How Our Parents Helped Create the Modern Economy They Do Not Understand

Previously posted on GenFKD.

As we continue examining the foundations of our modern economy, let’s take a look at how our parents’ generation helped revolutionize labor skills, before getting left behind.

For those who missed it, in the first part of the series, we gave millennials some ammunition when talking to their grandparents. Putting our jealousies aside, our grandparents pushed forward important economic, social, and technological reforms upon which succeeding generations have capitalized.

Now, let’s see how the baby boomers, and their apparent subcategory, “Generation Jones,” managed to get by in an era where disco and big hair was acceptable.

An economic roller coaster

The economic bonanza of the ‘50s and ‘60s screeched to a halt in the ‘70s. Rampant inflation followed by the harsh monetary corrections of the Federal Reserve created a tough economic climate.

From 1975 to 1983, the average unemployment rate was around 7.3 percent, peaking close to 10 percent in 1983.  Although it did hurt, the Fed reining in the money supply helped in the efforts to overcome the economic crisis in the ‘70s. Although the‘70s and early ’80s were recession filled, by the end of the decade, it wasn’t so bad.

Policy-wise, a major shift played out in the deregulation of industries, particularly in the financial sector. Much of this de-regulation was championed by President Reagan and his “Reaganomics” which also pushed for unprecedented tax cuts.

Updating the military

The global clash between economic and political ideologies roared along, with the Cold War playing a major role in shaping our economy. As the Soviet Union worked to spread its influence through regimes in southeast Asia and the Middle East, huge government contracts were awarded to defense firms in order to update the nation’s military. Satellite-based missile defense and other tech-heavy military armament received major investment during these years.7104fc8ff25a7ecefa4304d598d86caa-970-80

“The upgrades of the military also spurred advancements in network communication, paving the way for those modern things called ‘computer’ and ‘Internet.'”

The upgrades of the military also spurred advancements in network communication, paving the way for those modern things called  “computer” and “Internet.” This allowed the transmission of information from one system to another, providing a big feat for the military and a few of us common folk further down the line. These improvements certainly helped technology trickle down to the consumer in the form of personal computers, better airplanes, and a little later, GPS.

From manufacturing to service

During this era, the United States marveled the world with its technological advances, especially video cassettes, cabbage patch dolls, and personal computers. However, this was just business as usual as technical changes transformed American industries.

If our grandparents transitioned from farm jobs to manufacturing or “goods producing” jobs, the Boomers and Jonesers pushed even further in the transition to service-producing jobs. The tech sector spurred massive job opportunities for computer and data processing services. More pronounced, though, was the innovation in the financial sector which allowed for wealth to be created at a much faster pace than years past.

White-collar jobs in business, finance, and health accounted for more than half of the job growth through the ’80s. The rise in wealth fueled the already hot consumer lifestyle. Consumerism continued to roar throughout this period as retail stores, car dealerships, and restaurants shot through the roof.

Additionally, understanding and defending the law became not only a righteous occupation, but a lucrative one as well. This resulted in the amount of lawyers doubling during this time frame.

Women continue to dominate

Women also entered the labor force at peak rates; the ‘80s was, by far, the decade with the most influx of women.  Between 1970 and 1990, women 25-to-34 years old, saw a 29 percent increase in the participation rate. From 1950 to 1990, the participation rate gap between men and women shrunk from 52.5 percent to 18.6 percent, with the largest improvement occurring during our parents’ generation.

 

What’s more, management jobs occupied by women nearly doubled during this decade. On top of their continued dominance in occupations like nursing and teaching, many more women became lawyers, and joined the banking and financial management world.vintage-computers-2

These new gigs became more readily available to women as they increased their enrollment to universities. Half of all 1985 college grads were women, earning a rising share of advanced degrees in law, business, accounting, and computer and information sciences. This set the stage for the rise of Gen X, as women surpassed men in acquiring degrees by the end of the ’80s.

Technical change = soft skills

Computer technologies largely helped in the transition from factory and manufacturing work to service industry jobs. As this happened, skill sets needed to change as well. For those that stayed on or were hired into what was left of the manufacturing sector, industrial skills were not needed, rather, the ability to work with machines, press buttons, and to pull levers became more desirable.  From the old timer’s perspective, the newbies didn’t have to “work” so hard. That may be true in one sense, but from the perspective of technical change, the work became different. The newbies needed a new set of skills altogether.

In addition to being able to know the basics of computers, the service sector now sought out folks with honed soft skills.  Communicating effectively and not being a jerk to customers or coworkers became important to service industry employers.

Computers were now doing the dirty work and employees now had to use manners. The workforce adjusted accordingly as college enrollment increased and everyone pushed to develop relevant  technical skills — like turning on a computer. Okay, maybe a little more than that, but not much.

If we’re being real, the hard skill for most Boomers/Jonesers was really just smiling and being nice. Super impressed by Mom and Dad, eh?

Cuttin ‘dem paychecks

The influx of educated women into the workforce helped their real wages increase while men would see a slight decrease in their wages overall. However, the wage gap was huge throughout most sectors of the labor force, especially those dominated by men.

For example, in 1985, when taking account for all occupations, on average, men brought home $406 per week while women brought in $277. In  management-related occupations, men would make $515 per week, while women only earned $382.

The growth of white-collar jobs also spurred income inequality across many more occupations, unlike Pappy and Nana’s generation. Getting a college education, although still not a requirement, could put you well ahead of the rest when it came to paychecks.

Now, it wasn’t just physicians and top executives that were distinctly wealthier than the rest, but lawyers, engineers, computer programmers, and bankers were also able to see some serious cheddar. While doctors and top execs would see six-digit salaries, white-collar jobs would see salaries ranging from $30,000, for your average computer programmer, to around $60,000, for engineers.

Paychecks for clerical jobs increased but only to an annual $16,000 salary. Food service occupations, like cooks, preps, waiters and bartenders, would see a $230 weekly paycheck, or around $12,000 per year.

Graph of Median Annual Earnings! Click Me!

Keeping up with the Joneses

Credit became easily accessible when the interest rate caps on credit cards were lifted and the market of consumer credit was deregulated. So, they could keep on jonesin’ for Walkmans, waterbeds, and other goodies that do not exist anymore, but instead of using hard cold cash, they could swipe their credit cards.

The remnants of the ‘70s unbridled inflation showed its ugly face in real estate. The median value of a home in 1985 was around $85,000, though the median household income was at $23,600. While the cost of a home during our grandparents’ generation was only 2.2 times their annual salary, that ratio shot up to 3.6 during this time.

Our take

Our parents’ generation had a huge impact on the way the economy is shaping up today. The influx of women and computers changed the dynamic of industries at the macro level and the workplace at the micro level. Having soft skills became extremely important during this time and still is today! In addition to not being a jerk, the ability to look at a computer without a panic attack was also a plus.

Technical changes on the job tend to change skill requirements incrementally. Once the changes accumulate enough, they become new jobs. This generation’s transformation is noticeably relatable to ours, as a little bit more of that after-high school education became the necessary investment.

Next, we’ll dive into the “tough times” Generation X endured when faced with the longest peacetime economic growth period ever, period.

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