Sweeping problems under the rug

After reading Sarah's blog that discussed the issue of avoiding problems involving race, it made me think about what other problems. Actually I had a very similar discussion with my dad about some of the financial problems that were being avoided but were eventually going to become a major issue.

The most interesting issue my dad brought up was the fact that very few Americans actually have a retirement account that can support a retirement. After looking a little deeper into the issue, I found this article that shed a little more light on the problem. One of the most surprising things the article said was that "half of Americans have $2,000 or less in their [retirement] account."

This begs the question, what will the 50% of people with less then $2,000 in their retirement accounts do when it comes time to retire? The article also did say that the average amount in a retirement account is $50,000 but still, how long is $50,000 going to last if your only other source of income is social security?

Now of course, the reason most people don't have enough money in their retirement account to retire is because they can't afford to put money away. This dilemma caused me to look deeper at the core problem and after looking around, I think I found the answer.

The reason so many Americans don't have enough saved to retire goes back to the 1960's and America's slow transition from a manufacturing to a service economy. This blog has a great graphic that shows this change based on the largest employers from 1960 compared to 2010. The biggest employer in 1960 was General Motors and the biggest employer in 2010 was Wal-Mart.

Another important factor is that in 1960 one third of Americans belonged to a union (http://www.infoplease.com/timelines/laborunions.html) while today only 11.8% of Americans belong to unions (http://www.bls.gov/news.release/union2.nr0.htm). These unionized workers received higher wages allowing them to better save for retirement. Now the same working class is working at big retailers which don't give as good a salary or benefits which doesn't allow them to put any money away for retirement.

So what is the solution? Is there even a solution? This is a very complicated issue with many factors. With the increasing automation of manufacturing service might be the only source of employment in the future which will only exacerbate the problem. This is a big problem but no one has stepped up and tried to solve it.