Maria Gutzeit: ‘Out of luck’ line is gaining
By Maria Gutzeit
Monday, February 20th, 2017

A parents’ program at our local school was one of many signs the Rust Belt Rebellion of the 2016 election was simply the tip of a giant iceberg that people don’t want to admit is a threat.

I nearly fell out of my chair when they told parents, “Your child must go to a four-year university” to have financial success. This often goes unsaid in “polite circles.” A handout showed someone with a bachelor’s degree earns $1.2 million more over a lifetime than a person with only a high school education.

Our elementary school crowd was told that a child’s school success by fourth grade dictates his or her path in life. No pressure!

It’s not only the Rust Belt that feels angst. There is a line in this country above which you may survive, and below which life will be incredibly hard. Not hard as in “pull yourself up by the bootstraps” but hard as in “you are out of luck.”

Worse, that line is moving upward, leaving more people below it. The parents plotting their kid’s college entrance from kindergarten age know it.

Do we have the guts to admit we’re having a harder time than Mom and Dad did? Families today are playing on a much different playing field.

Pew Research reported in October 2014, “in real terms the average wage peaked 40 years ago. The average wage of January 1973 ($4.03/hr.) has the same purchasing power as 2014’s wage of $22.41/hr.”

The National Institute on Retirement Security points out that 85 percent of private-sector employees had pensions in 1975. Today that figure is approximately 17 percent.

Money magazine reported in 2016 that nearly half of all American families have no retirement savings, the 50th percentile (median) have saved $5,000 and the average (mean) of all families have saved $95,000. The wealthy pull up the average.

Exponentially higher college costs and health-care costs compound the budget pain.

Families have survived so far by credit card borrowing and sending the wife, the traditional caregiver, to work. It is the working wife who has allowed the middle class to survive so far, according to economist Heather Boushey in her book “Finding Time.”

This means child care and senior care have to be covered some other way. Low-income families must rely on unreliable low-cost options, and any glitches can easily cost them their jobs due to limited workplace flexibility.

At the middle and professional class some workers can still “buy time” by paying for institutional childcare, senior caregiving services, housecleaning and more, but it is quickly draining the bank accounts.

Professionals increasingly feel they need to take that promotion that requires a two-hour commute, or the relocation, or the travel, so they can help Junior get into college – which, by then, we all suspect will cost a quarter of a million dollars.

The current economic system is breaking families at every level. This is compounded by a gutted middle, and the top 1 percent holding as much wealth as the bottom 90 percent, according to an October 2014 paper from economists Emmanuel Saez and Gabriel Zucman.

This inequality last occurred prior to the Great Depression in 1929.

We’re trending toward flat or lower wages, fewer workers and more robots. The financial sector now rules, churning dollars with borrowing for stock buybacks to prop up share prices for investors.

Spending on things of the past like infrastructure, wages and research and development is passe. In 2014’s Harvard Business Review, William Lazonick wrote that in the prior decade, companies in the S&P 500 spent 91 percent of their earnings on buying back their own stock and paying dividends.

“That left very little for investments in productive capabilities or higher incomes for employees,” he said.

Money isn’t trickling down. The “out of luck” line is going up. Soon, I suspect, the professional class will officially join the Rust Belt in protesting, as you can’t keep wringing money out of those already maxed out.

The supply side needs a demand side. It is unclear how the rising percentage of folks with no extra cash can keep a consumer-driven economy humming.

Maximizing shareholder value no longer equals sustainable growth and certainly has nothing to do with today’s average family, unlike when Henry Ford famously wanted to make sure his workers earned enough to afford his product.

Political rants or catchy slogans miss the point. Sleights of hand like privatizing infrastructure or gutting the EPA are not going to fix what ails us.

The system has changed in ways few dare to admit because we’re busy desperately trying to stay above that ever-moving line.

The huge, necessary shifts in our system may be good, or may be fraught with complete chaos. The first step is admitting we have a problem.

Maria Gutzeit is a chemical engineer, business owner, elected water official and mom living in Santa Clarita.

About the author

Maria Gutzeit

Maria Gutzeit

Maria Gutzeit: ‘Out of luck’ line is gaining

A parents’ program at our local school was one of many signs the Rust Belt Rebellion of the 2016 election was simply the tip of a giant iceberg that people don’t want to admit is a threat.

I nearly fell out of my chair when they told parents, “Your child must go to a four-year university” to have financial success. This often goes unsaid in “polite circles.” A handout showed someone with a bachelor’s degree earns $1.2 million more over a lifetime than a person with only a high school education.

Our elementary school crowd was told that a child’s school success by fourth grade dictates his or her path in life. No pressure!

It’s not only the Rust Belt that feels angst. There is a line in this country above which you may survive, and below which life will be incredibly hard. Not hard as in “pull yourself up by the bootstraps” but hard as in “you are out of luck.”

Worse, that line is moving upward, leaving more people below it. The parents plotting their kid’s college entrance from kindergarten age know it.

Do we have the guts to admit we’re having a harder time than Mom and Dad did? Families today are playing on a much different playing field.

Pew Research reported in October 2014, “in real terms the average wage peaked 40 years ago. The average wage of January 1973 ($4.03/hr.) has the same purchasing power as 2014’s wage of $22.41/hr.”

The National Institute on Retirement Security points out that 85 percent of private-sector employees had pensions in 1975. Today that figure is approximately 17 percent.

Money magazine reported in 2016 that nearly half of all American families have no retirement savings, the 50th percentile (median) have saved $5,000 and the average (mean) of all families have saved $95,000. The wealthy pull up the average.

Exponentially higher college costs and health-care costs compound the budget pain.

Families have survived so far by credit card borrowing and sending the wife, the traditional caregiver, to work. It is the working wife who has allowed the middle class to survive so far, according to economist Heather Boushey in her book “Finding Time.”

This means child care and senior care have to be covered some other way. Low-income families must rely on unreliable low-cost options, and any glitches can easily cost them their jobs due to limited workplace flexibility.

At the middle and professional class some workers can still “buy time” by paying for institutional childcare, senior caregiving services, housecleaning and more, but it is quickly draining the bank accounts.

Professionals increasingly feel they need to take that promotion that requires a two-hour commute, or the relocation, or the travel, so they can help Junior get into college – which, by then, we all suspect will cost a quarter of a million dollars.

The current economic system is breaking families at every level. This is compounded by a gutted middle, and the top 1 percent holding as much wealth as the bottom 90 percent, according to an October 2014 paper from economists Emmanuel Saez and Gabriel Zucman.

This inequality last occurred prior to the Great Depression in 1929.

We’re trending toward flat or lower wages, fewer workers and more robots. The financial sector now rules, churning dollars with borrowing for stock buybacks to prop up share prices for investors.

Spending on things of the past like infrastructure, wages and research and development is passe. In 2014’s Harvard Business Review, William Lazonick wrote that in the prior decade, companies in the S&P 500 spent 91 percent of their earnings on buying back their own stock and paying dividends.

“That left very little for investments in productive capabilities or higher incomes for employees,” he said.

Money isn’t trickling down. The “out of luck” line is going up. Soon, I suspect, the professional class will officially join the Rust Belt in protesting, as you can’t keep wringing money out of those already maxed out.

The supply side needs a demand side. It is unclear how the rising percentage of folks with no extra cash can keep a consumer-driven economy humming.

Maximizing shareholder value no longer equals sustainable growth and certainly has nothing to do with today’s average family, unlike when Henry Ford famously wanted to make sure his workers earned enough to afford his product.

Political rants or catchy slogans miss the point. Sleights of hand like privatizing infrastructure or gutting the EPA are not going to fix what ails us.

The system has changed in ways few dare to admit because we’re busy desperately trying to stay above that ever-moving line.

The huge, necessary shifts in our system may be good, or may be fraught with complete chaos. The first step is admitting we have a problem.

Maria Gutzeit is a chemical engineer, business owner, elected water official and mom living in Santa Clarita.