News Journal: Hey America, isn’t it finally time for that ‘talk’?

I rarely read newspaper advice columns, but for some reason the headline on this one pulled me in: “Student is
saddled with heavy loans when her father reneges on helping pay for college.”
The woman who wrote for advice was an aunt who had agreed to pay 40 percent of her niece’s college
expenses, based on the girl’s father’s promise to do the same. The girl would be responsible for the final 20
percent, taking out loans and working part time.
The problem, the aunt said, was that the father had decided he couldn’t continue to contribute his 40 percent,
that at age 60 and with little saved, he had to put the money into a retirement fund. What should she do?
The newspaper’s advice columnist said she should honor her commitment to her niece and insist that the father keep his promise.
It got me thinking. Of course he should keep his promise. But then again, maybe not. Traditionally, financial planners advised parents to fund retirement
plans before putting money aside for their children’s college expenses. But is that still good advice when young people today can be saddled with tens of
thousands of dollars of debt when they graduate?
I thought about the father. Maybe he had lost the equity in his house when the housing market collapsed five years ago. Or lost the house altogether.
Millions did. Maybe his 401k
plan was decimated at the same time, when the market collapsed. Maybe he had lost his job and had to rely on savings
before he found another one that paid him less. That certainly happened to millions of people too.
Maybe he was worried that with no money saved going into retirement he might have to depend on his daughter for support in his old age.
Lots of maybes, and I decided the advice columnist hadn’t considered all of them. What I finally came away with was a sense of anger that millions of
other hard working families are facing the same kind of hard choices.
Economists say a recession ends after two successive quarters of GDP growth. By that definition, we came out of the Great Recession at the end of
2009.
Tell that to a guy in 2015 choosing between a penniless retirement and his daughter’s education. Yes, the stock market indexes have doubled since 2009,
but millions of people like him lost their savings then and haven’t benefited at all. The truth is, for the vast majority of Americans, the Great Recession has
never ended.
Worse. What that recession did was greatly exacerbate a terrible longterm
trend. Once upon a time, the kind of productivity growth we have seen over
the past four decades would have meant a rising standard of living across the economic board. But according to the Labor Department, while productivity
has been increasing during that period, the lower 90 percent of households’ share of the national income has fallen from 68 percent to 52 percent.
Jason Furman, Chairman of the Council of Economic Advisers, recently said, “Three factors determine middleclass
income: economic growth, income
distribution and laborforce
participation, all of which operated less favorably for middleincome
Americans after 1973 than before it.” One of his most
alarming data points was the decline in labor force participation by primeage
workers – those between 25 and 54 years of age – especially men. Only 88
percent of primeage
men are in the labor force, down from 95 percent in 1973.
This is the workforce the niece in our advice column story will enter in a couple of years. She is getting straight A’s according to her aunt, but is she going
to be saddled with so much debt when she graduates that it will set her back for the rest of her life? Instead of saving for a down payment on a house in
her twenties, will she be paying down debt? Multiply her dilemma by millions, and what effects will that have on our housing market?
I’m not an advice columnist, and I don’t have any easy answers. There are no easy answers. But I do believe we need to begin a serious national
dialogue about new economic realities and how they affect most American families. That dialogue ought to begin by acknowledging a new truth: The
proverbial rising tide no longer lifts all boats.
Ted Kaufman is former U.S. Senator from Delaware.

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