By James Manyika & Michael Spence
While the economic gains for many people in advanced economies are significant in some respects, in others they have been eroded by unexpected challenges. We examined a range of economic indicators, such as employment and wage growth, benefits, prices for basic and discretionary goods and services, and savings for retirement, and found that outcomes for individuals in three roles—workers, consumers and savers—present a more nuanced picture than the aggregate data might suggest.
For individuals as workers, employment is much higher than it was at the turn of the century. In the 22 Organisation for Economic Co-operation and Development countries we looked at, there were 45 million more jobs in 2018 than in 2000, 31 million of which went to women. There was also a wider array of alternative income-generating activities and work arrangements, which gave millions newfound flexibility.
But more precarious working arrangements have also been gaining ground, undercutting economic security for many. Moreover, wages have stagnated for most people.
For consumers, technology and globalization, along with deregulation, have substantially reduced the cost of many discretionary goods and services, from communications to clothing. Data costs have dropped almost 90 percent, as usage has surged tenfold.
But house rental prices—often the biggest-ticket item in the household budget, accounting for as much as one-quarter of spending on average—have soared. Holding all else constant, consumers in advanced economies would have to work an average of four additional weeks per year to be able to consume the same amount of housing, health care and education as they did two decades ago.
For savers, the good news is that mean wealth is back up and above where it was in 2008.
At the same time, household savings are down in many countries. More than half the people on average in the 22 countries we looked at didn’t save for retirement in 2017, and just over one-quarter didn’t save at all. And this at a time when saving for retirement is more important than ever, as people live longer.
The shift in the role of institutions does not just affect outcomes for savers. Indeed, our analysis shows a decline in market intervention by institutions across all three arenas of work, consumption and saving, although the extent of this varies by country.
James Manyika is the chairman of the McKinsey Global Institute. Michael Spence, a Nobel laureate in economics, is a professor at NYU’s Stern School of Business.