THE SEARCH FOR QUALITY OF LIFE IN THE NEW ECONOMY
Address to DYG's Annual SCAN Conference
New York, New York, May 21^st, 1999

Daniel Yankelovich

As we head into the new Millennium, America is experiencing a period of renewed economic vitality and growth. The question I want to consider this morning is how Americans are responding to the renewal of growth and affluence in the economy.

Let me start by taking a backward glance at how our economy has evolved since the end of World War II, and how the American public has responded to three very different periods in the life of the economy.

The economy from 1946-1973. The period from 1946-1973 saw rapid economic growth and high productivity. The US economy became the engine for the world’s economy as it recovered from World War II. In the words of John F. Kennedy, the economy was a rising tide that raised all boats. In fact, not all boats were raised, but this period did bring higher incomes and much higher levels of home ownership and affluence to a majority of Americans. In the late 1940s, only about two out of five Americans (37 percent) identified themselves as middle class; by 1973, four out of five Americans came to consider themselves middle class.

Americans did not respond to economic improvements right away; there was a considerable time lag. The economy began to improve right after the war ended but Americans held onto a Depression psychology until the late 1950s and early 1960s. When Americans finally decided to let go of the fear that the booming economy wasn't real and couldn't conceivably last, they lurched almost overnight to the other extreme — the euphoric belief that the good times would go on forever.

The technological advances of this period also gave rise to a kind of technological hubris. If we can send a man to the moon, the thinking went, surely we can wipe out poverty, cure cancer and stop crime and violence. This hubris was not confined to the public. It deeply affected government, leading people in government to make unrealistic commitments and promises that laid the seeds for later disillusionment with government’s ability to deal with social problems.

The period from 1973-1995. Americans were totally unprepared for the economic difficulties in the years that followed the Arab oil embargo in 1973. In the almost two decades that followed, the so-called misery index -- the sum of inflation and unemployment -- often exceeded 20 percent (in contrast to the present level of about 7 percent). The country went abruptly from high growth to low growth, from steady increases in productivity to stagnation. We experienced both a loss of competitiveness and a loss of confidence at the same time. From a societal point of view, income disparities widened. We moved sharply in the direction of a two-tier society with the top two quintiles of the population improving its material lot in life but the bottom three quintiles — a 60% majority! — finding itself relentlessly worse off. In the top two quintiles, wives entered the work force because they wanted to; in the bottom three quintiles they did so because of economic necessity.

Psychologically, this period also reinforced the habit of going into debt. In a time of high inflation, more and more people concluded that the smart thing to do was to borrow and carry debt. The conviction grew that the country was on the wrong track and a pervasive sense of anxiety, caution and risk aversion began to take hold.

This period also saw the deepening of mistrust in institutions, especially government: in the 1950s, three quarters of the public (76 percent) felt that you could trust the government "to do the right thing all or most of the time." By the end of the period, in the mid-nineties, three quarters of the public (76 percent), in a complete flip/flop, felt you couldn't have confidence in the government.

The period from 1995 on. Beginning in 1995, some extraordinary changes took place in our economic fortunes. Abruptly, the growth rate shot up: it jumped from 2 percent to 4 percent and remained at this high 4 percent level throughout 1996, 1997 and 1998. Productivity rose rapidly back to levels the economy had not seen since the 1960s. Corporate profitability rose from a level of 5.5 percent of GDP in the early 1980s to 10 percent of current GDP. The misery index dropped from its highs of 20+ percent to its current level of 7 percent. Instead of government deficits as far as the eye can see, we suddenly have the prospect of government surpluses as far as the eye can see. In the realm of social equity, the 60/40 split with the majority of Americans steadily losing ground is now back to the rising-tide pattern of the postwar boom.

What is the impact of these economic changes on the public outlook? We share with the old postwar psychology of affluence a hesitant but very real conviction that tomorrow will be as good as or even better than today. However, there is now much less naiveté about technology’s ability to solve all problems. There is also much less of the youthful impatience that encouraged us to drop constraints on self-expression in the 1960s and 1970s. There is much more realism about government’s ability to deal with social problems and a far greater emphasis on self-reliance. With the renewal of economic good times, there is also a greater willingness to spend; in fact, American consumers are single-handedly helping to keep the world economy thriving. Most Americans today have very little fear of debt. Beyond saving for education and retirement, little need is seen (unlike the recent past) to save for a rainy day.

In the course of this decade, the public’s view of the economy has completely turned around. The economic pessimism of the earlier part of the decade has dissipated. In 1992, eighty-two percent of the public rated the condition of the national economy as bad; by 1998, however, eighty-six percent of the public had changed its outlook and had come to rate the economy as good. About 7 out of 10 Americans feel that economic conditions in the country as a whole are progressively getting better. This finding correlates with education: the better educated you are, the more likely you are to think that the economy is going to continue to do well. In the early part of the decade, by a margin of five to two Americans thought Japan had the strongest overall economy in the world. Now, in the public’s estimation the US is seen as having forged ahead of Japan by a considerable margin.

Looking ahead

What is likely to happen in the next decade or so? SCAN findings, which focuses on the US and Australia, correlate well with the research findings of Ron Inglehart from the University of Michigan who has been surveying many of the world’s industrialized economies. Statistics from both sources suggest that with the new affluence, people in the industrial democracies have come to feel that they can afford to shift their priorities away from the traditional goals of modernization and the struggle for physical and economic survival. Historically, modernization has emphasized industrialization, economic efficiency, bureaucratic hierarchy and authority, scientific rationality and material well-being. We are now seeing a shift in emphasis toward the search for quality of life with all the rich vagueness and ambiguity that that phrase implies. Let me hasten to add that by quality of life, people don’t mean asceticism and the abandonment of the material side of life. On the contrary, quality of life presupposes a high level of material well-being. It means taking material well-being for granted while focusing on other values such as a cleaner environment, closer community ties, spiritual well-being, mental and physical stimulation and enjoyment of life.

One of the most powerful quality of life trends of this century has been peoples’ insistence on having more of a say in the decisions that affect their lives -- a rejection of the old rules of hierarchy where the "authorities" make decisions for you. This insistence is an important part of what Americans and others mean by quality of life.

In the pursuit of quality of life, there is also a desire to make room for ways of knowledge other than the scientific, such as insight, the search for moral and spiritual truths and wisdom. We are also more accepting of diversity and pluralism in all shapes and forms. There is more blurring of boundaries, not only in gender roles but also in the boundaries between public and private, profit and nonprofit, and businesses and their competitors. We are seeing the flowering of spirituality outside the confines of organized religion and a hunger for deeper meaning. There is an intense desire for greater depth in marriage, friendships, communities, the workplace, and even the marketplace.

Skill Development

What should be on our agenda for the next decade or so? One important area on which to focus is the individual’s development of marketable skills. The global economy has raised the stakes on marketable skills, both in a positive and negative way. There are growing rewards for those with the right skills, but the punishment for lack of skills is devastating. In the economy of the past, you could make a good living without having developed good technical skills. Increasingly, this is no longer possible. In our era of rapid technological change, it is no longer possible to count on being able to make a good living without special skills or even to train for and acquire one skill for a lifetime.

In today’s economy, the credentials that come with a formal four-year college education are heavily favored. But unfortunately, only 26 percent of Americans over the age of 25 have a college degree. The vast majority of the American workforce who do not have a four-year college education are threatened by the requirements for success in the global marketplace.

As a consequence of this threat, acquiring and honing new skills is becoming a huge growth industry. In the future, this may become more and more dis-intermediated from formal education. We are already seeing an explosion in the number of corporate universities and the rise of many new institutions that offer workshops, seminars and distance learning for everyone from top executives to the lower ranks of the workforce.

In the future we are likely to see major efforts to develop substitutes for the four-year college degree around various forms of skill development. This will take advantage of one of our nation’s most undervalued resources, the community college. While four-year college degrees are highly valued, vocational training has traditionally been stigmatized as a second-class education. With an increasing need for skill-development, however, the offerings of community colleges will be upgraded and gain greater standing and prestige.

The Third Age

Another focus in the next decade will be the search for quality of life after the normal retirement age. The aging population is one of the great transforming changes of our times. At the beginning of the century, 4 percent of the population were aged 65 and older. In the next few decades, this number will reach the 20 percent mark – a fivefold increase. As Peter Drucker observes, "There is no precedent for a population structure in which old people past any traditional retirement age outnumber young people, as they will in all developed countries well before the middle of the 21st century. Of all developments, it is the most spectacular, the most unexpected and the one that has no precedent whatsoever." A statement by Pete Peterson’s is even more startling: "Global life expectancies have grown more over the past 50 years than the previous 5,000. Perhaps two-thirds of the people who have ever lived to the age of 65 are alive today."

The assumption behind traditional retirement was that by age 60 or 65, people had exhausted themselves and their strongest need was for rest and dependency. That assumption remains valid today only for much older people. Drucker, among others, has calculated that the correct age for traditional retirement today should be 79 rather than 65. His calculation is based on the conclusion that today’s 79-year-old has reached the same physical and mental state that a 65 year-old person had reached earlier in the century.

For the past 20 years, Swiss social scientist Christian Lalive has been conducting a longitudinal study among older Swiss citizens. His research shows that in 1979, one-third of 65 to 74 year-olds were living active lives while the majority of their older cohorts, aged 75 to 85, were not. In only 20 years, the proportion of 75 to 85 year-olds living active lives has leapt to 38 percent, almost two out of five. In other words, there are now more Swiss 75 to 85 year-olds living active lives than there were Swiss 65 to 74 year-olds living active lives two decades ago.

Increasingly in today’s world, a 79 year-old is the equivalent of the 65 year-old of a half century ago. We have been given an extraordinary gift of 14 years of life and vitality. I recall that when my father was 65, he was tired and ready to stop work. In five years, when I’m 79, I might possibly feel the way he did at 65. I don’t feel that way now and Peter Drucker, who will be 90 this year, still doesn't feel that way.

As people’s longevity increases, we are beginning to realize that the traditional retirement lifestyle no longer meets the needs of the individual, the economy or the larger society. The word "retire" comes from the French word, "retirer," to pull back. It has a wholly negative meaning. To retire in the traditional sense is to stop doing something, specifically to stop working. In the past, retirement carried only this negative meaning; it had no positive implication of moving to something new. When you retired, you stopped participating in the economic life of the society and you prepared yourself for the death that soon followed. This lifestyle made sense when the distance between retirement and death was a matter of months. It makes no sense when the distance between retirement and death is a matter of decades.

The realization that in addition to adding years to our life-span we retain our vitality for a longer period of time is rapidly spreading throughout the society. This realization is not making people want to retire later; on the contrary, people want to retire earlier to take full advantage of this gift of life and vitality.

How are Americans going to use their new freedom? The dominant pattern will be an explosion in part-time jobs. Most Americans have not made adequate financial provision for their retirement, so a majority of Americans don’t want to stop working altogether. A whopping 80 percent of baby boomers state that they intend to continue working after they retire and many will look for part-time work that will both fill the time void and provide extra income.

We’re also witnessing the growth of retirement fantasies. The "Inn-in-Vermont" theme where, for example, a high-powered professional New York couple have the fantasy of buying an inn in rural Vermont, fixing it up, managing it and becoming part of a rural small town community, is becoming a more and more common finding in our research. The idea of exchanging a high-driving urban career for a quieter life which involves doing a completely different kind of work in a more close-knit community appeals to many people. This fantasy often has an artistic component which reflects a deep-seated creative urge to express oneself before it is too late.

I spent last week in Japan at a conference on aging and one Japanese social scientist conceptualized the issue in terms of three ages. In the first age, you are dependent on other people, in the second, other people are dependent on you. The third age is one of comparative freedom and a lack of either dependence or responsibility. If people start to rethink their lives in their fifties and early sixties, and if in addition they have this remarkable 14 year gift of life, they are going to be looking ahead to a period of 20 to 30 years in which they have considerable freedom to chose their own lifestyles. The search for quality of life in this third age is bound to be one of the great adventures of the next few decades.

I would like to conclude with an anecdote from my trip to Japan. At the conference at which I spoke last week in Tokyo, a panel of Japanese experts discussed aging in Japan. To my surprise, the panel discussion quickly shifted from aging to gender relationships. One of the participants used a very striking metaphor: she referred to her newly-retired Japanese husband as a "wet leaf." If you step on a dry leaf, it doesn't stick to your foot. But if you step on a wet leaf, it is difficult to shake it off.

Japanese women, especially the wives of so-called salary men, have been virtually abandoned by their husbands as they dedicate their lives to their corporations. So over the course of their husbands’ working lives, they develop their own independent lifestyles. Then, abruptly, their husbands retire. The men are utterly lost in retirement since they have devoted their lives totally to their corporations. They are confronted with a devastating discontinuity in their lives: they lurch from being "masters of the universe" one day to finding themselves as a wet leaf stuck to their wives’ foot the next day.

Over the years traditional gender relationships in Japan have changed very slowly. In many ways, they have been almost impervious to change. But I suspect that gender relations, and with it Japanese culture, will begin to change more rapidly under the influence of an aging population. Over the last twenty years, Japan has gone from being the youngest to being the oldest nation among the industrialized democracies. For Japanese men, the shift of power relations in retirement may transform the society.

In summary, we have entered a new economic era in American life that is full of optimism, promise and vitality. In this new era, Americans take their economic well-being for granted and focus their attention on the search quality of life. Quality of life means many things. Among the most important are equipping oneself and ones’ children with the right skills to cope in the global economy and looking forward to an enjoyable, satisfying, prosperous and very, very, very long retirement.

Thank you.