How well are you doing in today’s economy? Are you thriving? I hope so, and congratulations if you are! Obviously, many people are not. Unemployment is still high, and more people are staying unemployed for longer periods of time, especially the Boomer and near Boomer population. Underemployment, those working but at lower wage jobs, is a much discussed phenomenon and a seeming trend of the future for all age groups.
Older workers are especially hard hit as many of them have fewer working years to make up for the losses to their retirement and savings accounts, which have taken a beating from the poor economy of the past few years and the “tech burst” early this century. Many are changing their plans to work longer instead of retiring, as they had anticipated.
We must now be more creative in our career aspirations and look outside of the traditional choices as they have become more unstable. Viewing your working life in terms of “human capital” is a good place to start, and comparing this “human capital” concept with the same flexibility to change and make improvements as you might do with your savings and investment portfolios helps to put career changes and job market dynamics into a useful perspective.
The first question to ask yourself is, what effect will losing your job, or working at a lesser job have on your “human capital”, your future earning capacity, your future financial well-being? Looking over a working life span of 30-40 years and multiplying that by your current earnings gives you an idea of your “human capital” worth in monetary terms.
Now, think about how volatile your career path is, are you a salaried worker in a large, stable company, a college professor or on a tenure track, or are you a stock broker, banker or sales person with the largest portion of your earnings in a commission or bonus, or a laborer with limited job market choices? Historically, the more stable the career track, the more accurately you can predict your “human capital” number. Surprisingly, a professor will earn somewhat more over a career life span than a stock broker or sales person due to the more predictable nature of their career.