Working for The Man post 45 is a risky business

The Man is an unreliable dance parter, the hazard is in relying on working for The Man into middle age. The LA times has a mini series on the shrinking middle class. Unlike the British middle class whinathons and SAHM child benefistas and grizzling journalists that I’ve taken the piss out of earlier these guys are closer to the manufacturing industry end of things, and they seem less culpable than our lot with school fee ambitions for their progeny. All these guys seem to want is a house, two cars and a dog –  one of them sums up the feeling

The promise that your kids would have a better life than you, with the house, the two cars, the dog and everything else, it’s gone.

In fairness to the promise it  didn’t go away, it moved eastwards with globalisation. They were probably chuffed with how cheap DVD players and iPhones are these days… But it’s tough to feel good about that when it’s your end of the boat that’s sinking. Two things are common to all their stories:

They relied on an employer in some form or another. The other is just like me, they failed to lift their eyes to the distant horizons, though they had fewer savings than I had.

I don’t know the stats for the US, but in the UK most of us work for an employer. Fewer than 10% of us were self-employed when I started work in the early 1980s, rising to 15% in 2014.

The Man seems to like ’em  25-35…

You could could be lucky, get all the way to retirement working for him in one form or another. But The Man prefers younger models usually – they’re cheaper, probably more pliable, and in some industries like tech there’s the Zuckerberg doctrine of which more later. For occupations that need some skills he doesn’t like ’em too young, because he can’t see track record, but I’d say late twenties to mid thirties seems to be his favoured the age bracket, old rich favouring the young is not just a dating problem.

There’s more change in technologies and ways of working now. Pretty much everything a young web designer starting now knows will be hopelessly obsolete in thirty years’ time, and this trend devalues and depreciates skills quicker than before. On the flipside things often improve faster now and we will probably be able to do more with less in those thirty years, whatever the equivalent of the Internet will be then. For consumers and users this isn’t all bad at all. There is a corollary of this.

Your peak earnings are probably coming earlier in your career than for previous generations

This is a terribly difficult one to tease out of the statistics. The ONS published this report that seemed to indicate this is true –

but they do make the fair point that for five years wages have been stagnating, which has hit everybody. When it did depends on how old you were in 2009. I do have great feeling for those who were 21 in 2005 (or particularly 2008/9) who are entirely unrepresented in these stats and who took a gut punch from the economic crisis. I had the bad luck to start looking for work in 1982 (this was Thatcher’s first economic crisis, a price worth paying, eh, Geoffrey Howe?)

Experience was more valuable in the slower paced workplaces and technologies of the past. Taking my career  – in my early days working as a studio engineer and then as a design engineer for The Firm, experience counted. When I was at Television Centre in the mid 1980s, much of the production equipment and cameras in use were still from the inception of colour TV in the UK in 1967, this kit was more than 15 years old.

Later as I moved into analogue electronics design experience helps massively. That much is clear from the endless tyro questions on internet maker sites – there aren’t that many people in this analogue design now but the same gotchas that got me in the 1980s get Arduinio and PIC microcontroller people before they get their signals into the safety of the digital world. A crusty diatribe from the late Bob Pease[ref]I also kinda like the way he quit Teledyne Philbrick 😉 The modern workplace doesn’t really tolerate that sort of idiosyncratic behaviour.[/ref] on why Life doesn’t imitate Virtual Reality sketches out the problem, and there’s still a fair amount of art as well as craft in analogue electronics. At least more signal processing can be done digitally or integrated so fewer people get had that way now.  Decades of experience are less valuable with software coding, too much changes over the years.

The response to this is to keep learning, though Zuckerberg has something to say about your ability to do that with family responsibilities. The Man doesn’t want to pay for this but he wants to track it, so he does this with vendor accreditations and metrics and Continuous Personal Development and tickboxes and internal skills databases[ref] The Firm tried four times to establish an internal skills database and failed to come up with anything useful to anybody each time[/ref] and automated CV scanning. Boy am I glad I am out of that sort of garbage. It’s not like I haven’t learned anything since retiring, but I can do it without filling in forms and shit. I’ve learned video editing, mixing in key, a fair amount of stuff on soil science and how to use a microscope, GIS and coordinate transformation and all sorts. There’s no paper trail or tickboxery – all I need is an inquisitive mind and it’s more interesting to do that across a range of areas, but it leads to a scattergun random CV, which would probably choke The Man’s automated systems that seem to search for more and more across less and less. This is fortunately not my problem anymore.

Gen X and the following cohort saw greater career progression in absolute terms than the baby boomers[ref]the middle trace is closest to my age, I was fortunate enough to get more career progression than that[/ref], and started from a higher datum, which you wouldn’t guess from some of the carping that goes on. It somewhat supports my observation that Britain is a rich country and that it’s richer in many, many ways than the Britain I grew up in. It’s also becoming more unequal and communications are better, so the average may feel the draught more because they can see how the 1% live, but that’s a different story.

If careers really are peaking earlier in one’s working life, then pension savings in the peak years will be tough, because it is a lot easier to relate to maximising pension savings 5-10 years away from being able to benefit from the upside, compared to  15-20 years away from being able to lay claim to your savings. It’s also a tough time because of all the other calls on your income in the 30-45 age range, particularly if you are in with a spendy crowd who doesn’t save for retirement but spends the money on housing, holidays and kids. They’re going to have a better lifestyle. The YOLO approach may catch up with them later, but you’re going to stick out as being skint and come across as poor if you direct more of your income into a pension. It isn’t all downside – if you do manage to save more earlier and take a breather as you slide down the other side of the greasy pole, compounding will increase your hoard a bit more than those who save most in the runup to retirement.

The Zuckerberg Doctrine: “Young people are just smarter”

Thus quoth Mark Zuckerberg. He’s got an interesting rationale for this.People might think our Mark is an arrogant tosser, but he’s a smart arrogant tosser. Let’s hear it from Mark

“I want to stress the importance of being young and technical,” he stated. If you want to found a successful company, you should only hire young people with technical expertise.

“Young people are just smarter,” he said with a straight face. “Why are most chess masters under 30?” he asked. “I don’t know,” he answered. “Young people just have simpler lives. We may not own a car. We may not have family.” In the absence of those distractions, he says, you can focus on big ideologies. He added, “I only own a mattress.” Later: “Simplicity in life allows you to focus on what’s important.”

I happen to agree with him on the simplicity thing, although you do probably want to keep such folk away from other people[ref]In my first real job a digital designer had designed an analogue sensor front-end around a virtual earth configuration. Much head scratching as to why this was ratty as they thought it was a high impedance. The young ermine, with the youthful 23-year old purity of purpose, laserlike focus and confidence of the Zuckerberg doctrine delivered himself of the statement “well it’s a low impedance, the clue is in the name virtual earth that’s why this rolls off low frequencies”. I was dead right, this was exactly the reason this was unreliable and occasionally burst into oscillation, but the delivery stank. for some reason I didn’t see any progression in that firm ;)[/ref]  like customers until they’ve knocked off some rough edges. There’s truth in what he says. Young people have simpler lives unencumbered by family, and focus benefits from fewer distractions 😉

IT and coding is a very specialised field of human endeavour, that kind of geekiness is not always well socialised, so the Zuckerberg Doctrine isn’t universal.  But it would be unwise to ignore this dynamic, after all most of us do get older. The Man’s age discrimination probably varies across industries – in finance, creative industries and Silicon Valley grey hair is probably a rarity. In doctors, and engineers less so.

You need to be more enterprising or have significant savings earlier in life if The Man is going to finish with you early

Something else common to all of the LA Times’ crew was that they didn’t have a lot of savings. Thrift used to be one of the virtues of the middle class in bygone times even in consumer America. As the 1960s ad sort of said, a man with savings can tell The Man to get on his bike.

Those that had savings didn’t have enough, or were unable to reduce their outgoings enough to make these savings last. The way things are going you want to be able to seriously control outgoings or have a dependable independent income by the time The Man finds you less attractive. For many people an independent income via self-employment is the answer. It’s not a bad match – get your experience and contacts on The Man’s dime and then launch out on your own as a consultant. Cynical bastard that I am, when I get handed a business card where the ink smudges that says consultant and I look up and see grey hair I wonder if that isn’t shorthand for un(der)employed. Sometimes you subliminally pick up the general air of desperation of the good people who are finished at fifty. It’s a hard act to pull off. I am in the same age group, but I’ve never yet self-identified as a consultant 😉  Engineer was good enough for Bob Pease, it’s good enough for me, though if what I am offering better fits scientist, surveyor, carpenter or general dogsbody that’s what I’ll run with . If you’re going to self-identify as a consultant, at least spring for a properly printed business card that doesn’t smudge when your stressed and sweaty hand passes it over to the client. There’s nothing inherently wrong with being a ‘consultant’, but performance art in oozing confidence and savoir-faire is part of the job!

For many people self-employment is the answer, but in the UK the self-employment experience seems to be getting worse

According to the ONS in 2012/13 the average median income from self-employment was £207 per week. It’s probably iffy to take that at face value since the whole point of self-employment is to minimise your income tax and favour dividend income, which is less adversely taxed. Ten years of inflation-adjusted earnings from self-employment isn’t going to a good place, and there’s more and more of it.

ONS – Median self-employed income, 2002/03 – 2012/13, UK

I have been self-employed – once at the bottom end as an agency kitchen porter between school and university and then a second time for a few years moonlighting doing multimedia and web design on the side in the Web 1.0 days of late 1990s, before World + Dog started doing it.

Self-employment bugged me, I have no real taste for it, I far preferred working for a company. You have shedloads of paperwork, government departments write to you considering you guilty until proven innocent with hostile language even if it’s just to fill in your VAT return. On top of that the income is often not dependable – how the hell do you you plan for the future or take on a mortgage with an income that varies 2:1 year on year?

Concern: I appreciate the predictability of a regular job.
Answer: Envision yourself as a medieval serf who will till the same soil for the rest of your life. Mind numbing, right?

Paul Graham, Y Combinator

Ermine: Work is overrated. It ain’t all that… Give me William Godwin’s Leisure of a cultivated understanding any day, Paul

There’s more to Life than Work, Paul. I suspect that maybe 10% of the self-employed are true entrepreneurs doing well because they are The Right Stuff.  We need these guys, but the statistics point to most people being employees, presumably by preference.

Where to go from here?

The baby boomers could get away with slowly increasing their spending through their working lives until they got to retirement. For the next generation the peak is in the child-rearing years, which matches parents’ spending requirements better, but it has long term risks, since parental spending seems to be able to rise to match any available resources. There’s always a better public school than the one you can ‘afford’ if you had more money…

The expectation that you gradually increase your lifestyle in rough proportion to your income needs to change. The middle class need to relearn those principles of thrift, push back on the consumerism and design their lives more. Designing The Man out of your later working life would be a good move. Pitching for financial independence is a good way of doing that – you don’t have to retire if you don’t want to, but the tribulations of the LA Times people would be avoided if you did discover yourself finished at fifty.

The UK is becoming much more entrepreneurial. That’s probably all A Good Thing, though such a working life sounds like purgatory to me, but in the end if this is what we are designing the economy to select for adaptation is usually better than resistance. Presumably introversion will eventually be stamped out of the population that way, and introverts can take solace that they may be better suited to bailing out earlier.

One thing will have to be surrendered, however.

The promise that your kids would have a better life than you,

This is a subset of a wider problem, but it is an emotive area so it is felt deeply. The tide is running out fast. There is just too much ever-increasing wealth of the 1% for the middle class to get a look in, they’ll be outbought on housing and on school fees. The 1% will eat them for breakfast – they’re just that much better resourced, and when it comes to aggressively promoting the interests of their children they have deeper pockets

Too much ambition for too many children is what scuppered Shona Sibary. You’re not going to send four children to public school on a journalist’s wage or two. It appears by now that you’re pushing the boat out to send two to public school on a ‘middle class’ wage of two people earning each twice the average UK wage. Let’s take this putative household of two people each earning £50,000 gross so a household net income of £72,000 and with two kids.For starters, it isn’t middle class – these dudes are well-off compared to other households, look for the itty red bit around £1350 p.w. They’re better off than about 85% of other British households.

IFS position of this £72k net household relative to others in the UK

It still can’t stretch to four lots of public school fees (> £40k)  and the house and the three holidays a year.  Maybe the Telegraph is right and getting a pension for your newborn is a more realistic way to deploy those dwindling middle class resources – it’s an out of the box answer to there being fewer and fewer jobs for them.