Holiday Thoughts about Three Especially Vulnerable Groups

I try to be optimistic — especially this time of year when the days are short and cold, when almost everybody things everyone else is having a better time than they are, and now that we’re in the worst economic downturn in almost anyone’s memory. Yet I also try to be realistic about the effects of this Mini-Depression. At least three distinct groups are especially vulnerable, each quite differently:

1. The poor and near poor, with family incomes typically under $20,000 a year. Their connections to the labor force are tenuous at best, often involving part-time and temporary jobs. They’re also the first to be let go during downturns. Not surprising, this recession is taking a toll, and about to take a larger one. Few in this group qualify for unemployment insurance, and an increasing number have exhausted the five-year maximum for temporary welfare assistance. To the extent they’re getting by, they’re moving in with relatives. The media have missed this story almost entirely.

2. Middle and lower-middle class households whose breadwinners are within five years of being eligible for Social Security. Many are in danger of losing jobs and a large number are already working fewer hours. They’re cutting back on all discretionary purchases. But their biggest problem is that both their savings and the value of their homes have shrunk dramatically, and probably won’t bounce back before they planned to retire. Social Security will cover about 40 percent of their pre-retirement earnings. So many are now planning to work well beyond age 65. This will be a particular challenge for blue-collar workers whose earnings have depended largely on physical labor. Their bodies may not last.

3. Middle and lower-middle class retirees. Most are dependent on income from savings, which has declined sharply. They’re cutting expenses where they can, but they’re running out of resources. To the extent they can turn to their children for help, they are doing so. That means a large and growing cohort of middle-income people between the ages of 35 and 65 have begun subsidizing their parents, even though they and their immediate families are under financial stress. Here’s another untold story.

Other Americans are in distress but these three groups are particularly worrisome, and in the years ahead it seems likely they’ll be in worse shape than they are today. If this is to be avoided, these three groups will need distinct public policies crafted to their particular needs. More on this to come.

In the meantime, happy holidays.

Originally published at Robert Reich’s Blog and reproduced here with the author’s permission.

5 Responses to "Holiday Thoughts about Three Especially Vulnerable Groups"

  1. Eileen   December 29, 2008 at 7:25 pm

    Just wanted to thank you for noticing and pointing out for others to see that there are indeed three specific groups that are already in distress (or likely to be there very soon). My spouse and I are both retired–he is 68 and I am 62. We’re average middle-class—he was a teacher for 32 years; I was a management trainer for 21 years (and high school teacher for 7 years prior to that). I am worried about our future and have been since 2001. We’ve taken it as a challenge to ourselves to learn to live frugally and we’ve made great strides over the past 7 years. I’m very proud of how we’ve adapted. However, I can’t lose the fear that we and the poor, those about to retire within 5 years, and those who are already in retirement are headed for a dreadful future. I am afraid that we will be forgotten. Thank you, Prof. Reich, for “noticing” us.

    • devils advocate   December 30, 2008 at 8:22 am

      extremely important postthe “working poor/middle class” is merging and emergingquite scaryhere is one possibility:help seniors supplement their Soc Security with part-time (non-physical) workin schools etc.40-50% of the skilled workers are hoping to retire in the next 5 yearspay them to train apprentices so they can afford to retirehelp

  2. Guest   December 30, 2008 at 4:21 am

    “Mini-Depression”? Actually worst than 1929.

  3. Guest   December 30, 2008 at 3:54 pm

    Thank you Mr Reich! It is about time an economist looked at problems real people in the real world are suffering with. Let me share with the group an article that helped us understand what we needed to do and how to do it:,-In-Laws-and-Your-Own-Children-at-the-Same-Time?&id=1477153 Cut and paste entire link in your browser.God Bless!

  4. Jerry Halberstadt   December 31, 2008 at 9:34 pm

    How can we focus resources on these and other groups? For example, artists are always struggling and will find it even harder to market their work during hard times. I think it is time for a new “New Deal” that put artists to work during the depression, and for a new deal that will enable elders to finance new businesses. Let’s bail out elders and artists: