The Plight of the Gen Xer
Latest research underscores the special difficulties Gen Xers are having making ends meet and planning for retirement. While promotions may be scarce in a slowly recovering economy, there are some things HR executives can do to help this pool of future leaders.
By Kristen B. Frasch
It's no secret that Generation X employees -- those born in the early 1960s to the early 1980s -- face their own sets of challenges when it comes to making ends meet.
A provocative piece published in the Harvard Business Review more than three years ago calls attention to the unique circumstances and troubles this group faces, as well as the similarities between the "bookend" demographic groups on either side of them, the baby boomers before them and the millennials picking up the rear.
Sylvia Ann Hewlett -- founding president and CEO of the New York-based Center for Talent Innovation and co-author of the piece, "How Gen Y & Boomers Will Reshape Your Agenda" -- was quoted earlier this year in an HRE Q&A about the study's findings and implications, and how things have progressed since.
In that Q&A, Hewlett -- also author of When the Bough Breaks, Off-Ramps and On-Ramps and Winning the War for Talent in Emerging Markets -- refers to Gen Xers as the "generation of hard knocks . . . the generation being hit hardest by two or three major recessions . . . the generation whose parents -- pre-baby boomers -- were without the more discretionary moneys that boomers [for the most part, parents of the millennials] had and have . . . ."
Now, a study from New York-based PwC US, the 2013 Employee Financial Wellness Survey, backs up what Hewlett and others have been seeing and saying. It supports the grim picture of Gen Xers' dire straits as they struggle more than any other group when it comes to juggling competing financial priorities related to their homes, children and parents.
The study finds more than one-third (36 percent) of Gen Xers think it's likely they will need to dip into their retirement savings to pay for nonretirement expenses, "a percentage significantly higher than for both baby boomers and Gen Y," according to PwC's release. In fact, 30 percent of Gen Xers, from the more than 1,600 full-time employed adult respondents, admit to having already done so.
The study also finds almost half (49 percent) of Gen X respondents find it difficult to meet their household expenses on time each month, as compared to baby boomers (31 percent) and millennials (30 percent).
"Gen X employees are in a unique financial situation," says Kent Allison, partner and national practice leader of PwC's employee financial education practice. "They're often faced with the full spectrum of financial issues -- from having to fund children's education to caring for aging parents -- while dealing with day-to-day household expenses.
"These competing financial pressures, along with already depleted equity in their homes," he says, "exacerbate America's retirement crisis as employees believe they have no choice but to turn to their retirement savings to focus on short-term needs."
In other research, Hewlett and her company find millennials are getting, on average, more than $400 in cash a month from their parents to help them through career pursuits, schooling and other life expenses.
"Gen Xers' parents," she says, "don't have those kinds of resources."
What's more, she adds, "Xers have come of age in one recession, hit two other recessions, were the ones worst hit in the underwater-mortgage crisis, and are hitting a world where salaries are flat and where baby boomers have decided to stick around, giving them no room to advance."
What employers and their HR leaders need to keep in mind, though, says Hewlett, is that Gen Xers, as depleted as their resources may be, are "still the bench strength for leadership; [many] are your future leaders."
Even if promotions and higher salaries aren't readily available, "one thing we can do for Gen Xers is sponsor [the talented ones] for career advancement so they can finally climb that ladder," says Hewlett. In her latest book, Forget a Mentor, Find a Sponsor, due on shelves this September, she details ways employers can groom people for future careers, including stretch assignments, foreign experience and more.
With reality pressing down on them, making them feel depleted and discouraged, she says, "the message employers need to be giving this next generation of extremely capable, well-prepared people is to really let them know that they will be entering the business' leadership of tomorrow; they're going to be leading their organizations and you can and should treat them as such."
"Inspire them and assure them they're on track for that, whether you can match that with a new title or salary right away or not," she adds.
Should employers be counseling them away from dipping into their retirements to simply handle what life is throwing at them? Hewlett says no.
Counseling them on staying away from their 401(k), she says, "would be condescending and demeaning, I think."
"These are smart people," she says. "They're grown up. They're adults. And they're making these very difficult decisions" as carefully as they know how.
No, the best and only real way to help them out of this extremely tough time, she adds, "is to lead them toward those higher-responsibility, higher-salaried positions." That eventual advancement is the only thing that will turn Gen-Xers' present financial troubles around, "and that is something you can start doing now."