The denoument over public worker wages and benefits begins to play out—they will be making less and contributing more just like many private sector workers. Wisconsin’s template will be adopted in other jurisdictions—there’s really no other choice. The Wisconsin governor’s union busting overkill is very much beside the point.
What’s befalling public employees, who by the way make up about 20% of the nation’s workforce, is instructive to what’s happening across the American economic landscape. Overall wages and benefits for U.S. workers continue to ebb, even fall. People will have to make do with less and save more if they have any chance to enjoy a reasonably secure retirement. A story over the weekend in the Wall Street Journal highlighted the discouraging outlook for looming baby boomer wannabe retirees—most don’t have nearly enough in their 401ks to come anywhere close to sustaining their living standards in post work years. And let’s not ignore the inevitable--Medicare eventually will need to be slashed putting more of an onus on seniors.
This all leads to personal retrenchment—spending and consuming less. The average American family will have more trouble affording a home—we’ll look to downsize and pool resources. Instead of parents, grown children and grandparents all having their own places, generations more likely will live together to make ends meet. Not as many young adults will be able to venture out on their own until they become well established and retirement communities won’t be as affordable for many seniors.
America has been overstored for years—less consumption leads to decreased per capita demand for retail space. Instead of provisioning for three or more homes, inter-generational family units make due with buying stuff for one place.
It will be harder for people with less in their pockets to afford cars and the costs for operating vehicles. At the very least, people will lean to living closer to work to limit gasoline and wear-and-tear maintenance expenses. Folks will pay more attention to energy bills too—bigger places that cost more to heat and cool may not be as attractive. That’s why larger houses on the suburban fringe lose favor to more in-town style living.
This should favor more urban lifestyles—apartments and townhouses near to commercial areas, preferably with mass transit alternatives to car dependency.
Now there will still be an affluent minority that supports neighborhoods in prime gateway cities which serve the global marketplace. These people will continue to flock to the leading resorts and buy second homes. CEOs will continue to want prime headquarters space for themselves and supporting casts. But they also will continue to look for lower cost alternatives for other workers, including outsourcing to people working from home and overseas.
Those public employees in Wisconsin are a leading indicator of where the country is headed—if taxpayers can’t pay them more and the country’s debt obligations are too significant then the consequences seem clear.
If you make less, you do with less, including less space. That’s what this new period in America is all about—we’re in the Era of Less.
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Jonathan D. Miller
A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.
