The New American Dream

05/09/2011 5:04 pm EST


Terry Savage

Author, The Savage Truth on Money

Amidst all the headlines about jobs and employment, it took someone from another country to make this point to me. He said, “It looks like the new American status symbol is having a job!”

It’s a startling concept that Americans might measure our success not by a new car or a big house, or even the size of a paycheck. It’s come down to one simple fact that divides our citizens, and drives our hopes and fears: How secure is your job?

The balance is lopsided, according to the most recent unemployment numbers. With 9% officially unemployed, and more than 90% holding jobs, you wouldn’t think this anxiety could have such an impact our national psyche.

But the headlines mask troubling times for Americans and their families. Many of the currently employed have jobs earning far less than they budgeted for in better times. Many more have simply “dropped out” of the workforce, and are no longer counted in the unemployment statistics.

  • If you are a recent grad burdened with student debt, the outlook for finding a job is improving.
  • If you are in your late 50s or early 60s, not so good. You may be telling friends that you took early retirement—but it’s a long bridge to Medicare and Social Security.
  • And if you are an inner-city high school grad, or dropout, it’s hard to find a path to America’s promise.

The Job Facts
Economists found some good cheer in the latest statistics: The economy added 244,000 jobs last month, mostly in the private sector. That number has been increasing monthly, up from only 78,000 new jobs in January 2011.

But it falls woefully short of the 13 million private-sector jobs that must be added over the next three years to bring unemployment down to 6%. The economy must add at least 300,000 jobs every month to reach that goal. And that requires economic growth of at least 4% above the 1.8% gain of the most recent quarter.

(Don’t forget that the working-age population grows by about 1% ever year, so this is a moving target. We need to increase jobs just to stay even.)

Even more worrisome is the weekly “Initial Claims” for unemployment, which jumped to an unexpected 474,000 in the most recent week. The trend of this unemployment line has turned sharply upward in the past month, signaling growing weakness in the job market and a potential slowdown in the economy.

Economists can find both hopeful and pessimistic numbers within all these reports. But the real issue is how they impact your own financial planning and your outlook on the future.

Making Work
First, let’s get beyond the belief that America is inevitably going to sink into a permanent state of slow job and economic growth.

We’re in a transition period, and unfortunately many jobs that used to offer significant wages no longer exist. That list ranges from factory workers to middle management. Many have been outsourced—not to other countries, but to technology. But technology itself creates new jobs.

Here’s a great example: Groupon was formed in Chicago in the depths of the recent recession, offering bargains to consumers on a tight budget. In just three years, the company has created more than 5,000 jobs, and become an engine of growth for many small businesses. Facebook is in the process of adding 2,000 jobs just to compete with Groupon.

While you may not see these job openings posted, word spreads among the tech-savvy community—just as ants know where there’s a picnic. It’s a new economy and new kinds of jobs are being created.

That kind of economic change is irreversible and inevitable, no matter what the politicians try to do to stop the process. Businesses can’t support unprofitable jobs in a competitive world, and government can’t “create” jobs forever. We need a productive economy to create good jobs in the private sector, and support government jobs that are paid for with tax dollars.

Creating Jobs
Washington’s policies, and politics, are not creating a climate for job growth. It’s a credit to the underlying strength and will of the American economy that we get as many new jobs as we do.

Today, there is uncertainty over taxes, over our national debt, and over future regulation. That’s not a climate for real economic growth.

If we want more jobs, let’s ask Congress to get out of the way of the certainty and optimism that lead to economic growth and jobs in the real economy.

Then all who want to can acquire the new American status symbol: a good, paying job.

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