PBS Frontline: The Middle Class and the New American Economy

[Beststash]

I watched it and the message I got was that "good" jobs were the key to a sustaining middle class. I define a "good" job as one that pays a living wage and has decent healthcare benefits. Sure bad choices are sometimes made, technology has an impact, the economy goes up and down, but when I was growing up (born 1950) jobs were plentiful and even 'lifetime" jobs were mostly the norm.

The American dream can be restored but it will require workers to begin to make decisions politically that bring about more of a balance between business and labor. The last 35 years have not been kind to most working Americans. I was able to ER simply because I won the lottery by having a "good" job with benefits, education was affordable, and worked in an era where employees were considered the companies most valuable resource.

 

[scrabbler1]

As a childfree person, I dispute the label "American Dream" because it implies that those who are like me can't achieve it or choose not to achieve it. My own "American Dream" included a good paying job, owning my own place, and being able to retire early, all of which I did by age 45. Marriage and kids were not part of it, as I never had any interest in them.

The Neumanns (the white family), made some bad choices which hurt them financially and in other ways (i.e. their divorce). Form the timeline I was able to figure out that they had their first kid when she was 20 years old and soon had two more kids within a few years of that. Then they bought a house, further putting pressure on their finances. Nowhere in their saga did they build up any emergency fund of savings - it all went to raising their growing family and to the house they could not really afford. These pressures led to their divorce which only hurt them more financially (she lost the house). And their two sons, neither of whom are doing very well financially, have had children out of wedlock before they have turned 30. Only the daughter is doing reasonably well and that is in large part to her having avoided (or delaying, we don't know) having children. She has held a steady job with benefits although housing remains a struggle for her and her boyfriend.

The Stanleys (the black family) had 5 kids which put a lot of pressure on their finances. Their kept their marriage together, to their credit, although they were falling into a debt spiral with the high-interest credit cards. Some of their kids are doing okay but are all struggling to various degrees. I forget if any of them have kids out of wedlock. Sending one to a costly out-of-state school was not a good idea because they could not really afford it (that's where the debt spiral seemed to have formed). No emergency fund with this family, either.

Both families made some really bad choices financially which caused lots of problems and prevented them from getting ahead. They made themselves vulnerable to something external (job loss, medical issue) which only made things worse, a lot worse. Sorry, but I have trouble finding much sympathy for them.

 

[pb4uski]

Based on this thread I set my DVR up to record it, but the comments so far seem to me to reinforce my long-held belief that the minimum wage is too low and needs to be gradually increased. While I'm no fan of unions, at the same time I think the pendulum may have swung too far to the employers and there are too many employers who take advantage of low income employees who are relatively powerless except in good economic times. I concede that there are problems and issues with an increased minimum wage as well.

I recall a non-union private company client of mine back in the late 70s who had a large number of low skill workers but still treated them quite well, had very good relations with the employees, and made money. It was a win-win for both the company and employees.

 

[Gatordoc50]

The Neumann's obtained their mortgage ( probably ay 18% plus, when the father had a good job. It took them 20 years before their combined wages equaled his wage when they were married.

 

[Mulligan]

As a childfree person, I dispute the label "American Dream" because it implies that those who are like me can't achieve it or choose not to achieve it. My own "American Dream" included a good paying job, owning my own place, and being able to retire early, all of which I did by age 45. Marriage and kids were not part of it, as I never had any interest in them.

The Neumanns (the white family), made some bad choices which hurt them financially and in other ways (i.e. their divorce). Form the timeline I was able to figure out that they had their first kid when she was 20 years old and soon had two more kids within a few years of that. Then they bought a house, further putting pressure on their finances. Nowhere in their saga did they build up any emergency fund of savings - it all went to raising their growing family and to the house they could not really afford. These pressures led to their divorce which only hurt them more financially (she lost the house). And their two sons, neither of whom are doing very well financially, have had children out of wedlock before they have turned 30. Only the daughter is doing reasonably well and that is in large part to her having avoided (or delaying, we don't know) having children. She has held a steady job with benefits although housing remains a struggle for her and her boyfriend.

The Stanleys (the black family) had 5 kids which put a lot of pressure on their finances. Their kept their marriage together, to their credit, although they were falling into a debt spiral with the high-interest credit cards. Some of their kids are doing okay but are all struggling to various degrees. I forget if any of them have kids out of wedlock. Sending one to a costly out-of-state school was not a good idea because they could not really afford it (that's where the debt spiral seemed to have formed). No emergency fund with this family, either.

Both families made some really bad choices financially which caused lots of problems and prevented them from getting ahead. They made themselves vulnerable to something external (job loss, medical issue) which only made things worse, a lot worse. Sorry, but I have trouble finding much sympathy for them.

While your points are very valid, and I won't dispute them, the soft spot in me tends to be more sympathetic though. These people got caught up in a changing world of our economy. Applying the work models of the 70s and 80s did not translate to today, and their feet got swept out from under them. If I had chose the manufacturing lifestyle, I very well could have been a poster boy for this show, also. One thing is for sure; Papa Stanley is a fit looking 60 year old. The man could pass for 40, and if I was an employer I would definitely hire him in a heartbeat.

 

[poorcarver]

"Chance favors the prepared mind."

 

[ERD50]

...

Definitely not the American dream. Whatever happened to it?

Can we really evaluate the status of the 'American Dream' based on a couple anecdotes plucked for a TV show?

Did the American Dream ever exist for the en-slaved and many of their following generations? And now, global competition is making it tougher to support high wages here in America, but that is helping to fulfill some dreams for others in the world. Is that a bad thing?

As I look at my kids and nephews, the ones that have applied themselves are doing well. The couple that have not had their nose to the grindstone would be more likely to be featured on a TV show - and they could easily point to some bad luck as part of their problem.

-ERD50

 

[ERD50]

... especially in this day and age when a college degree is no guarantee of good paying steady employment.

? When was this magical time when a college degree 'guaranteed a good paying steady employment'? I see a waterfall of revisionist history in this thread.

... They made themselves vulnerable to something external (job loss, medical issue) which only made things worse, a lot worse. Sorry, but I have trouble finding much sympathy for them.

I didn't see it (judging from the comments here), but that seems a common theme. Allow yourself to get in a vulnerable position, and any little thing can get you in a downward spiral. Often (not always), a little planning can help reduce that vulnerability.

I recall a non-union private company client of mine back in the late 70s who had a large number of low skill workers but still treated them quite well, had very good relations with the employees, and made money. It was a win-win for both the company and employees.

... Applying the work models of the 70s and 80s did not translate to today, and their feet got swept out from under them. ...

Right, it is not the 70's. Times change and we need to adapt. I saw it in the early 80's, when a local manufacturer had major lay-offs, and guys in their 50's had not kept their skills up-to-date and couldn't find equivalent jobs (seeing their faces as I handed those guys resumes back to them at our job fair was a major influence in my decision to be prepared for FI).

With global competition, I think it would very difficult to pay low-skilled workers 'very well' today. But if you think it can be done, maybe you should help get a firm up and running.

As far as employers having too much power, if that's the case, I'd rather see that power regulated than to strengthen unions or raise minimum wage. IMO, that is a better way to fix the source of the problem (if it exists), the others are band-aids that will have other consequences or unfair work-arounds.

-ERD50

 

[Willers]

I watched this last night and had mixed feelings. I spent part of my childhood in a basement apartment in what can only be described as a ghetto (after my father lost his job). That is what led me to become interested in becoming FI. Living there made me very aware of the disparity in opportunities available (especially for children) and I can understand the struggles. My father studied hard and passed the PE exam, which led to a new career. He knew that a sustainable career was the key to changing our lives. The effects of not having that was really on display in the report.

Part of me though, was disappointed in the choices made. My wife and I put off having children when we were young. Why? Because we knew we couldn't afford them. I'm not sure when it became a right to have as many children as you want without regard to the costs of that decision. It was also pretty easy to predict the outcome of some financial moves (e.g. buying the building to start two new businesses, choosing an out-of-state school when an in-state would have been 1/2 the cost).

I wish there were more opportunities, especially in poorer areas, for life and money coaching/mentoring. That is a real gap. I have been considering joining such a program in my area and this report convinced me to go forward. Maybe I can help a future Neumann or Stanley...

 

[pb4uski]

...With global competition, I think it would very difficult to pay low-skilled workers 'very well' today. But if you think it can be done, maybe you should help get a firm up and running.

As far as employers having too much power, if that's the case, I'd rather see that power regulated than to strengthen unions or raise minimum wage. IMO, that is a better way to fix the source of the problem (if it exists), the others are band-aids that will have other consequences or unfair work-arounds.

-ERD50

Please note that I said they were treated very well, I didn't say paid very well - they were paid fairly IMO. On the second part, I'm sorry, but I'm retired.

I'm not quite sure what sort of regulations you have in mind, but an increased minimum wage is one form of regulation.

 

[ERD50]

...

I'm not quite sure what sort of regulations you have in mind, but an increased minimum wage is one form of regulation.

IMO, it's better to do something to reign in the excess power (on either side), and then let the market decide. IOW, we may not have a very free market if one employer has a monopoly on jobs in an area/industry. Better to do something to make that industry/area more competitive than to try to micro-manage all the things that competition naturally brings about.

I just have not seen an area where price-fixing ever really worked in the long term - have you? Minimum wage is price fixing. It may be done with good intentions, but it will have consequences that may be unwanted.

From what I recall reading, a pretty small % are actually dependent on min-wage jobs. Many of those jobs are filled by high school or college kids, or people looking for part-time or a second job, or are second earners in a family and want (or only qualify for) a low stress, non-skilled job.

My kids worked min-wage jobs. As long as the business can fill those jobs at that price, why not? How much does a high-school bus-boy need to make? Should diners expect to pay more for their dinner, to meet someone else's idea of what is 'fair pay'?

-ERD50

 

[Arifriekinel]

From what I recall reading, a pretty small % are actually dependent on min-wage jobs. Many of those jobs are filled by high school or college kids, or people looking for part-time or a second job, or are second earners in a family and want (or only qualify for) a low stress, non-skilled job.

My kids worked min-wage jobs. As long as the business can fill those jobs at that price, why not? How much does a high-school bus-boy need to make? Should diners expect to pay more for their dinner, to meet someone else's idea of what is 'fair pay'?

-ERD50

It hasn't been like that for a while in my area. In high school, we were expected to be volunteers or interns, because minimum wage jobs are for people who've been laid off and recent college grads before they could find something. high-school bus boys aren't much of a thing when people who have experience need a job instead.

 

[nvestysly]

I wish there were more opportunities, especially in poorer areas, for life and money coaching/mentoring. That is a real gap. I have been considering joining such a program in my area and this report convinced me to go forward. Maybe I can help a future Neumann or Stanley...

I struggle with this too. I think our local, state and federal governments would serve society much better if they put more effort into teaching ideas about saving/investing/FI versus many of the hand-out programs that currently exist. I realize some good programs are out there but we don't seem to be making much progress in this arena.

I'm a firm believer that nearly everyone can save 10% regardless of how much (or little) they make. All of us know somebody who makes 10% less than we do and they are living their lives. Hence, you can save 10%. Okay this may not apply to poverty level wages but both families in this program were not in poverty early in life. Had they saved the 10% early in life and made better decisions in subsequent years I think the outcomes could have been quite a bit different.

It's obvious to me after seeing this program that we (society/government) are not very successful in our quest to end poverty. Something fundamental has to change before we begin to see improvement in the living conditions of poverty and lower middle-class workers. I don't think we can simpy continue the programs we have in place, or spend more money on the existing programs, and expect a better result.

In that regard, I've facilitated several classes on Your Money or Your Life by Joe Dominguez and Vicki Robin. I'm optimistic that some of the attendees at the class will likely improve their financial situation. Unfortunately, some attendees at the class seem to fall for the trap that they will never become FI because they don't make enough money. I try to encourage people that make little money by telling them they will be FI with a much smaller nest egg than somebody who makes (and spends) six figures.

Let us know how you decide to proceed with your teaching/mentoring.

 

[Gatordoc50]

An alternative way to look at the Neumann's would be to ask why someone with little skills right out of high school could land such a high paying job. Having that job and then losing it caused many of their problems.

 

[nvestysly]

An alternative way to look at the Neumann's would be to ask why someone with little skills right out of high school could land such a high paying job. Having that job and then losing it caused many of their problems.

DW said something similar. DW noted that both couples in the Frontline program were making 50% or more than she and I were making at the time. The couples in the Frontline program are similar in age to DW and me. DW and I both had professional jobs - we believed our salaries were above average pay at the time - yet somehow the couples in Milwaukee, who made much more money, had a dramatically different outcome than us.

 

[Which Roger]

An alternative way to look at the Neumann's would be to ask why someone with little skills right out of high school could land such a high paying job. Having that job and then losing it caused many of their problems.

I think you hit the nail on the head regarding how things have changed. Back in the day, the path that the Neumanns initially took - landing a good job early on, was the key to achieving the American Dream, because those generally turned out to be jobs for life. The "haves" were the ones who got those jobs when they were young, and the "have nots" were the ones who didn't.

These days, the model has changed, and the key to achieving the American Dream is to be self-motivated, flexible, adaptable, and willing and able to learn without a lot of hand holding. Examples of this are the young programmers who are self-taught and landing good jobs. Or most of us on this forum who are self-educated regarding finance and other things relevant to ER. Just about anything that anyone could ever possibly want to learn is available for free on the internet. The key is knowing how to process that information.

The Neumanns were caught in the transition from the old to the new - their "job for life" turned out to be anything but that.

 

[antmary]

I didn't see the program, but I would like to respond. During the 60's and 70's, it was easy for me, as a young student to find a job in the summer time. I worked as a: motel maid, peach picker, sales girl, insurance billing person, governess, and anything else that came along that would help me to pay the bills.

I also remember that my wage was anywhere from the high $2.00's to around $3.25 per hour. But, my rent was cheap - $25 per mo. for a room; I was able to work myself through a state college. It was not hard to survive, and I have always been able to find a good job after graduating from the university.

Today, the money-scape looks much different to me. I read that some fast food restaurants skip over the high school kids, and hire retired persons or college grads. Typical charges for a room around here (California) go for at least $500 per month. College costs have gone through the roof - students are graduating with mountains of debt. I also can't believe how expensive food is today.

It seems that the problems we see today are incredibly complex, with myriad causes. It would be much easier if everything were black and white!

 

[ABQ2015]

The TV show reminded me of my hometown, a small mining community in southern NM. When I graduated from high school in the mid 70s, I went off to college supporting myself with savings from working in a fast food restaurant in high school for two years, part-time and summer jobs mostly at the $2/hr minimum wage, student loans, etc. Many of my classmates married their high school sweethearts, he got a job in the mines starting at $15 an hour, and she stayed home and had kids. Many got subsidized housing from the mines - nothing extravagant but very reasonable rent. I remember being rather jealous at the time. But several years later the mines starting laying off and many lost their jobs. Quite a few of them got divorced. I'm friends with some of the gals on Facebook and they struggled after the divorce to go back to school and eventually got jobs with benefits but a so so salary. My family was blue collar and my parents raised six kids in a mobile home in the poorer section of town. But I was fortunate as my dad encouraged all of us to go to college and get employable degrees - three of us were able to achieve this. Also he did not have enough clout at the mines to get us jobs there after graduation or during the summers. This turned out to be a good thing.

 

[Mulligan]

I think you hit the nail on the head regarding how things have changed. Back in the day, the path that the Neumanns initially took - landing a good job early on, was the key to achieving the American Dream, because those generally turned out to be jobs for life. The "haves" were the ones who got those jobs when they were young, and the "have nots" were the ones who didn't.

These days, the model has changed, and the key to achieving the American Dream is to be self-motivated, flexible, adaptable, and willing and able to learn without a lot of hand holding. Examples of this are the young programmers who are self-taught and landing good jobs. Or most of us on this forum who are self-educated regarding finance and other things relevant to ER. Just about anything that anyone could ever possibly want to learn is available for free on the internet. The key is knowing how to process that information.

The Neumanns were caught in the transition from the old to the new - their "job for life" turned out to be anything but that.

I also concur with you, especially in the manufacturing and union arena. Where I lived back in the 70s the local refractory plant would hire summer help from older high schoolers for $10 an hour. Many got on their after graduation and would live a great life. Until everything went off shore and now the plant has been empty for over a decade. I remember working in a union grocery store making close to $6 an hour in the mid 80s while in college. The produce manager had a college degree but never even bothered to look for a job then I remember because he was making close to $15 an hour with good benefits. Of course the store was closed up for good before 2000. I imagine the pay in union grocery stores have taken a severe beating over the last 25 years

 

[Midpack]

I finally watched the show and it was pretty much as expected (same story as Gary, Detroit, Youngstown and many more), but interesting nonetheless to hear each family members perspectives at intervals over 20+ years.

But the most interesting observation on this thread to me is how it appears ER members respective ideology lenses remain wholly unchanged, as reflected by their reviews of the Frontline episode. As journalism, no effect at all? Like so much journalism these days...yawn...

 

[MBAustin]

I found it very interesting for them to have followed both families over such a long period and to see how the perspective on what IS middle class has changed. Also it hadn't really sunk in with me how many families live on such low incomes and without benefits.

It seems to me that Keith Stanley's opportunity to go away to college made all the difference for him and he has made the most of it. That was the most encouraging part of the program, that and the fact that his parents continue to be so resilient. There are more good people in hard times than we realize.

 

[NW-Bound]

I just finished watching the show on PBS Web site. Had not planned on watching it, but out of curiosity from reading the comments here, decided to see what it was about.

Yes, the Neumanns (white family) are hard-working people. It's too bad their children are also strugging now, but then the children would do better without having kids that early, out of wedlock at that.

I found myself liking the Stanleys (black family) a lot for their positive attitude. While the Neumanns might have been well-intentioned parents, the Stanleys also knew how to put their good will into their child raising, and it shows. Yet, it's too bad that the Stanleys did not know better than financing their child's out-of-state college with credit cards. Why did the son have to go to Alabama University and not a Wisconsin school? They knew many good life practices such as hard work, having a positive attitude and teaching their children right from wrong, but their financial skills were lacking.

Finally, as we all know, in the past 2 decades, many families elsewhere in the US have prospered. These were not always college-educated or having nice highly-paid jobs. Included are many immigrants, whose language skills put them at a further disadvantage. If a TV producer wants to portray how many people were successfully raising their living standards during the boom years of 1990-2000, he would have no problems finding plenty of examples. Hint: it would be much easier for him to look outside of places like Milwaukee or Detroit, though I suspect examples do exist in those latter places.

The above brings to mind this observation. People stuck in stagnant areas are doing themselves a disservice by not uprooting and moving to places where jobs are. I could not help thinking how the Neumanns would do so much better if they would let their home get foreclosed 22 years ago, and go start a new life in places like Texas, Arizona, or Idaho, etc... People are still doing that today.

 

[ERD50]

But the most interesting observation on this thread to me is how it appears ER members respective ideology lenses remain wholly unchanged, as reflected by their reviews of the Frontline episode. ...

I don't know how interesting that is, I think it would be totally expected when the journalism is presented in select anecdotes.

Even if it was a straight factual report, people are likely to differ on the causes, and that reflects what they have learned (or think they've learned) from their own experience/observation. So if we talk about lower wages, one person sees that as a greedy corporation (but why wasn't that corp greedy in the past?), another sees it as the consequence of globalization.

And if one sees bad luck as a reason, and another says it depends on how you prepare and deal with bad luck - I would expect that view to come across in any comments on this story. Why wouldn't it? It would be more 'interesting' (and perplexing) to me, if their views were somehow reversed. Now that would be interesting - what would cause that, I would wonder.


-ERD50

 

[travelover]

Let them eat cake.

 

[FIREd]

The above brings to mind this observation. People stuck in stagnant areas are doing themselves a disservice by not uprooting and moving to places where jobs are. I could not help thinking how the Neumanns would do so much better if they would let their home get foreclosed 22 years ago, and go to start a new life in places like Texas, Arizona, or Idaho, etc... People are still doing that today.

That's what I thought after watching the documentary. This was more about the decline of the rust belt as it was about the decline of the middle class as a whole.