I was born in the middle of world war two. I grew up around the generation that had lived through the great depression and the war. They really never stopped talking about it. Most of them were left with recurring feelings of anxiety about economic security. They held onto that good steady job and were compulsive savers. My generation came of age without ever having known that atmosphere of pervasive insecurity. We were much more inclined to take relative affluence for granted. One of the debates between the two generations in the 60s was whether to plan life for security or to seek interesting experiences.
The political and economic upheavals from 1930 – 1945 forced major changes in the American economic system and resulted in an expanded middle class with income adequate for comfort and a growing wealth base. The programs of the new deal began to construct a social safety net with programs such as social security, public assistance, and unemployment insurance. Increased support for labor unions helped them to extend the benefits of organized labor to a much larger portion of the American workforce. After the war the housing programs stimulated a boom in residential construction and through low down payment federally assisted loans opened up home ownership to large numbers of families for whom it had never been a practical possibility. The dark side of this picture is that racial minorities were systematically excluded from much of this windfall. The Social Security Act and the Wagner Act excluded agricultural and domestic workers. The federal housing loans were explicitly limited to all white neighborhoods.
After the war the American establishment circled the wagons to get rid of any militancy left over from the depression. The Taft-Hartley Act restricted the ability of unions to expand to new industries and under the banner of anti-communism they were purged of people who thought labor deserved a bigger share of the pie. The US economy having run full tilt in building the war machine had expanded extensively while most of the rest of the industrial world was in ruins. American wages were kept at wartime levels as the carrot to go with the sticks and defined benefit pension plans became common. In 1950 America was a more affluent nation than it had ever been and the resources were more widely distributed than they had ever been before. In the 1960s Medicare was added to the safety net.
The depression generation began to reach retirement age in the 1970s just as the inflation crisis was beginning to rattle the post war prosperity. Many of them reaped their reward for the privations that they had endured in an earlier period of their lives. With Social Security, and defined benefit pension plan and Medicare they could expect comfort and security in their sunset years. They had also accumulated real estate equity. In many instances that was passed onto the next generation as inherited family wealth. My boomer generation thought that we could take the same thing for granted.
Fast forward through the economic crises of the past 40 years. Unions and defined benefit pension plans in the private sector have become almost as rare as the dodo bird. Both are under increasing pressure in the public sector. The 401K has shifted the burden and risk of retirement saving and investment from the employer to the worker. Finding a job at the beginning of working life and holding onto it until retirement is something that only happens in old movies. Reductions in Social Security and Medicare seem to have reached the stage of bipartisan political policy. The age of affluence has been replaced by the age of austerity. This is a result of long term trends and not just just the economic slump of the past four years.
The boomer generation has now reached the point of retirement and things don't look so rosy. There is much less certainty about pensions and investments. The value of real estate has declined. Life expectancy has increased meaning a longer period of retirement that must be provided for. On average the children of the boomers are having an even tougher time than their parents. Many of this newly retiring generation will have enough resources to get them through retirement, but they will be scraping closer to the bottom to do it. I think it likely that they will need to use up much of the real estate equity since pensions and benefits will be inadequate, This mean a shrinking wealth base to pass on the children and grandchildren.
At the end of WW II we saw the making of the great American middle class. We are now seeing its undoing. The economic resources are being transferred back to the concentrated financial elite. Most people are still desperately clinging to the shreds of the American dream. Something wonderful will turn up and the good times will return. The good times have been on the wane for a long time. A couple of bubbles have been engineered to makes us think that all would be well. The real effect of them was to speed up the transfer of wealth back to the wealthy.