I read a lot of personal finance articles daily. Most of what I read is positive and uplifting. At very least much of it is interesting. But there is one type of article that really pains me to read about. That is the latest US financial statistics.
I Read a Lot About Finance
Those of you who interact with me on Twitter know that I post articles from around the web most days nearly hourly. I read all that stuff and try to share the things I find the most interesting. If you haven’t checked out our Twitter thread you can try here. Honestly, sometimes I enjoy sharing and reading stuff more then I like writing.
US Financial Statistics Posts
But as I noted in the opening I find some posts depressing. No, not the stuff about an individual’s debt situation or struggles. Anyone can have a bad financial situation. Reading about how people are turning it around can be interesting and uplifting. What really bugs me are the raw society financial statistics you read about personal finance.
You know the ones:
- 40% of American’s can’t cover a $400 emergency expense
- Not including mortgage loans the average American household carried $38000 in debt in 2018
- That as recently as 2017 39.7 million people, or 12.3 percent of the country, live in poverty.
- 33% of college graduates are underemployed
The Disconnect Between the Economy and Financial Statistics
Scary sad statistics. Especially when we consider how well the overall economy is performing. The stock markets are up, though arguably that focuses on those that can afford to invest. Overall job availability is also up, with the unemployment number at an all-time low. Job numbers tend to relate to society as a whole. So what is going on?
How can there be more jobs than people and yet so many are hanging on by a thread? People look for an excuse.. The political opponent of your choice. Foreign competition and immigrants. Even people that are wealthy. But what is the real story?
A Labor Market in Transition
Well if you take a step back from the rhetoric you quickly see a labor market in flux. Completely separate from the business cycle the concept of work itself is changing. The changes are coming quickly from all angles and that has interesting ramifications for those of us who, well, labor…
- The Robots are coming! Automation is starting to replace some lower-paid repetitive jobs. Many fast-food restaurants now have ordering kiosks and have thus reduced their cashier staff slightly. Manufacturing and warehousing are shifting quicker towards robots for building and inventory management. As someone who has seen the field over the last decade, what once only worked with companies with a small amount of like SKU’s and high dollar products is now seeping into the common warehouse environment. Jobs will go away.
- The Freelancer is comming! Not losing your job to automation? Well you just might lose your job to… yourself, or one of the many like you that want to do the job from home as a contract employee or freelancer. The most clear example here is taxi drivers and Uber. The rise of the ride-sharing company has displaced many cab driver’s jobs. But honestly, the systemic changes go well beyond just this one example.
- The Global Competition is already here! Almost nothing we consume is solely made in any given country. Going back to our freelance example most jobs are capable of being done remotely from any corner of the world. As such when you apply for a job unless it is a local service job, you are competing with people all over the world. More competition for a job means lower pay and harder to find the job you want, supply and demand.
Change is Also an Opportunity
The above sound scary in their own right, even before we consider why they might lead to those sad statistics. But here is the thing… From an individual level these changes don’t have to be scary. Each change does threaten people’s status quo job. But it also opens up a door to new and unique opportunities.
For example, the robots might open the door to robot designers or robot maintainers. Freelancing could be your ride to a better work-life balance, or even potentially higher pay. In theory, freelancing along with global competition could allow you to take a job remotely that otherwise would be out of reach for you. Say you live in the middle of the midwest away from major companies. In the modern freelance economy you might still be able to take a remote job with a silicon valley giant that pays better than anything you have locally. At an individual and even an economy level, these changes can open the door to many new opportunities.
Jobs are Sitting Unfulfilled, But People Are Also Unemployed
You see ultimately the disconnect between the jobs report and the numbers in poverty are not a disconnect. There are many jobs sitting out there unfilled. The problem is there are also many people out there lacking the needed skillset for those opportunities. They have been unable to adapt to the labor market place change as of yet. Just as every major labor shift of the last 1000 years, there are jobs with winners and losers. Some will go away and many more will appear. People are simultaneously losing their existing jobs (or getting fewer hours) and not qualified for newer opportunities.
Individually what you can do is plan ahead to adapt to the change? Educate yourself in fields that will still be needed despite the economic shift. Develop a niche so you can’t be replaced by a freelancer or that competition. Do what you can to always be learning and get ahead of the trend. Failing to adapt means being left behind in today’s economy.
Always Learning, Stay Ahead of the Financial Statistic
Once you are ahead of that trend though, the task doesn’t stop. There was a recent article making the rounds of how people in tech get forced out as they get older. It could be because they don’t adapt to the changes as easily after a lifetime of doing it one way. It could be age discrimination. Or it could just be that their senior salaries are inflated compared to their deliverables. But either way there comes a point where you will not come out ahead when the economy shifts. You are at a pronounced disadvantage the older you get in a changing labor market. This ultimately means the second thing you can do is start saving for that rainy day and living below your means now. The day you find your own job displaced you’ll be ready.
Will that solve the overall poverty in this country? No… Obviously not everyone can adapt. There are political and cultural things that need to be done as well. However, those things may be too late or not helpful to yourself. You can only count on you and your family. Have you begun to adapt to these changes? Do you find the societal financial statistics above as depressing as I do?