For the generation born in the 1960s, the American dream has undeniably vanished

(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at: lawrence@krubner.com, or follow me on Twitter.

Interesting:

The declining prospects of America’s working class are widely discussed and hotly debated these days, from the anthems of Bruce Springsteen to the “deaths of despair” research of Princeton economists Anne Case and Angus Deaton.

A recent paper from the Opportunity & Inclusive Growth Institute explores this downhill trend for less-educated men and women by comparing life outcomes of two cohorts born 20 years apart. It shows that for the more recent generation, the American dream has undeniably vanished.

“The Lost Ones: The Opportunities and Outcomes of Non-College-Educated Americans Born in the 1960s” compares wages, medical expenses, and life expectancy for non-college-educated white men, women, and couples born in the decade around 1940 with circumstances for those born 20 years later—a cohort 49-to-58 years old as of 2014. The paper’s authors, Institute senior scholar Mariacristina De Nardi and colleagues Margherita Borella and Fang Yang, then analyze how those differences have affected the two cohorts’ labor market outcomes and will affect their lives in retirement. Their goal, they write, “is to better measure these important changes in the lifetime opportunities … and to uncover their effects on the labor supply, savings, and welfare of a relatively recent birth cohort.”

In brief, they find a profound deterioration in well-being. Accounting for inflation, wages have declined for non-college-educated white men. And while wages have increased for women, it’s only because their human capital (education and experience) has drastically increased over this time period. These men and women—comprising 60 percent of their age group—are also expected to experience much higher out-of-pocket medical expenses in retirement and large decreases in life expectancy compared with their earlier counterparts (see figures). They “would have been much better off if they had faced the corresponding lifetime opportunities of the 1940s birth cohort.”

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