The Lost-Out Generation : Were They Born Too Late to Enjoy the American Dream, or Are They Just Too Spoiled to Satisfy?

Mark Daw didn’t realize his family was “going up a rung” until the summer of 1968 when his father went out to buy a new car and came home with their first Cadillac.

While growing up, Daw assumed that as an adult, “I would outdo them,” the 33-year-old sales executive says of his parents. “I even knew the house I would buy”--a showplace overlooking Pasadena.

Not long ago he bought a modest townhouse in a Sierra Madre development. A slow smile of resignation spreads across Daw’s face. “It’s not where I thought I would be,” he says wistfully. “I’ve had to adjust my expectations.”

To their Glendale parents, Jeff and Dana Hunt look as if they’ve got it made.

Good jobs. New cars. Nice vacations. Their own home. But there’s also the staggering mortgage, the hefty car notes and insurance, the credit card bills and the thousands of dollars in student loans they still owe.

“My parents call us their ‘rich relatives,’ ” says Dana Hunt, a 27-year-old financial adviser to a medical corporation. “But if they knew what our payments were every month, my dad would have a coronary.”

Mercedes Tondre, 37, and Arthur Cable, 36, just had their first child. But when Tondre went back to work as a marketing consultant after only eight months, “my mother disapproved. She said, ‘Can’t you stay home for the first years? Can’t you live on Arthur’s salary?’

“I had to explain that, yes, it would be lovely to. But it isn’t an economic reality.”

Her mother, Pearl, still wishes Tondre could put her career on hold to take care of the baby. “But I see it takes two to get out there and work in order to survive now,” Pearl Tondre says with a sigh.

To parents who survived the Great Depression and World War II, the Angst expressed by their white-collar children, privileged enough to grow up in an era of peace and plenty, sounds like a whiny script for the television series “thirtysomething.” But to a widening circle of nationally known economists, demographers and sociologists, their problems ring very real.

They are the Lost-Out Generation.

Raised in a period of affluence with every expectation it would continue, today they feel they’ve somehow missed out: They were born too late to match the postwar prosperity of their parents, too early to enjoy the full employment predicted for the baby bust, and just in time to experience a major recession, out-of-sight housing prices and the waning of America’s economic power.

As a result, they now face the very real possibility that they will never achieve the success of their parents’ generation or even their children’s, for that matter.

Obviously, not all 76 million baby boomers born between 1946 and 1964 have lost out on the American Dream; some have gone way beyond it, and their yuppie penchant for buying Cuisinarts, health club memberships and condos has been alternately envied and ridiculed.

But what distinguishes the Lost-Out from the rest of the baby boom is an undercurrent of dissatisfaction: the feeling that something has gone very wrong with their world.

“They were brought up under a psychology of affluence,” says Robert L. Cohen, a West Coast vice president of Yankelovich Clancy Shulman, a company that tracks consumer values and life styles.

And just as healthy people take for granted their bodily senses, so the Lost-Out took for granted the luxuries of their parents’ lives: the sight of color TVs, the sound of automatic dishwashers, the smell of new cars, the feel of air conditioning.

As always, television was there to reinforce their conviction that surely everyone lived this way. Didn’t June and Ward Cleaver have a lovely home? Too bad no one even suspected back then that what they paid for their house would hardly constitute a reasonable down payment two decades later for Wally and the Beaver.

The reality, experts say, is that to attain any degree of prosperity, the Lost-Out have had to “finesse” their situation by making life-style adjustments unfamiliar to their parents: relying on two incomes, taking on large amounts of debt, postponing marriage and childbirth, having fewer children.

The consequence? More stress, less personal happiness, no peace of mind.

So are they really worse off, or do they just think they are? It may not matter.

“Statistically, it is plain wrong, wrong, wrong,” says Ben Wattenberg, a demographic expert at the American Enterprise Institute in Washington. “But I wouldn’t disagree with you that the perception among baby boomers is there. And perceptions are not always related to facts.”

Wants, Needs, Desires

Wattenberg says “Most generations find something to whine about. . . . We human beings have a wonderful ability to want more than we have and to feel bad when we don’t get it. Wants, needs and desires always outrun income.”

But Frank Levy, the author of the much-talked-about “Dollars and Dreams: The Changing American Income Distribution,” compared earnings for baby boomers and their parents and concluded that a Lost-Out Generation exists and its sense of suffering “is quite real.”

He found that by the end of World War II, the average family income in the United States was $14,000 (in today’s dollars). For the next three decades, family incomes grew steadily, doubling by 1973. Then, with the first major OPEC oil price hike, wages suddenly stopped growing and productivity faltered. Inflation raged and recessions stung.

Today, average family income is no higher than it was 14 years ago, Levy maintains; the United States remains in a period of wage stagnation. As a result, the baby boomers face an “inequality of prospects,” Levy says, “an increasingly unequal distribution of the chance to purchase the middle-class dream.”

Compared to Ozzie and Harriet, says Levy, professor of public affairs at the University of Maryland, the baby boomers have gotten a raw deal.

Dick Easterlin, professor of economic demography at USC and the author of “Birth and Fortune: The Impact of Numbers on Personal Welfare,” cites surveys showing that before reaching adulthood, the Lost-Out had traditional attitudes toward marriage, childbearing and working mothers. Yet when they grew up, they seemed to shun marriage and family life at unprecedented rates, while the labor force participation of mothers rose to new highs.

Did they do this by choice or because of economic circumstance? And if the latter, how did they cope with such compromise?

Easterlin contends the Lost-Out never had a chance to choose: “The deteriorating labor market conditions of baby boomers have forced them to abandon traditional norms in a desperate effort to maintain their economic status. This prosperity, however, has been purchased at the expense of family life.”

And apparently also at the expense of their overall mental health. As evidence for this, he points to what he calls “greater psychological stress” among the ranks of baby boomers in general: that suicide and divorce rates have risen substantially, as well as have symptoms of tension and mental depression such as nausea, headaches and anxiety.

Tondre and Cable know what stress is. It is what Cable calls “this feeling like disaster is just around the corner.”

Hard to believe, considering that together they earn more than $100,000. “When you look at our combined income, you think, ‘How can we possibly complain?’ ” Tondre says.

But in their minds, their whole financial security appears to be a house of cards, ready to topple with each shift of the economic winds. “There are times at work when I’m filled with so much anxiety because there’s no room for error,” Tondre says. “You make a mistake, and you lose an account. You lose an account, and you lose the house. You lose the house, and you lose everything else. It’s an absolute domino effect.”

It’s little wonder then that Tondre increasingly fantasizes about “getting off the precipice and moving to a gentler life,” as she describes it. “You know what I want to hear? I want to hear a screen door bang again. That memory means so much safety and security to me. I haven’t heard the sound of a screen door since the 1950s.”

The concept of job security is another lost relic. Given today’s corporate reality of mergers, acquisitions and lean-and-mean management, the careers of many highly qualified baby boomers are at risk.

Another key reason for the Lost-Out’s feeling of vulnerability is the large debts they have amassed to finance their prosperity.

They have mortgage and car payments and student loans to pay each month. And with charge cards so easy to obtain, suddenly the Lost-Out are hundreds of thousands of dollars in the red.

Living on credit has become the dirty little secret of this generation. Dana Hunt’s parents bought their first car on credit two years ago. Before that, they always paid cash.

One weekend recently, Jeff and Dana Hunt decided to scrap their 10-year-old Camino pickup that was falling apart. They went into a Toyota dealership on Saturday and came home with a new truck on Sunday. Now they have a hefty new truck payment--money they knew they should be saving. “Sometimes you’d like to kick yourself,” Dana Hunt says. “You say, ‘I’m never going to buy on credit again.’ ”

“It almost destroyed us financially but we did it anyway,” Jeff Hunt says. “If I make up my mind I want to get something, I usually get it.”

Undoubtedly, if the Lost-Out were more willing to save now and spend later, many of their personal financial problems would ease. As a 1986 Yankelovich Clancy Shulman survey for Time magazine found, the key difference between baby boomers and their parents is “they are not as willing to make sacrifices,” says Cohen. “It’s a remarkable admission.”

But most baby boomers never had to learn the “do without” ethic that was part of their parents’ daily existences. “My parents said they started out with very little,” Dana Hunt says. “All my mother wanted when she got married was to buy fabric to cover her front window. But she couldn’t do it. She couldn’t find the $5.”

Later, Dana recalls, “if there was something we really wanted, Mom and Dad found a way to come up with it. When I really wanted to go to Occidental College, my mother went to work three days a week to be able to afford the $10,000 a year tuition.

“They did the sacrificing. We didn’t.”

Naturally, baby boomer parents didn’t know that along with GI Joe and Barbie dolls, they gave their children an unrealistic view of life. “Our parents wanted to give their kids what they did not have themselves,” Mark Daw says. “The problem is that we were given all these expectations that ‘I can have it.’ ”

They Were Unprepared

The way Tondre sees it, baby boomers were unprepared to deal with bad times because they never experienced real hardship. “We didn’t know the Depression. We didn’t know the World War.”

The result: Tondre can’t imagine making the sort of sacrifices for her children that her parents did. “When things got real tough, they lived with my grandmother. But Arthur and I wouldn’t dream of that as a possibility.”

Tondre says “cinching the belt” is harder than ever because of expenses their parents never had. “How do we do it? You can’t drop automobile insurance. You can’t drop child care.”

Says her husband: “You have to go to a restaurant if you both work.”

If saving and sacrificing are not part of the Lost-Out’s legacy from their parents, what is? “Greed is the key emotion here,” Tondre says. “And that’s probably just the way it has to be given the circumstances because we’re so much in competition.

“I hate that feeling that ‘I’ve got to get mine now because it’s not going to be there for a lot of us.’ You almost start to panic.”

This panicky mentality that permeates the Lost-Out is the effect of growing up in a “crowded generation,” says Peter Morrison, director of the Population Research Center at the RAND Corp.

“It’s like being in a telephone booth with 50 people,” says Cable, whose friends are on three-year waiting lists just to get their children into preschool in Los Angeles. If it seems like all their lives they’ve been elbowing people out of the way, they’re right, experts agree.

Given their tremendous numbers, they experienced tremendous competition to get into college. And, because of their parents’ affluence, more of them could attend college than any previous generation. A bachelor’s degree was supposed to be their automatic pass into the middle-class. But “what baby boomers found when they moved into the labor market in the early 1970s was that college didn’t come through on the rewards,” Morrison says.

Then this huge block of job-seekers moved into the labor market in the 1970s, in the midst of a severe economic downturn.

Some experts, like Columbia University economics professor David Bloom, believe that generational crowding has permanently reduced the lifetime income and overall financial condition of a significant segment of baby boomers, thus creating the Lost-Out.

Stuck in the Middle

And while the economy is experiencing sustained growth in the 1980s, the baby boomers are still stepping all over one another--stuck in middle management with little hope of promotion.

“Eventually,” Cable says, “we’re all going to be competing for beds in nursing homes.”

Ironically, the same phenomenon that has held back baby boomers is going to help the next demographic group made up of baby busters. While members of the baby boom have had to scramble for every opportunity, “anybody under 20 is favored demographically by just the opposite situation,” Morrison says. “These are the kids who probably all their lives are going to walk down the street and see half a dozen help-wanted signs.”

Probably in no other area have the Lost-Out lost out more than in housing.

As Morrison notes, the 1980s have unfolded as a decade characterized by “housing haves” and “housing have-nots”--those who bought their first home before the huge run-up in prices and those who bought one afterward; those who enjoyed low-interest mortgages, effortless equity buildup and cheap housing costs and those who have staggering monthly payments.

“How you’re going to feel about your circumstances in general,” Morrison says, “is going to be heavily dependent on whether you got into the housing market in time.”

The Joint Center for Housing Studies at Harvard University reports that after rising steadily in the decades after World War II, home ownership rates have declined in the 1980s. Households headed by people younger than 45 have been hardest hit, with proportionately fewer homeowners in that age range now than even in 1973.

And despite the growth of two-income families, the median-priced home today absorbs nearly 1 1/2 times the portion of family income as it did in 1973.

When Daw was growing up, his parents moved from an Alhambra tract home to a San Marino mansion. But when Daw decided to get in the housing market, all he could afford was a condominium in a “marginal” neighborhood where “someone got raped in a garage.”

He asked some residents what type of people lived there. “Oh, this is a very safe neighborhood,” he was told. “The people who live here rob your mom and dad’s neighborhood.”

“That’s when I felt a resentment,” Daw says. “It was this feeling of, ‘Why am I living here when I grew up in a life style as nice as San Marino.’ It didn’t seem fair.”

Their Strategy

For Tondre and Cable, the strategy was simple. “To try to find the worst house in the best neighborhood,” Cable says.

They hunted for eight months, watched interests rate hover between 9.5% and 9.75% and finally bought a three-bedroom, two-bath Los Feliz “wreck” last October for about $200,000; it recently was valued at $350,000. “And we realized we couldn’t have bought it at that price,” Cable says.

“You feel,” Tondre says, “like you should have bought a house when you were 2.”

When the Hunts decided to look for a house, they wanted to be in the same area where they grew up. “We always thought we’d live in Glendale. And we always thought we’d have a house at least as nice as our parents,” Jeff Hunt says.

But they couldn’t find anything in their $100,000 price range. So they did what what most couples their age and income bracket have had to do: “We backpedaled.” Today, they’re living in a two-bedroom, two-bath home in Alhambra--a community they initially dismissed as “not for us.”

“What worries us now is the next house,” Jeff Hunt says. “We figured we would be here maybe five years before we moved into something bigger. Well, after looking around, we may be here longer than five years. Because we don’t know how we’re ever going to able to afford something more.”

Daw is 33 and still single. And he doesn’t want to be. While he doesn’t believe that he has postponed marriage because of economic considerations, he like many unmarried members of his generation worry that he has lost out on an important part of adult life: having a family.

“I feel like, ‘Wow, what’s happening?’ ” he says. “I was certain that by this time I would be married with children.”

His experience is not unusual. Between 1968 and 1982, the percentage of never-married men aged 25-35 rose from 16% to 17%; for females aged 25-35 it increased from 8% to 18%.

At the same time, fertility declined sharply. For husband-and-wife families with a head of household 25-34 years old, 16% were childless in 1968 compared with 24% in 1982; the average number of children in families decreased from 2.4 in 1968 to 1.8 in 1982.

Wattenberg, whose 1987 book, “The Birth Dearth,” examined the long-range effects of birth-rate decline, believes that in this respect, many baby boomers have “lost out” by deciding to have smaller families or none at all.

“But they really will live to regret it if they haven’t thought it through,” he says. “The part that troubles me is that a lot of them are caught up in the nature of their life style. Is it more important to be able to take a couple of weeks in the islands than have a child?”

But the life styles of the Lost-Out bear little resemblance to their parents’ because there’s no Donna Reed at home to clean the house, cook the meals and keep the kids quiet, let alone soothe Dad after a bad day at the office.

Dana Hunt recalls that in the Glendale neighborhood where she grew up, full-time mothers were the rule. But Dana, who has an MBA and earns more than her husband, can’t imagine what it would be like not to work. Without her income, the couple would be pressed not only to make the monthly mortgage payments but to have extra to go out to restaurants, movies and the theater or to travel to Britain this month for 2 1/2 weeks.

Having a child would change their life style. So the Hunts are unsure they want a family. “It’s the economics,” Dana Hunt says. “We’re very content the way we are.”

Tondre and Cable waited until their mid-30s to have their first child, Wylie. “I don’t think that either of us really understood what the costs of parenting would be,” Tondre says. “And knowing the problems that I’ve faced already with day care, my concern just escalates when I think about the years to come after that.”

Currently, the couple spends $500-$600 a month for part-time child care. They also worry whether they can afford private school for Wylie “because I don’t have much confidence, unfortunately, in the public school system,” Tondre says.

Then, of course, there’s the soaring cost of college to consider at a time when federal aid is declining. A recent national survey by the College Board showed that tuitions continue to increase faster than the inflation rate for the general economy. Students at four-year private schools will pay $7,693 for academic 1988-89, an increase of 9% over the previous year; room and board, on average, will be about $3,000, up about 6%.

So Tondre and Cable have suspended their plans to have a big family. “I want to give Wylie a brother or sister,” Tondre says. “But I feel I don’t have the choice anymore. And I think my parents did.”

While their parents for the most part can look forward to comfortable retirements, the Lost-Outs perceive that prospects for their golden years are bleaker. John Mayberry, a 30-year-old engineer, admits to feeling envious of the perks of his parents’ lives as they come close to retirement--the beautiful home, the second house at the beach, the condo in the desert--because he knows he will never have the same.

“I’m happy for them, of course. But I wonder why I’m working six days a week and my father has a pool in his back yard and we have a cesspool in ours.”

For those 30 million people older than 65 today, the Social Security fund is fat with a surplus. But by 2010, a record 75 million Americans will be older than 65; by 2019, the program may well be bankrupt, in large part because there may not be enough money paid into Social Security by the baby bust generation--whose current birth rate is about half that of 1957.

The Lost-Out now resent having their hard-earned capital flowing from their generation, which can barely buy homes, to another, which flaunts beach condos and Winnebagos.

“I think there’s going to be a real bloodletting over Social Security eventually,” Daw says, adding of his contributions to the fund.

“I feel that if I could take that money and invest, that I would be far better off. I am resigned to the fact that I am going to have to provide for myself and my family sometime down the line.”

It’s easy to understand, then, why the Lost-Out have developed a ghoulish fascination with the contents of their parents’ wills--in expectation of fat inheritances. Cable, for one, finds himself looking longingly at his mother’s beautiful country home in the Berkshires and “wondering, ‘Geez, what is this worth?’ ”

So the Lost-Out look to their future with less hope than their parents did. Daw probably mirrors the attitudes of many because he has learned to live with the disappointment: “I think it’s a very degenerative sort of attitude wondering how things might have been because there’s nothing I can do about the past. All I have is today.”

WHY THE’ LOST-OUT’ GENERATION FEELS THAT WAY

Born into solidly middle-class homes between 1946 and 1964, these Baby Boomers grew up with a psychology of affluence and took the luxuries of their parents’lives for granted. Television was there to reinforce their conviction that everyone lived this way. But unlike their parents, they never learned to do with out. Instead, they subscribed to the classic American belief that each succeeding generation is entitled to be more prosperous than the previous one.

While their expectations haven’t changed the economic climate has. Some experts say that real wages have stagnated. Mergers and changing markets have made the concept of job security a lost relic. A median-priced home now absorbs almost 1 1/2 times the portion of family income it did in 1973. Raising one child from birth through college is expected to cost an average of $135,000. And the Lost Out worry that Social Security won’t provide them any retirement benefits.

As a result, the Lost-Out have abandoned their parents’traditional life style to maintain their economic status. Living on credit has become their dirty little secret. Unwilling to sacrifice their creature comforts, they are postponing marriage and having fewer children. Because both spouses often work, they have child care and other expenses their parents’ never did. All this has led to disappointment and a feeling they were born too late to cash in on the American dream