7 Ways to Sink in a Stagnant Economy

It’s a scattershot recovery, but many people limit their own opportunities.

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A lot of Americans are wondering why the so-called economic recovery hasn't paid a visit to their neighborhood.

[See where to work if you want a raise.]

The economy is growing and finally adding more jobs than it's shedding. Corporate profits are strong, and workers in favored sectors seem to be buying cars, iPads, restaurant meals, and luxury items. But it's a scattershot recovery. Nearly 14 million Americans remain unemployed. Many others can't find the kinds of jobs they want, or are earning less than they were before the recession began at the end of 2007. Home values continue to fall, eating away at household wealth. Many families feel like they're falling behind, with rising gas and food prices making the sting worse.

The recovery, unfortunately, doesn't apply to everybody. Workers with up-to-date skills and the vigorous energy it takes to adapt constantly are poised for a return to prosperity. But many others are stuck flat-footed in a confusing, Darwinian economy, out of good options and unsure what to do. Some of that is due to the depth of the recent recession and the abrupt transformation of industries such as housing and construction. But people also make a lot of mistakes that limit their own opportunities. Here are seven of the most commonplace ways to fall behind in an uncertain economy:

Stick with what you know. Technology is evolving faster than ever and becoming a dominant factor inside many companies. That's why people adept at Web development, data mining, social media, and mobile applications enjoy strong prospects for raises and promotions. Many such jobs didn't even exist five years ago, and people who jumped into something new are now enjoying the benefits, like rising pay and job offers from fast-growing companies. High-end recruiters repeatedly say that the best offers go to people with multiple skill sets, especially if they can blend traditional expertise in marketing, law, manufacturing, or other disciplines with cutting-edge technological know-how. But if hot job offers don't interest you, keep trying to earn a living using the same skills you developed 10 or 20 years ago. They'll become obsolete sooner or later, and your prospects will slowly degrade along the way.

[See why jobs are recovering but pay isn't.]

Demand the same pay you got five years ago. It's natural to think that if you used to earn $15 an hour, say, or a $50,000 salary, then you're worth at least that much today. But that's a fallacy. Your value as a worker at any point in time is what somebody is willing to pay you, nothing more. In the past, pay was good in many fields because the economy was strong and it was hard to find qualified workers. But now there's a glut of workers in many industries, and companies can pay less for the same people. In construction, for example, about two million jobs have been lost since the start of the recession, with no rebound evident yet. With real-estate values down and contractors under severe pressure to slash costs, it's not reasonable that they'll offer the same pay they did during the real-estate boom—especially if there are five or 10 applicants for every job.

Nobody wants a pay cut, but without distinctive skills, the only way to snag a job is to be the low bidder—the one willing to work for the least pay. If you do that, at least you'll be in the workforce, where you can learn more and perhaps get a raise if you take on more responsibility. Or you could hold out for more, but you'll have to wait until everybody willing to work for less than you has been hired.

[See why the middle-aged are missing out on new jobs.]

Gripe about globalization. If you're a complainer, these are the glory days. It's definitely true that big, multinational companies are shipping jobs overseas, hiring cheap foreign workers instead of Americans who could do the job for more. If that's starting to happen in your field, it's a warning sign that your industry is declining or your skills are becoming dated and you need to invest more heavily in yourself to stay ahead. But you could ignore that warning and hope that your job never gets outsourced, and then, if it does, blame foreigners and greedy bosses for your obsolescence.

Globalization, by the way, benefits a lot of Americans, too. It's one reason there's so much cheap, foreign-made stuff at Wal-Mart. U.S exports have been a bright spot lately, with people in other countries buying an increasing amount of stuff made in America, by Americans. And strong profits at U.S. corporations—perhaps the biggest thing keeping the economy going at the moment—are due, in part, to demand coming from overseas. So globalization helps create some U.S. jobs, too, and that trend could intensify in coming years as foreign consumers become wealthier and buy more stuff made in America. But if that interferes with your complaining, never mind.

Stay where you are. Jobs move around in a dynamic economy like ours, because companies and the investors who finance them deploy their money where it's likely to earn the highest return. So workers who want the best opportunities need to move where the jobs are. Some people are lucky enough to live in regions where the economy stays vibrant for a long time. But in a lot of other places, fortune comes and goes. In nine states, for instance, the unemployment rate is still 10 percent or higher, including California, Nevada, Florida, and Michigan. In North Dakota, South Dakota, and Nebraska, it's under 5 percent.

[See what it will take to fix the housing market.]

It's obviously hard to move if you're underwater on a house and would be forced to take a loss if you had to sell. But if you live in a depressed area where jobs are scarce, the cost of not moving is high, too: depressed pay, limited opportunity, and a better-than-average chance of prolonged joblessness. And some people refuse to move because it's too inconvenient to uproot the family or leave friends behind. Those are valid issues, but it still doesn't mean a good job will come to you. Instead, it will go to somebody else who went looking for it.

Work in a declining industry. Industries rise and fall as the economy changes, and some fields, such as printing, insurance, state and local government, and what's left of the textile industry, are likely to shrink for the foreseeable future. That means there will be fewer jobs, fewer promotions, downward pressure on pay, and less overall opportunity. Some people stay in declining industries anyway, because they know the business and it would be time-consuming to learn something else. But they're also taking a pass on better opportunities they might find if they transferred into growing industries like healthcare or a variety of tech-based fields. Oh well, you can always work longer and retire later (as long as you don't end up laid off yourself).

[See 10 industries that will shed the most jobs in 2011.]

Milk your career until retirement. A lot of baby boomers sense their own obsolescence—they don't know what "the Twitter" is and they're constantly asking twentysomething colleagues for computer help—but they're hoping they can hit retirement age before the boss notices. Some will make it to the finish line. But many disenchanted boomers have been among the eight million people who have lost their jobs since 2008—and as they've found, it's awful to end up out of work in your 50s or 60s with stale skills and high pay requirements. Hardly anybody's inoculated against the turbulent economy these days, so smart employees will keep themselves fresh and relevant until the day they hang it up. Work is more fulfilling when you're fully engaged anyway. But if that seems like too much effort, roll the dice and coast through the last few years of your career.

[See why baby boomers are bummed out.]

Wait for the government to fix it. The government has come to the rescue before, so it probably will again, right? Um, no. In the past, Washington was able to cut taxes, extend unemployment insurance, stimulate the economy, and add generous new benefits like the prescription drug subsidy for seniors because it was more solvent and better able to borrow than it is now. In the future, however, it needs to reverse those unfunded giveaways and start paying down all the debt accumulated over the last 10 years. No matter what politicians say, that means fewer benefits and subsidies, and higher taxes, probably starting sometime after the 2012 elections. So if you don't bail yourself out, there may be no rescue.

Twitter: @rickjnewman