Poor Martha Parry. The New York woman sold her insurance company and thought she had it made. According to Time magazine’s July 21 cover story, she had $1 million in the stock market two years ago and was looking forward to a retirement of golf, travel, and good times.
Now, at 65, she has $600,000 in her retirement account and must still earn her living by the sweat of her brow. She is one of the lucky ones. Most 65-year-olds have much less money, and many are near bankruptcy. Recently, the expression “senior debt,” which used to refer to secured credit, has taken on an entirely different meaning. For old people are going bankrupt at the fastest rate in history. More often than ever before, they walk right into their retirement years without a dollar in their pockets … and credit-card bills that would embarrass a pickpocket.
Just three years ago, the typical home calculator overheated as the average investor toted up how rich he would be at 18% annual growth … and how soon he could retire. Again, the calculators are warming up — but this time to different purpose: figuring out how much people will have to save in order to have any hope of ever retiring.
Expect “a move back toward the historical norm,” warns Time, “working until you drop.”
“More and more older Americans were choosing to work anyway,” Time continues, “often part-time and in dream jobs like business consulting or running a small art gallery, just to stay active and engaged. But that’s very different from the prospect that faces many older workers today: being forced to work more hours each week for more years than they want at jobs they don’t like.”
Imagine that you worked as an airport security guard, pretending that every grandmother and Girl Scout is a menace to the empire … or that you labored for the Federal Reserve Bank, pretending to protect its money. You might be worn out at 55 or 60. Nothing wears a man out faster than pretending to do real work.
One of the shocking things about Americans is how much they work. Paris, Berlin … even London … have slowed down for the summer. Manhattan, meanwhile, is as loud as ever. People schlep and hump … toting and pulling … as though they needed the money. And maybe they do.
Everybody knows that Americans got a lot richer in the Great Boom of 1982-2000. But a man toting bales full time in 1979 would have earned $677 at it (adjusted for inflation to the year 2000). He could have kept on toting bales for the next two decades, but he would have little to show for it. Median weekly earnings for men in 2000 were less than they had been 20 years earlier. In 2000, he would have earned only $646 per week.
Seeing these figures in Gary North’s “Remnant Review,” we could barely believe them. But there they were, taken from Bureau of Labor Statistics data.
During the same period, family income rose, but only because the family spent more hours schlepping and toting. According to census data, the average married couple worked nearly 400 hours more in 1999 than they did in 1979. Even so, the data shows that at least 20% of families actually lost income in the ’73 to ’93 period.
“No explanation for this reduction of per-capita income has been widely accepted by economists,” writes Gary North.
“There is no serious economic thinking going on in America,” adds Dr. Kurt Richebacher. “They think the whole economy depends on consumer confidence. As long as consumers keep buying, they believe, everything will be all right. But where does the consumer get the money to spend? Nobody even seems to care.”
Here we offer an old explanation for why corporate earnings have collapsed … and why personal earnings have stagnated … and why Americans have to work longer and longer just to maintain their standard of living:
“You can’t get something for nothing” is our theory. Stagnant wages are our evidence. Collapsing profits are our smoking gun.
Americans do not save enough. Without savings, there is no real capital investment — because there is nothing to invest. Instead, there is only make-believe investment in unprofitable new technology — paid for with credit. Without real capital investment in profit-making new machinery, new plants, and equipment, people do not have high-value-added new jobs. Their wages cannot increase — for they are not really producing more and better goods and services. So, they are forced to work longer hours and go into debt in order to give themselves the illusion of financial progress.
Then, once they think they are getting rich, they are encouraged to borrow and spend even more — which further distorts the entire economy toward a level of consumerism that can’t be maintained.
Eventually, the consumers arrive at retirement age and realize that they don’t have enough money. What can they do? Go back to work!
At least Americans are used to it. They’ve been schlepping longer and longer hours since 1982. Now they are prepared to work not just more hours but more years too.