36% of American Workers Have Savings of Less Than $1,000

Number of Part-Time Workers in U.S. Economy Doubles as Companies Keep Eye on CostsI have said it many times in these pages: economic growth in the U.S. economy can only occur when the general standard of living for the average American improves. Sadly, each day, we see more and more evidence suggesting the opposite.

Consider the results from the 2014 Retirement Confidence Survey by the Employee Benefit Research Institute. (Source: Employee Benefit Research Institute, March 2014.) This survey asks workers and retirees about how they feel about retirement, among many other things. Here are a few of the highlights:

  • 24% of workers in the U.S. economy are not at all confident about having enough money to retire comfortably. Only 18% believe they can retire comfortably, but almost all who said this are from households who earn a relatively higher income
  • 58% of the workers and 44% of the retirees in the U.S. economy say they are having problems with the amount of debt they hold
  • 36% of the workers say they have less than $1,000 in savings. This number has gone up significantly from 28% in 2013
  • The rising cost of living and day-to-day expenses are getting in the way of retirement. 53% of the workers are citing these expenses as the biggest reason they are not saving for retirement

I believe things will get worse for both retirees and workers by the end of this decade. Let me explain why…

Public companies are struggling to post earnings growth this year. At this point, the only way for them to show better corporate earnings is by reducing their expenses. While some have started to lay off employees, others are cutting retirement benefits.

Take The Boeing Company (NYSE/BA), for example. It said it will freeze pension benefits of more than 68,000 non-union employees and move them to 401(k) retirement savings plans starting in 2016. A number of companies based in the U.S. economy have taken similar actions. (Source: Wall Street Journal, March 6, 2014.)

Another problem: the number of part-time workers who can’t find full-time work in the U.S. economy has ballooned. The number of part-time workers in the U.S. economy between 1956 and 2007 averaged 3.6 million annually. In 2013, there were almost 114% more part-time workers in the U.S. economy compared to the historical average—7.8 million in 2013 compared to the 50-year average of 3.6 million! (Source: Federal Reserve Bank of St. Louis web site, last accessed March 21, 2014.)

With the real numbers I just gave you, how can I possibly be positive on the U.S. economy?