I see that more attention is being paid to something I pointed out long ago. In real terms Millennials are earning less than previous age cohorts did at the same stage in life. The Associated Press reports:
SOUTH MILWAUKEE, Wisconsin (AP) — Baby Boomers: your millennial children are worse off than you.
With a median household income of $40,581, millennials earn 20 percent less than boomers did at the same stage of life, despite being better educated, according to a new analysis of Federal Reserve data by the advocacy group Young Invincibles.
The analysis being released Friday gives concrete details about a troubling generational divide that helps to explain much of the anxiety that defined the 2016 election. Millennials have half the net worth of boomers. Their home ownership rate is lower, while their student debt is drastically higher.
The AP mentions another point I’ve made here from time to time:
The declining fortunes of millennials could impact boomers who are retired or on the cusp of retirement. Payroll taxes from millennials helps to finance the Social Security and Medicare benefits that many boomers receive — programs that Trump has said won’t be subject to spending cuts. And those same boomers will need younger generations to buy their homes and invest in the financial markets to protect their own savings.
Sadly, the AP failed to link to the actual study and a quick search didn’t turn it up. Unless this is it.
What remains unmentioned is that Millennials have significantly less job security than previous age cohorts have had at their age. Once upon a time in the mists of the different past, having been hired a worker could expect to work for the same employer until retirement. No longer.
There are many reasons for these changes. My own personal belief is that discrimination continues to be a factor both in hiring and pay and a higher proportion of Millennials are black or Hispanic than was the case among the Baby Boomers.
I also wonder if the Millennials are more educated or just more credentialed?
A factor that goes unmentioned: incomes are likely to be correlated with parental incomes. My income is more like my father’s than it is like the income of other people in my age cohort and I suspect that’s true even when controlling for educational attainment. Not all diplomas are created equal.
I think it’s obvious that more than any other factor lower incomes are the price of globalization. Comparing the percentages of college grads between Americans today and 30 or 50 years ago is specious. There are more college-educated Indians than there are Americans at all levels of educational attainment. It’s a small world after all and when employers regularly reach out to offshore resources your diploma just isn’t worth as much as it used to be.
Globalization is clearly the main culprit. While that has been accelerated by US companies sending so much of our work overseas, making the investor class wealthier but not everyone else, this was bound to happen eventually. China and India were bound to adopt at least some market reforms. Absent another world war, we just weren’t going to have dominance we had for so long.
Steve
As I understand it, benefits were used to retain employees during WWII when wages were frozen and manpower short. It’s a wonder that arrangement lasted as long as it did. I suspect unions were the reason for that. Now companies WANT turnover, saving them money by reducing the already small amount of power the employee has in the arrangement, reducing the likelihood of union organizing. They rely on technology to replace or eliminate the need for experience, which increasingly accounts for nothing.
No wonder I increasingly see millennials who work do so tuned out, with I-Pods on. They know they’re going nowhere, just
$10-$12/hour anywhere in town .
Gray Shambler:
I think that unions were a factor but possibly not in the way that you think. Unions work by creating artificial scarcity. That’s what a closed shop and limiting union membership do.
You would expect wages to rise in a tight labor market and fall in a loose one. We presently have a very loose labor market meaning that there are more workers, not just U. S. workers but Indian, Chinese, etc. workers, than there are jobs for them.
Without a looser labor market wages will remain stagnant or fall.
Don’t count out the Millennials. At last part of the difference in current income is due to the longer “childhood” in modern American society. Over the long run, those with education will likely have increasingly high incomes and asset accumulation.
A few things Millennials have that Boomers did not at their age:
– Smart phones.
– The internet.
– Access to virtually every movie, TV show or book ever created, 24/7.
– Much better food, coffee, wine and whiskey.
– Lower cancer rates.
– Cars that are safer, more reliable and cheaper to operate.
– Cheaper (though admittedly more unpleasant) air travel.
– The ability to purchase almost literally anything and have it at your front door 48 hours later.
– Less violent crime.
– And here in California, at least, weed delivery to your home within a thirty minute time frame.
In exchange they’ve given up McMansions, job security, cars that rust as they pull off the lot, and enslavement by the AT&T monopoly.
Apples and Oranges. I could buy a McMansion, but why in God’s name would I? Are we assuming everyone wants a massive, faux-Georgian, with a huge lawn? You know how much furniture that involves? What it takes to keep it clean?
I never wanted – in fact dreaded – the idea of working 30 years at one company. Is that really something we miss? Really? Because when I go to hell I expect ‘lifelong employment in a cubicle’ to be on the menu.
Bottom line, would I rather live in Millennial world or Boomer world? Millennial world by miles, even with the economic insecurity. Income ain’t everything, and a dollar that gets me Netflix 24/7 is better than a dollar that gets me a sticky seat in a movie theater on Saturday night. Sorry, but I have zero nostalgia for the ‘good old days.’ They weren’t actually all that good.
Regarding the investor class getting wealthier: I guess we need to go over this for the 47,000th time. In a credit backed monetary system, money investments MUST have a positive return, overall. The economy is dependent upon the financial system for growth, and the financial system grows as financial investments grow and increase.
Therefore, people who have money invested in the financial sector MUST have positive returns if the economy is growing, and they will have negative returns if it is contracting. (This is applicable to the overall system, and individual investment instruments may perform differently.)
This has no relation to investing in companies producing actual goods or services. Many of these companies try to match the returns of financial investments, but overall, financial investments have few of the downsides as companies producing actual goods and services.
If you want to stop the rich from getting richer, you need to do something about the credit backed monetary system, or do what China does.
“I’ve got one word for you, Benjamin: plastics.”
The Graduate
I am sure many of the counterculture idiots got a laugh over that. The hippies tried to “turn on, tune in, and drop out”, and then, they discovered soap and money were not toxic. Subsequently, they invented 100% dacron polyester, snag-free, sansabelt trousers, leisure suits, disco, and cocaine. So, the filthy animals did invest in plastic after all.
Now, we have their dirtbag grandchildren to endure. Where is the Ohio National Guard when you really need them?
And then who is going to pay for your adult diapers and your heart transplant at age 90? It may have escaped your notice, but without those disgusting young people paying our Social Security and Medicare and covering our unfunded pensions while simultaneously carrying mountains of student loans, most of us old people are back on the dog food diet.
The truth is Millennials should be hunting Boomers in the streets with baseball bats.
@michael reynolds
Exactly how are the out-of-work, debt over burdened, worthless degree holding, and over inflated self worth Millennials going to pay for anything?
At some point they are going to wake-up and realize that they have been not only sold a “bill of goods”, but they have also been left with the Boomer Generation’s bill for their goods. The party is coming to an end, but it is not not the usual “government is spending too much”, “government freebies”, “(President)* Obama doubled the debt” or anything else.
It has to do with the monetary and financial systems, and your little tax decrease is a drop in the bucket, if that. I have been going on about this for quite some time.
As to any government programs for myself, I have no illusions that I will be working until I keel over onto my keyboard. I am with the VA, but that is service related. I should probably have my claim re-evaluated, but I do not like “rocking the boat”. The one time we tried to get government help was after the hurricane. The SBA approved a small loan at market rates for me, and then, a month later unapproved it. My wife applied for a SBA loan for her business, and she did not have a good enough credit score.
F*ck your government help. You can take it and blow it out your a$$. I do recommend to everybody to get every penny out of the government they can, but I do not trust those f*ckers any further than I can throw them.
I better stop. I already did my police rant, and I am about to get all spun up.
Millennials are getting f*cked over in ways they cannot imagine. It is similar to low income, high risk borrowers back in 2005 – 2007. The student loans and degrees will have “seemed like a good idea at the time” and “everybody was doing it”. You will hear everything you heard about housing and mortgage companies.
That was just a taste of what is to come. The past eight years have been spent enlarging the credit supply as fast as possible, and there has been no corresponding investment in actual production facilities of goods and services. I have been over this multiple times, but it is directly related to Millennials’ plight.
All the economists who claimed that “nobody could have known” the housing bubble would burst or financial system would collapse is an idiot or liar, and these same idiots are prognosticating today. My guess is that they would disregard my scenario, and I suspect that they are high up on your goto list of economists.
The difference is that it is not just student loans or the past eight years. This time it is going to include the last 20 – 30 years worth of credit creation. (Credit is not debt. “Credit cards” are debt. Credit is an asset, and it can be bought and sold. Debt must be paid-off.)
The only hope is that the rest of the world has a greater collapse and the trade deficit dollars return to the US in addition to foreign capital fleeing to the US as a safe haven.
*(Obama the man has a proper title, but nobody uses it. The last time I checked we are not drinking buddies, and we are not on a first or last name basis. Maybe it is my Marine Corps training, but everybody from the lowly Private to a General (Brigadier, Major, Lieutenant, General) rates to be addressed by their rank or billet. When the man no longer holds the billet, I will no longer address him as President, but he still has a few days to go.)
What a load of self-pitying bull. Yeah, we were the last generation of good, hard-working people, and all these youngsters should be shot. You suck from the taxpayer teat by your own admission – and not just VA, if you’re not on SS and Medicare you will be – and you’re pissed off that your lousy credit killed your SBA loan, so ‘f-ck the gubmint?’ Take Washington’s nipple out of your mouth before you say that.
You know, just because you age doesn’t mean you have to turn into an out-of-touch old man.
Thomas PM Barnett. a champion of globalism admitted the American Elite sold out the American worker for the greater good of world economic egalitarian peace and stability. He always brags that, well, we haven’t had a world war since then, how wonderful the result.
Important for the workers to realize none of this was “inevitable” but the result of a conspiracy, whether Alex Jones or any other conspiratologists get the exact details right.
TB- “but not everyone else”
Steve
We have hollowed out the middle class to the point where most people cannot absorb a moderate emergency.
http://www.cbsnews.com/news/most-americans-cant-handle-a-500-surprise-bill/
Living paycheck to paycheck with nothing left over is not a middle class life.
Millennials may be starting off worse than their parents did, but I am not so sure that they are worse off than their parents are now. Most of the Millennials I know (a non-representative subset) are paying down their debts, and buying less stuff. They may be better conditioned to live within their means than their parents were, and will end up doing better in the long run.
The VA is service related. Sorry, I did my time.
I have no idea how Medicare works with VA medical. They take care of me, and I am happy. (Oh, I do not care if socialized, government run, single payer, or any other adjective is used to describe the VA medical system.)
The SBA was a loan based upon need to rebuild my house. It had nothing to do with my credit rating. The SBA was lending money to homeowners to rebuild. My wife, on the other hand, is one of those female types, and there were supposed to be all kinds of programs to help women and minorities trying to rebuild businesses. I will not bore with my sob story.
I guess she should should have said she was born with a d*ck. Hell, maybe I would have gotten the loan if I told them I was born with a d*ck, but I identified with somebody who was born without a d*ck but identified with somebody who was born with one. They probably would have been shoveling money at me as fast as they could.
I do have flood insurance, and that is a government program. I have money in the bank, and the FDIC is a quasi-federal program. I fly on airplanes, and the FAA is a government program.
I benefit from a lot of government services, and I dislike and distrust the government. I suppose you have confused me with the usual Republican, right-wing, conservative, libertarian positions. I have a philosophical leaning towards their positions, but when exposed to an examination in a fully formed philosophical framework, their principals fail.
Much of the government intervention you worship, I would toss out, but the Right would soon begin screaming bloody murder at what I would implement. I guess you have missed my comments about banking regulations, Glass-Steagall, FDIC, the “free-market”, “free-trade”, and references to the FDA, food inspections, FAA, and the Great Molasses Flood.
While you were playing hooky, I have thrown down the gauntlet multiple times for our friends on the Right to defend their principles, and more often than not, one of our friends on the Left picked it up to defend some small aspect that had no bearing on my larger point.
The SBA was my interaction with the government trying to get “gubmint money”, but that is not why I dislike and distrust the government. I have a laundry list of issues that caused that. I will note that I was wary of the police long before it became fashionable, including the well-heeled progressive salons, but there was one group of people who had a similar attitude as mine.
As to “sucking at the government teat”, I would take every last cent I could get, but I hate interacting and distrust them too much. I have nothing against many of the social safety net programs. They could use some improvements and upgrades, but I never call them freebies or goodies. (I hope I have not.) I damn sure do not like to see the people on them being disparaged – black, brown, white, green, man, woman, blue-collar, white-collar, whatever.
(Incidentally, I do not dislike the working people in government, and when I encounter them, I usually get along with them. Here is a little secret: They do not especially like their jobs. Very few people wrote a third grade essay on “I Want to be a(n) fill-in-the-blank When I Grow Up” – IRS Agent, DMV Clerk, SBA Loan Denier, Other Boring Job. They are just trying to put food on the table, clothes on their backs, and a roof over their head.)
As for all the Millennials being shot, it only took a few hippies taking a bullet or two, and the rest decided that bathing was not such a bad thing. All the Millennials are not worthless. Pajama Boys and such are worthless, but my two nieces who enlisted in the National Guard each have a pair of balls. I would not call Baby Boomers hard working. They are slackers. If the previous generation had the same work ethic, the retirement age would have been 45. Baby Boomers are irredeemable, but the Millennials have an opportunity to redeem themselves.
I really should not be as general as I have been. Not all Baby Boomers or Millennials are worthless, and not all of the “Greatest Generation” is the greatest or even great.
When I have the time, I stay up-to-date on current pop culture, and I always stay up-to-date on technology. On many other things, I am way ahead of things, and it may take a few months or years to get to fruition. I used to try to keep up with a lot more, but there is just too much.
Boomers versus Millennials. This is not meant to be a knife fight between the two groupings. However, each generation does goes through their own individuated gauntlet of “living,” setting the fads, fashions, customs etc. during the high points of their given time of prominence. Then, as one era declines, another rises up, peaks, and so it goes. As this pattern continues so do all the changes, acceptable/unacceptable behaviors, values, habits, sensibilities which accompany it. Even haircuts go from crew-cuts to long hair and now to shaved, bald and multi-colored.
As for the financial inclination, boomers saved for material success and retirement. Millennials, though, seem to scoff at accumulating anything but the latest tech item. Renting is preferred over house ownership, and uber over leasing/owning a car which they have to fuel and maintain (that’s not their thing). Making “families” is delayed, as is being “responsible” (in the eyes of their elders), while selfies are the rage. It’s just a different reality, accompanying a different set of circumstances, that rapidly evolves through generation after generation.
While I don’t wholly accept the Millennial mentality as being necessarily compatible with my own, I don’t resent it either. I see them, metaphorically, elongating and relishing the adolescence phase of life, flexing their muscles as adults as they slowly gain experience and wisdom as to who they are and what they really want, I think it will take them longer to go the “maturation distance” than it did for the Boomers, simply because they are traveling through their years at a different pace, with a different bag of assets and problems to assist or weigh them down. Nonetheless, I believe they will do well in the end, despite all the dire statistics and predictions, by simply finding a new foothold, different from the boomers that will create new comfort zones and criteria for building their own definition of a “life well lived.”
@steve
In a credit backed monetary system, the credit supply has to increase for the economy to grow. This is why the economists rail about the importance of inflation, but they do not understand how money works. Therefore, they assume that prices need to increase for the economy to grow. You may understand this, but others do not.
Because credit must grow, the owners of the credit assets will become richer. These assets must stay within the financial sector because they are the raw materials that are used to manufacture the additional credit products that increase the economy.
There is a Golden Goose that produces golden eggs, but the vast majority of golden eggs must be used to replace the old golden eggs that upon maturity the Golden Goose ate plus a few extras so she can produce a few more. As time goes by, the extra amount not consumed by the Golden Goose decreases because she needs more and more to maintain her position.
Increasing the output of the Golden Goose requires increasing the size of the Golden Goose. Furthermore, you cannot simply divide the Golden Goose between the workers because most of the Golden Goose cannot be consumed, or if you begin consuming it too fast, hello Venezuela.
The only other option is to mimic the Chinese, and you then dictate what is the size of the Golden Goose and how much it is producing. The Golden Goose could be a hound dog with a purple bow for a collar, and the output could be pictures of cheeseburgers that are proclaimed to be golden eggs. It would work for a while.
Otherwise, you need to end or curtail the credit creation.
“You cannot extrapolate a trend where the human element intervenes” Can’t remember who said it, but it applies here. Things will change, and people will be the agents.
jan: As for the financial inclination, boomers saved for material success and retirement. Millennials, though, seem to scoff at accumulating anything but the latest tech item.
Actually, most Baby Boomers are pretty screwed when it comes to retirement. 50% have less than $100,000, and a lot of them have had to pillage their retirement plans for non-retirement expenses (source: 2 minutes of internet research started by googling “baby boomer retirement facts”)
As a rule of thumb, Baby Boomers blew their money and have nothing to show for it, except some resentful kids.
I’m not sure what gadgets you think Millennials blow their money on — there’s usually a smartphone and a laptop, but that’s hardly extravagant. They are more mobile. They tend not to have houses yet, but they are young (and during the Great Recession a lot of areas have been hit hard, and houses became traps anchoring someone to a declining area).
One of the unexpected pitfalls for Boomer’s retirement plans have been the Fed’s endless QE way of manipulating the economy, whereas savings became like bricks in banks. But, nonetheless, Boomer’s do have an edge on wealth, when compared to millennials. Google that Gustopher.
The comments about millennial and tech was not meant to be negative. Rather, millennials tend to have the latest games, gagets, software, apps, shortcuts to buy and communicate messages – far more than their more traditional counterparts – Boomer’s. They are less interested in tangibles than inquisitive and stimulated by the unusual and intangible. That’s just my observation….
“As a rule of thumb, Baby Boomers blew their money and have nothing to show for it, except some resentful kids.”
Pretty much that. Boomers had more economic advantages than any comparable American generation.
I think millennials will be fine in the end. Adversity, across a cohort, will probably be a good thing.
“…unless this was it.” Yep. (And via Fed data)
However, I got my bootlegged version posted by Boris Badinov on a little known Russian propaganda website known for Russian agitprop. I’m not telling whether Natasha Fatale and golden showers were involved……..
http://www.zerohedge.com/news/2017-01-14/why-millennials-are-behind-they-earn-20-less-boomers-did-same-age
Jan:
A point I’ve been making here for quite some time. They just aren’t as into giant McMansions, lawns and gas guzzlers. They don’t want as many toys. Their social status relies more on Facebook ‘friends’ than it does on owning a Mercedes.
It does not work to simply look at income. Money is a tool used to obtain goods and services. Does the average American today have fewer goods and services than his/her parents did at the equivalent age? Of course not, he’s got far more.
It’s like when we compare the prices of cars, as if today’s Ford is not far superior to a 1970’s Ford. When a product improves dramatically you can no longer compare it one-to-one against earlier iterations. A Sopwith Camel is not an F-18. And with the internet and related social media it is worse than that since those things did not even exist and thus we have no points of comparison.
It is bizarre to act as if the life of a 20-something today is worse than that of a 20-something 30 or 40 years ago, when the modern kid has nearly unlimited, nearly-free access to what in the old days would have required a dedicated team of research librarians, not to mention a million dollar library of entertainment and a full-time projectionist. But modern kid doesn’t get to spend 30 years in a cubicle and that’s what matters? Right. Let’s do a poll of millennials on how many would trade their iPhones for a chance to sit in swivel chair wearing a tie for 30 years.
People armed with economics textbooks and no imagination are failing to see the forest for the trees. They’re like people at the dawn of the 20th century moaning that kids today don’t even keep a stable of horses, just some silly Model T. Life is not worse, it’s quite a bit better. The people who are worse off are worse off because they are choosing to live in the past, refusing to relocate, refusing or incapable of re-education, rejecting reality in favor of a nostalgic fantasy, and, because of their bigotry and ignorance, voting for the very people who rob them blind. The millennials aren’t the problem, old Boomers who have refused to adapt are the problem.
TB- Dude, yes the capitalists need to make money. I am not disputing that. It is just that not much of that supposed increase in GDP is going to anyone else. WE used to manage to grow, and have everyone benefit.
Steve
Michael, your analysis, outlook on millennials is one of the few points we consistently seem in agreement on. Maybe it’s because we share parenthood of this particular group of up and coming individuals. I guess people can easily argue and differ on policy. But, when it comes to our children facts simply become facts. Hand shake…..
@steve
The US’s and almost every other country’s monetary system is a Ponzi scheme, and the base of the structure needs to expand to keep the entire thing stable. It is Bernie Madoff on steroids.
The economy is financialized, and it works according to financial principles not capitalist ones. In the financial industry, the end product is also the raw product of the next end product. There is nothing analogous in the capitalist system. The closest would be energy production. It would require an industry where the end product could be used in the production of itself.
For eight years under President Obama, the rich have gotten richer. Either President Obama is a closet Republican, or things do not work the way he thinks they do.