Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!usa-post Newsgroups: usa-today.bonus From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: bonus Thu, Mar 26 1992 Date: Thu, 26 Mar 92 05:44:31 EST Message-ID: 03-26 0000 BONUS: '90S may be better than '80S USA TODAY Update March 26, 1992 Source: USA TODAY:Gannett National Information Network Here's a shocker: For most people, the '90s could be a great decade. Even better than the '80s. A study out Thursday predicts there will be a "sturdy increase in the living standards of the average American" this decade as average household income rises a healthy 14%. WHAT'S THE MAIN REASON INCOME GROWTH COULD BE BETTER THAN EXPECTED? Baby boomers - 78 million people 28 to 46 years old - are entering what should be their peak earning years. So they'll bring home bigger paychecks as they move into higher-paying jobs and take on more responsibility. "That powerful demographic shift is going to work in our favor," says Fabian Linden, who wrote Thursday's report for the Conference Board, a New York-based business-research group that is widely respected for its studies of consumer attitudes and labor-force changes. WHAT ARE THE CHANGES LINDEN FORSEES? In 2000, average annual household income should be the equivalent of $41,000 in 1990 dollars, up from $36,000 in 1990. That 14% gain would outrun the 11% income growth of the roaring '80s, when the economy enjoyed its longest stretch of peacetime growth. The Conference Board predicts that income gain will produce a drop in the number of households with incomes less than $35,000 a year and a jump in the number of households with higher incomes. DOES THE STUDY JIBE WITH ECONOMISTS' FORECASTS? The study, written for businesses to help them plot marketing strategies, flies in the face of public opinion and conventional wisdom among many economists. Both predict the '90s will be a decade of little or no improvement in most people's financial lives. The reasons: Weak economic growth, stiff business competition from foreign companies, the elimination of many middle-management jobs and a glut of baby boomers chasing fewer promotion opportunities. WHAT'S OMITTED FROM THE STUDY? The study doesn't tackle subjective issues, such as whether today's family with two working spouses is worse off than the family of the '50s and '60s who lived on one income. Because it goes against the flow, the Conference Board report is generating great skepticism among many experts. "Just looking at the demographics is too simple," says Barry Leskin, director of the University of Southern California's executive MBA program. Leskin doubts there will be enough high-paying jobs for baby boomers. "There will be no promotions in the future for older, experienced workers," he says. HOW DOES LINDEN RESPOND? "Twaddle," Linden replies. "By ignoring the social and demographic changes that are under way, (other economists) are making believe we are headed for more distressing times when we really aren't. They're making real mischief." When Linden and economists at the Conference Board look ahead through the '90s, they see an explosion in the number of households headed by people 35 to 55 - which covers a huge chunk of the labor force that typically commands high wages. In 1990, there were 35 million such households. In 2000, there will be 45 million, a 29% increase. WHAT ELSE DOES THE CONFERENCE BOARD SEE? A sharp drop in households headed by someone younger than 35, mostly because of the baby bust after 1964. Someone in that age group typically earns less than the rest of the workforce because he or she is relatively new in his or her career. In 1990, there were 26 million such households. By 2000, the Conference Board estimates, there will be 22 million. That's a 15% decline. Also seen: A huge increase in the number of households formed when two people marry - and combine their incomes if both work. In the '70s and '80s, just 25% of new households fit that category. HOW MANY OF NEW HOUSEHOLDS WILL BE MARRIED COUPLES? The Conference Board, analyzing Census Bureau figures, says that in the '90s, about 60% of new households will be created by married couples as baby boomers finally head to the altar. Those couples' combined earnings will push up the household income average. And because their costs won't double - they'll only need one home, for example - most will likely have extra income to spend. That could help fuel the economy. WILL THERE BE ENOUGH GOOD JOBS FOR THE MIDCAREER WORKERS? Linden says yes. "There is nothing, nothing, nothing in the trends or expectations to suggest" a drop in the number of good jobs available, he says. Projections late last year by the Bureau of Labor Statistics, which assume the economy will grow a modest 2.3% annually through 2005, lend some support to Linden's argument. They show those jobs will grow, although slightly: By 2005, the number of executive, administrative and managerial jobs will rise to 16 million, up 4 million from 1990. By 2005, the number of professional jobs will grow to 21 million, up 5 million. WILL THOSE INCREASES BE ENOUGH? Those increases sound small compared with the baby-boom generation, which numbers 78 million. But the generation ahead - born in the 1930s - will be retiring this decade. That will create some room for boomers. There also won't be much competition from below: The small baby-bust generation of the late '60s and early '70s. And not every member of the baby-boom generation will be qualified for or even want the promotions that come open. WHAT'S THE DOWN SIDE? Most job growth is expected in the services sector of the economy, often in highly specialized fields such as health care and computers, says the Bureau of Labor Statistics. "The big issue isn't whether the economy will produce jobs. It is whether workers will have the training necessary to fill those jobs," says Janet Norwood, commissioner of the bureau until December and now a senior fellow at the Urban Institute think tank in Washington. Educated workers, Norwood says, will do OK. They'll either transfer their skills to new jobs or go back to school and be retrained fairly quickly. WHAT DOES THE CONFERENCE BOARD SAY ABOUT THE CONCERNS? Some of those concerns may be exaggerated, the Conference Board study indicates. One reason: 30% of workers between 35 and 45 who identify themselves as the top wage earner in their household have a college degree. That's more than twice the percentage of college graduates in their parents' generation. Plus, some economists say, the '90s may turn out to be a decade in which businesses compete for experienced workers - bidding up wages and even paying for people to be retrained. Some people forget that three years ago, businesses were having a hard time finding workers. WHAT'S LINDEN'S FINAL ANALYSIS? Linden says too many experts are looking too closely at the economy's short-term problems - especially the wave of layoffs aggravated by the recession that began in July 1990 - and forgetting that powerful demographic forces may soon sweep the country. He remembers other times when experts forgot to look at the big picture. "This all reminds me of the '60s," he says, "when we were told, `None of these flower children will ever be interested in material things. ... They'll never be conspicuous consumers.' " Bonus Editor: Michele Coleman. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM