New Social Security Study Gives the Bad News to Generation X

Generation X has been told since we started working that Social Security would go broke before we would ever receive any benefits.  A new study by Harvard and Dartmouth researchers puts the date at which the Social Security trust funds will be tapped out at 2033.  And the demographics at that point only bring in taxes that can pay 75% of benefits due.

For Generation X, that means that those of us turning 50 this year will see an insolvent program when we hit 68.  Or one year after the current age to receive full benefits.   I just received my statement from the Social Security Administration last week, and it lays out the difference in monthly payments for electing to take Social Security early, at 62, or waiting until you are 67.  And the difference is fairly substantial.  The question is, should the spectre of insolvency in the system make one consider taking the early retirement in order to insure that you get something back?

I don’t think we will actually get to that point of course.   Even with bad demographics due to lower than expected birthrates, there are many ways to fix Social Security.  Raising the age at which benefits can be claimed seems to make sense, given increased lifespans.  And the rate of taxation could be raised, though I would hate to see that.  Likewise one could remove the ceiling on OASDI taxation.  Although I don’t see that the last option raises that much money — the tail of the income distribution.

I fully expect that Generation X will see an increase in the age at which we can draw Social Security.  Time to start re-planning that retirement!

Workforce Generation Gaps

Much ink has been expended on the subject of integrating Boomers, Gen Xers, and Millennials in the workplace.  But which group gives the best job performance?  And is there a performance generation gap in addition to the cultural divides?

A friend on Facebook posted this video from The Economist that discusses an Ernst and Young survey on the workplace effectiveness of Baby Boomers, Generation X, and Millennials (Generation Y).  Overall it looks like Gen X “wins” as having the best combination of work characteristics.  One would think this is unsurprising since at this point, Generation X has at least 10 and up to nearly 30 years of experience, and still have the ambition or need to support a family that makes us keep climbing the greasy pole.  The Baby Boomers at this point have to be actively considering retirement, even if they don’t want to or think they will be able to.  So, I would expect them to start dialing it back.  The chart shows them as being the most cost effective workers.  I think that has to do with the post 50 decline in salary I discussed here along with their effectiveness at the job.  Being at peak earnings makes Generation X a bit less cost effective even though we are arguable better at the job.  As for the Millennials, I guess that combination of being lazy and hard to work with that is reflected in the survey makes them not even worth the fairly low salaries they are getting at this point in their careers!

Mid-career job change time for Generation X

One of the defining characteristics of Generation X that differentiated us from the Baby Boomers as we entered the workforce was that we did not expect to stay with one employer for our whole lives.  I don’t know what the overall statistics are, now that we have put in at least half a working lifetime, but I can speak for myself personally.  I have worked for three separate organizations and seem to find myself switching jobs every seven years (plus or minus).  When I looked at my lifetime earnings record for my post about Gen X’s peak earning years, I did note that my job search coincided with a salary plateau, and I used the job change to get a raise.  I think that this has been a standard Gen X model.

Since I am at that place again (in terms of time and stagnation), I am again looking for another opportunity.  As before, I think that the opportunities outside my organization are likely to be better than inside.  As I look into changing jobs again, I found this article from Marc Miller about Generation Xers hitting 50 and considering changing careers.  Miller runs Career Pivot, a “career design firm” that helps Baby Boomers shift careers. His article notes that Gen Xers are now facing the career choices that the Boomers hit a decade or two back, but that we are different form the Boomers in fundamental ways.  One on these ways is that we Xers have been more career focused – using education and job shifting between employers to drive higher levels of reward, as opposed to the Boomer strategy of going to work for one company for an entire career.  The second issue that he notes that affects mid-career changes for Generation X is that we have delayed having children, and this will have an effect on letting your Generation X midlife crisis drive a career change.

Miller closes with this statement, which I found sort of interesting.

“Approaching Career Crossroads

The great recession and the new economy has caused many in all generations to approach career crossroads.

    1. Do you blindly follow a career path to earn a living and hope happiness will follow?
    2. Do you pursue monetary success and think happiness will flow from that success?
    3. Do you follow your passion to attain happiness and the monetary success that will follow?

Baby boomers followed path #1.

Generation Xers followed path #2.

Generation Y, who happen to be baby boomers kids, are following path #3.

All three paths are flawed.”

My career works with his generalization, as I would say that I followed path two.  Is it flawed?  Undoubtedly.  But I don’t think there is a path that doesn’t have flaws.

The Fast and the Furious – $1B Worldwide in 17 Days

I have posted my contention that the Fast and the Furious franchise, a movie with a completely Generation X starring cast, is the greatest movie franchise of our generation.  More support for that comes in today’s news that this weekend Furious 7 will break the $1B Worldwide Box Office mark.  Right now it is beating all the other films that are out.

Gen X Listicle – 10 Things Generation X won’t tell you

Good list from Market Watch on things Generation X won’t tell you.  Although I would tell you!  I think that I especially resonate with numbers (2) Markerter and media are ignoring us in favor of Boomers and Millennials and numbers (6) Boomers won’t get out of the way at work and (7) Millennials want to pass us on the corporate ladder.  The thing is, I wanted to pass boomers on the corporate ladder when I was in my late 20s/early 30s.  They just are still not out of the way.  Though I have passed a few.

Sleep, work, and happiness.

Read this article in the New York Times about how people sacrifice sleep in favor of work.  It links to this study that shows that higher wage rates reduce sleep time for men.  Given my previous posts about Gen X earnings being at peak during our 40s, I would suppose that we are also getting less sleep than ever!  No wonder we are more depressed and less happy.

So, since lack of sleep leads to worsened depression is it a vicious cycle?  Or just a chicken and egg problem?  Or a set of spurious correlations?

Generation X – Peak Earnings and Peak Unhappiness.

I know that correlation does not imply causation, but I will also note that the curves for earnings by age and the curves for how unhappy people are by age do show remarkable anti-correlation.

Peak Unhappiness
We need a drink.


Here is the curve for satisfaction (happiness) with respect to age:

Peak Unhappiness!
Life Satisfaction Curve



And here is the plot of earnings (on a logarithmic scale):

blog_lifetime_earnings_profileSo, both are U shaped curves that have extrema in the late 40s.  Perhaps the earnings chart is more directly comparable to the rate of depression by age:



Should I find time, I think I will try and run a correlation between these two datasets!  It might prove interesting!  And while studies claim that money can buy happiness – at least to a point – if this correlation had related causes, it might argue that on an individual basis, money, or its pursuit, seems to lead to increased unhappiness!

Geneeration X, in our age range of 33 to 50 are now reaching peak earnings and peak unhappiness.  The good news is that those of us hitting fifty this year are poised to spend a few years getting happier!  We make a bit less money, but apparently it will be worth it for our mental health.

Gen X – Why is Generation X Childless?

I found this article from 2011 that discusses the results of a study on Generation X by the Center for Work-Life Policy.  I was amazed by the finding that 43 percent of Gen Xer women and 32 percent of Gen Xer men do not have children.  So, why is Gen X remaining childless?

I can relate to this, having only had a child when I was 45, and I have many friends who have no children or only one, whether they were married right out of college or later in life.  But it still surprised me, since most of my friends came from science and engineering professions, so they were starting from a double whammy in the romance department — (1) being nerds and mostly romantic late bloomers and (2) mostly being products of PhD programs, which meant that they put their whole lives on hold until they were nearly thirty years old, and then they spend at least five more years getting established in a research or academic career.  But it is obviously more widespread.  Melanie Notkin writes this about other factors that enter into this decision from a Gen X woman’s perspective.

And the Center for Work-Life Policy study might reflect some of the tradeoffs that our generation has made, noting this about Generation X:

  •   Despite having been nicknamed the “slacker generation,” Generation X enrolled in higher education in record numbers. Over a third of Gen X hold bachelor’s degrees and 11 percent have graduate degrees.
  •     Gen X is not only highly ambitious but their ambition is nearly gender neutral: 75 percent of women and 72 percent of men consider themselves ambitious.

Beyond that, the recession of 2007 was also bad timing for Generation X in terms of reproduction.  In 2008, the youngest Gen Xers would have been 26 and the oldest 43, and so in prime childbearing years for most of our group during the 2008 – 2010 economic downturn.  Having a child is always a big decision, and even harder in the teeth of a bad economy.

Generation X is already a small generation sandwiched between two large generations. Given the birth rates for our cohort, and potential reductions in family size due to the Great Recession, I expect the post Millennial generation to be even smaller.  What does that bode for them?  Hopefully a lot of opportunity, if I believe Malcolm Gladwell’s story in Outliers  that babies born in the Depression had greater economic opportunities in their lives than would otherwise have been expected.

Will Generation X be the last American generation to be fully employed?

The Millenials had the misfortune to hit their initial job hunting years in the face of the 2007 recession.  Since we have had eight years of high unemployment in the US, this has hit younger people particularly hard, as this graph from of  Bureau of Labor Statistics data shows: BN-FS270_jobles_G_20141124160829A lot of ink has been spilled in the last few years on how MIllenials are struggling, still living in their mom’s basement, hunting for jobs, and struggling to pay off their student loans. The other generations in the workforce (X, Boomers, and Silents) have much lower unemployment rates and are at fairly stable points in their careers. But thinking about the future of jobs, I have been wondering if, due to the incredible rise in automation and computerization in the last twenty years, if Generation X might not be the last generation to see full employment.  This thought was further crystallized for me this week with the crash of the Germanwings Airbus in Europe.

If the crash was indeed a deliberate act by the pilot, as it seems to be as of today, are we better off with complete computer control of the airplane?  Crashes due to mechanical problems seem to be rarer and rarer, with the root cause of many more crashes seeming to be pilot error, or in this and a few other cases, “pilot terror“.

While the replacement of people by machines in many repetitive or lower skill jobs is expected, people are still afraid to replace pilots, drivers, and other jobs in which some judgment is required.  But  with driverless cars, unmanned drones, and more sophisticated artificial intelligence and advanced sensors, is human judgment in these cases better than machine control? I think that ultimately, these jobs, along with lower skill jobs will all be candidates where humans-in-the-loop will be phased out.

So, the question is, what will we all do?  I guess we will all be free to be artists, poets, mathematicians, or carpenter’s wives. But I don’t see everyone getting paid for their poetry.  I would certainly starve. Ultimately, if large corporations are churning out consumer goods, all made by machines, they still need consumers to buy them, which implies a large middle class.  So, if we don’t find something useful for people to do in the face of automation, what happens?  Will corporations each support some portion of the population?  Have their own armies? We might truly be Microserfs or hold McJobs then.

Or, we may have to consider a guaranteed minimum income or some other version or Social Credit.  But I don’t think we get to that point within the Generation X or Millennial working lifetime.  But perhaps “Generation Z” might have to grapple with these issues.

GenX – In our peak earning years.

Last month there were some articles reporting on a paper out of the New York Fed showing how earnings rise and fall with age.  The upshot from the reporting is that your early forties is as good as it gets, since on average real earnings (wages anyway) peak by age 45.  For us in GenX, since we are between 34 and 50 now, we are smack into our peak earning years, and for those of us hitting 50 into the decline.  Below is the chart reproduced in Slate magazine:


Out of curiosity I made a chart showing my personal wage growth (inflation adjusted to 2014 dollars) on the same scale (below). It looks like my wage growth is following this pattern for my 30s and 40s.  My 20s are different since the depressed pay in graduate school makes for a huge rise when I finally got a real job!  But the flattening and even slight decline in real dollars from age 45 is disturbing.  I know it reflects the fact that eventually many of us top out the pay scales at work, and those cost of living raise don’t really reflect the true rise in the cost of living!