison of the 2006 Pew results with surveys taken in 1989 and 1997 shows job satisfaction dropping sharply among workers aged 50 or older and growing discontent with employee benefits.

The quality of work life may not be alone in retreat. Tom Smith, director of the General Social Survey (GSS) at the University of Chicago’s National Opinion Research Center, concludes in a study (http:// www.news.uchicago.edu/releases/05/051228.troubles.shtml) that “Americans on average are worse-off now than in the past.” Smith came to this conclusion after comparing GSS results from 2004 and 1991. In both years, respondents were asked to identify the frequency and severity with which they encountered 66 different problems ranging from the death of the spouse to the loss of a job and the inability to pay for health insurance. The percentage of Americans who experienced at least one problem increased over the years from 89.1 to 91.5 percent. The average number of problems experienced grew from 4.03 to 4.34. Smith found significant increases in problems such as being unemployed, being pressured to pay bills, being unable to afford food, lacking medical insurance, and being hospitalized.

What factors could explain the erosion in the quality of life in the United States? One might be the aging of the population, which leads to more health problems. Another might be technological change and the consequent globalization of the workforce. The Pew survey shows how ambivalent Americans feel about these changes. Sixty-nine percent think e-mail and other modern communication technologies have helped workers. But an even larger 77 percent think outsourcing–which is one consequence of the communications revolution–has hurt American workers.

Smith’s study sheds some light on why things may be turning south by examining the demographic segments with the most and the least troubles. The biggest change in the distribution of troubles was by education. In 1991, the least-educated group experienced 1.33 problems for every 1 problem experienced by the best-educated group. By 2004, the ratio had grown to 1.79 to 1. The growing gap between the haves and the have-nots in an increasingly competitive world may explain the Decade of Retreat.

For more on the changing demographics of the American population, see New Strategist’s updated American Generations Series: The Millennials, Generation X, The Baby Boom, and Older Americans. Visit New Strategist’s web site at http://www.newstrategist.com to order hardcopies or download these books today.

By Cheryl Russell, editorial director, New Strategist Publications
If you have any questions or comments about the above editorial, e-mail New Strategist at mailto:demographics@newstrategist.com.

 

BET YOU DIDN’T KNOW

During an average quarter of 2004, 57 percent of householders aged 35 to 44 paid interest on a mortgage, spending $1,941 on the item during the quarter.

2. Q & A

Who Will Get Hurt by Housing?

The housing market is in transition. Sales of existing homes fell in July, according to the National Association of Realtors. New homes sales also fell that month, reports the Census Bureau. Although analysts expected the declines, the size of the drop exceeded predictions and heightened fears of trouble ahead for homeowners and the economy.

Who will be hurt by a downturn in the housing market? One vulnerable group is young adults. The homeownership rate of householders under age 30 grew faster than that of older age groups between 2000 and 2005. The number of homeowners in the United States climbed by 3 million during those years, and more than one in five new homeowners were under age 30.

In years past, these young adults would have been renting apartments and could have benefited from the transition to a buyer’s market. But as housing prices rose fast and lenders marketed tempting interest-only loans, many took the plunge. Now they may have a hard time staying afloat because they have little equity in their homes and their housing costs will rise with interest rates. The latest data from the 2005 American Housing Survey (http://www.census.gov/hhes/www/ housing/ahs/nationaldata.html) show how many of the nation’s homeowners fall into the two groups most vulnerable to a pause in the rise of housing prices or even a slip.

1. Homeowners with a mortgage other than fixed-rate: Of the nation’s 46 million homeowners with a mortgage, 9 million (19 percent) do not have a fixed rate of interest. They have adjustable-rate mortgages, balloon mortgages, or some combination. Rising interest rates will hurt them.

2. Homeowners with little or no equity in their home: Of the nation’s 46 million homeowners with a mortgage, 5 million (12 percent) owe 90 percent or more of the value of their home. Falling prices will hurt them.

As the housing market finds a new level of stability, it is important to keep in mind that many homeowners (39 percent) have no mortgage at all, most homeowners with mortgages pay a fixed interest rate, and those with mortgages owe only 55 percent, on average, of the value of their home–in other words, they have enough equity to weather a substantial price drop. But some won’t be so lucky, and the youngest homeowners may be hit the hardest.

If you have any questions or comments about the above Q & A, e-mail New Strategist at mailto:demographics@newstrategist.com.

 

BET YOU DIDN’T KNOW

The labor force participation rate of men aged 65 or older climbed to 19.8 percent in 2005, the highest level since 1979.

3. COOL RESEARCH LINKS

To keep up-to-date on ever-changing demographics and lifestyles, check out these useful web sites.

2005 Income Data
http://www.census.gov/hhes/ www/income/income.html
Last week the Census Bureau unveiled the much-anticipated snapshot of our economic well- being, the results of the Current Population Survey’s Annual Social and Economic Supplement. Taken in March each year, the supplement asks a large, nationally representative sample of Americans about their economic status in the previous year. The numbers are available at this site. The results show median household income rose 1.1 percent between 2004 and 2005, to $46,326, the first significant increase since 1999. But the 2005 figure is still well below the level of 2000, and the gains were limited to a few demographic segments. By age, only householders aged 65 or older saw their median income rise significantly between 2004 and 2005–up 2.8 percent. One factor behind the gain is higher labor force participation among the elderly.

College Costs
http://nces.ed.gov/ pubsearch/pubsinfo.asp?pubid=2006186
Everyone knows college costs are in the stratosphere and rising. But few pay full freight to go to school. This report from the National Center for Education Statistics reveals how much families actually pay, out of pocket, to send their kids to school–or what the NCES calls the net price of attendance. For full-time undergraduate students at a four-year public college, the annual cost of attendance (including tuition, room, board, books, supplies, transportation, and personal living expenses) was $15,200 in 200304. Families actually paid only 78 percent of that amount, or $11,900, after all grants, veteran’s benefits, and estimated tax benefits are subtracted from the total. For full-time undergraduate students at a four-year private school, the annual cost of attendance was $28,300 in 200304. Families paid just 71 percent of that amount, or $20,000. The report also includes tables detailing the net price of attendance by family income.

 

BET YOU DIDN’T KNOW

The share of Generation X men with a college degree ranges from 11 percent among Hispanics to 59 percent among Asians.

4. BOOKS FOR 2006: The updated AMERICAN GENERATIONS SERIES

New Strategist continues to do the work for you with a new update of the four-volume American Generations Series:

  • The Millennials: Americans Born 1977 to 1994, 3rd ed. $69.95; 1-885070-88-8; 416 pgs.; hardcover
  • Generation X: Americans Born 1965 to 1976, 5th ed. $69.95; 1-885070-89-6; 352 pgs.; hardcover
  • The Baby Boom: Americans Born 1946 to 1964, 5th ed. $69.95; 1-885070-90-X; 352 pgs.; hardcover
  • Older Americans: A Changing Market, 5th ed. $69.95; 1-885070-91-8; 392 pgs.; hardcover

The four volumes in the American Generations Series are designed for easy use, with ten chapters bringing you the latest data on each generation’s education, health, housing, income, labor force participation, living arrangements, population, spending, time use, and wealth.

New to the series is the chapter with data from the government’s fascinating American Time Use Survey. And The Millennials includes updated estimates of the sexual activity and drug use of teens and young adults, along with the latest numbers on alcohol and cigarette use among teenagers.

Order all four volumes in the American Generations Series and receive a free CD containing the previous editions of these books in .pdf format. What a deal! (CD available only with hardcopy orders.)

American Generation Series + CD (ISBN 1-933588-07-1) $265.00.

To see detailed tables of contents, introductions, bibliographies, indexes, and sample pages of these books, or to download them in .pdf format, go to http://www.newstrategist.com.

 

BET YOU DIDN’T KNOW

Minorities account for the majority of children under age 10 in six states: Arizona, California, Hawaii, Nevada, New Mexico, and Texas.

5. A NEW LOOK AT SPENDING: The all new WHO’S BUYING BY AGE

For anyone interested in spending by age–and age is probably the most important predictor of spending–Who’s Buying by Age could be considered the new bible of spending patterns.

  • Who’s Buying by Age
    $59.95; 1-933588-04-7; 214 pgs.; paper

Who’s Buying by Age is your only published source for weekly and quarterly spending data. It gives you, along with its in-depth annual spending data, a full picture not only of what households buy and how much they spend, but how often they buy certain items. Best of all, you get 2000-to-2004 spending trend data by age.

Who’s Buying by Age opens with an overview chapter that examines average spending in 2000 and 2004 for seven age groups ranging from under 25 to 75 or older. The twelve chapters that follow focus on spending by product category–alcohol, apparel, entertainment, financial products and services, gifts for nonhousehold members, groceries, health care, household operations, shelter and utilities, restaurants, transportation, and a chapter on personal care, reading, education, and tobacco.

To see the detailed table of contents, introduction, index, and sample pages from this report, or to download it in .pdf format, go to http://www.newstrategist.com.

 

BET YOU DIDN’T KNOW

In the 2004 presidential election, two-thirds of voters were aged 40 or older.