Zielenziger: Finance and Economic Security
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  • From peak to trough more than 8m jobs were lost. As many Americans are working now as in November 1999.
  • “ Seventy is the new 17,” says the director of the Schwartz Center for Economic Policy Analysis at New York’s New School for Social Research. “Seniors are now overrepresented in low-income jobs normally associated with teens.”
  • nonfarm payroll employment almost 7 percent (7.7 million jobs) lower in July 2010 than it was when recession began in December 07
  • The share of the labor force that have been unemployed for more than 26 weeks rose higher than it had been at any point in the past six decades
  • Investors withdrew a staggering $33.12 billion from domestic stock market  mutual funds  in the first seven months of this year

Transcript

  • 1. IMLS Summit: “Transforming Life after 50” Older Americans and the “Great Recession” Michael Zielenziger
  • 2. What explains economic prosperity of 2001-7?
    • Could it be:
      • Higher Productivity?
      • Agricultural boom?
      • More Exports to other nations
      • Major Technological innovation
    • … .Or….
  • 3. Driver of the West’s economic growth
  • 4. Effects of the housing boom
      • Construction Jobs
      • Real Estate licenses
      • Property taxes
      • Bank refinancing /closing costs/escrow/insurance
      • Was IT SUSTAINABLE?
  • 5. Effects of the housing boom
      • 418,000 net construction jobs (1/01 to 6/05)
      • 41 percent of total employment growth
      • 474,000 rise in financial services jobs, of which at least 20 percent were in real estate
    • MEANWHILE
      • Manufacturing loses 2.6 million jobs
      • High tech loses 560,000 workers
      • Balance of trade deficit explodes
  • 6. New driver of the West’s economy
    • Overbuilt and over burdened
  • 7. The Post-Lehman brothers world
    • Banking crisis: bailouts for big banks; TARP
    • -- credit crisis for Main Street
    • + End of “easy” credit = defaults
    • + Stunning collapse of housing prices = foreclosure
    • + No housing / no credit = no jobs!!
    • +Steady fall of equities
    • + The ERA of ZIRP and deflation
    • What’s a 50+ couple to do??
  • 8. Households Affected by Financial Distress by Age Group
  • 9. A new US paradigm??
    • Could this be a “structural” change
      • Internet “bubble”
      • Housing “bubble”
      • ARM “bubble”
      • Banks charge 4 percent; Savers get less than one percent…
      • Where are new jobs??
        • Manufacturing?
        • High-tech?
        • Graduation statistics of younger Americans
        • Military recruitment – UP!!
  • 10. Recession + unemployment = “hard times”
    • Recoveries usually spur recoveries in employment growth….
  • 11. More 65+ workers than 17 year old workers…
    • Retirement? Grandma works at McDonald’s
  • 12. Continual rising productivity
    • More Output Per Hour of Labor
  • 13. Economic prosperity not equally shared
    • Who got rich?
  • 14. Unprecedented job losses
    • … in year three
  • 15. Long term unemployment rates unprecedented
    • … beyond 27 weeks
  • 16. Leaving stocks for bonds
    • And ETFs…$33 billion withdrawn from stock mutual funds even though bond yields are poor…
  • 17. “ Then” Inflation vs. “ Now” Deflation”
    • INFLATION :
    • “ Too much money chases too few goods”
    • Demand pushes costs higher. (Frothy housing “bubble”)
    • High interest rates; the “real” value of money erodes
    • Good for debtors. Bad for savers
    • DEFLATION
    • Too little money chasing too many goods”
    • Demand sputters, prices fall --like housing today!
    • Low interest rates fail to spark consumption.
    • Bad for debtors. Not so good for savers/
  • 18. Productivity growth and unemployment
  • 19. The 2010-2020 paradigm
      • 401 (K) now 201 (K): stock portfolios unravel
      • Housing values shrink, maybe permanently
      • Forced to work longer, without robust job prospects
      • Cut backs in city services and public benefits
      • A nation of non-savers being forced to “cut back”
      • More $$ to pay for health care
      • NO QUICK FIXES!!
  • 20. Health Care Burden: Average Annual Contributions to Premiums and Total Premiums for Family Coverage, 1999-2010 * Estimate is statistically different from estimate for the previous year shown (p<.05). Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2010. $5,791 $6,438* $7,061* $8,003* $9,068* $9,950* $10,880* $11,480* $12,106* $12,680* $13,375* $13,770*
  • 21. Role for libraries
      • Expand “literacy” to include financial literacy
      • Employment / job centers
      • Counseling centers; strong links to employment security agencies
      • Community centers
      • Building community ties where other institutions have failed.
      • Help for very young and very old; updated definition of “continual learning…”
  • 22. Questions / Comments??
    • Michael Zielenziger
    • [email_address]
    • m [email_address]