New data confirms the downward mobility of the typical family. The Census Bureau's annual report on income and poverty shows that median household income in 2010 was $49,445, after adjusting for inflation, a 6.4 percent drop in purchasing power since 2007. The typical family's take-home pay is now at 1996 levels. And the percentage of Americans living in poverty rose to 15.1 percent, the worst level since 1993. All of those numbers would be worse if not for billions of dollars in temporary tax breaks and government aid for the unemployed.
So if you feel like you're falling behind, you're not imagining things--and you've got plenty of company. The fading fortunes of the middle class are probably the top factor fueling vast dissatisfaction with government and a pervasive sense of national decline.
But it’s important to remember that nobody is captive to national trends. Every individual has the ability to improve his or her own fortune, no matter how the rest of American society is doing. Some people are waiting for Washington policymakers to fix the problem, but if you'd rather take matters into your own hands, here are some ways to get ahead, even in an unforgiving economy:
Get the right skills. A mismatch between the skills employers need and the skills Americans have is perhaps the biggest problem in the U.S. labor force. There are roughly 2 million unemployed construction workers, for instance, and lesser-skilled assembly-line jobs disappear daily. But there's a shortage of plumbers, electricians, and welders in some places. A lot of people figure they're better off waiting for jobs in their field to return instead of learning something new. But this is a deadly, outdated mentality in an economy that's changing with record speed.
Get the right education (or make sure your kids do). Too many college grads get degrees in soft disciplines like arts, literature, and social sciences, while there's a shortage of math, science, and engineering grads. Diplomas aren't created equally, and if you're not learning stuff that employers are willing to pay for, then you may not be getting the best return on your education investment. Good technical schools and community colleges are also a valid alternative to college for many teenagers, especially if they teach marketable skills and offer internships at local businesses.
Reduce relience on government. Anybody who relies on government subsidies of any kind is living on borrowed time. Deep cost cutting at every level of government seems inevitable, and that will affect welfare, Social Security, and Medicare recipients, homeowners claiming a mortgage-interest deduction, municipal workers relying on government pensions, and many others. Anybody whose livelihood is dependent on "discretionary" federal spending--such as funds devoted to arts, parks, highway construction, community development, and dozens of other nice-to-have things--should make backup plans, because this is the type of spending that seems most likely to get whacked over the next few years.
Get used to starting over. Old think: You'll have a stable career in a single field: New think: You might have three or four careers over the course of your working life, as you respond to rapid changes in the workplace and the global economy. Getting fired or laid off can often seem like a setback from which you'll never recover. But there's ample evidence that one key determinant of success is how well you respond to tough challenges. Determination and resilience can even be more valuable than a high IQ or a fancy degree.
Save more/buy less. Many Americans are trying to live more frugally--but our commitment is wobbly. The savings rate, for instance, is now 5.2 percent, which is better than the near-zero levels of a few years ago, but probably not high enough. Americans have also been paying down record levels of debt, but still owe far more than historical averages. Paying off debt and building savings is crucial, because doing so provides a cushion during rough times that many people lack. That provides the kind of flexibility that's sometimes needed to try something new—such as starting your own business.
Reduce your own living standards. The net effect of falling incomes for many people is a lower standard of living, which can be characterized in many ways: More work, more stress, less money, less free time, less stuff, and falling satisfaction. But a lower standard of living doesn't need to be disastrous, and many people make the mistake of clinging to every gizmo, convenience, and club membership they've ever enjoyed, as if entitled to such things in perpetuity.
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