I was just listening to a discussion with millennials on the Tom Ashbrook On Point show, and this was the repeated theme. I had to roll my eyes, though I also tried to keep in mind the myopia of youth. I totally bought into this meme when it was expressed by Douglas Coupland as a major theme of his seminal work Generation X. But then came the boom of the middle and later '90s, and that idea was forgotten.
More recently, I read a Roger Ebert movie review (wish I could recall which one) written in the early '80s in which he stated something close to “we are now entering into an era of economic austerity in which we’ll all have to get used to getting by with less”. That obviously wasn’t true either for us “all”, although there were some who got left behind by the '80s boom and rise in inequality.
I have not read an example of this from the 1970s, but it would shock me if there weren’t people writing, when the oil shocks and stagflation hit, and the stock market stalled out, the same thing then by comparison with the Sixties boom years.
I know that it has been shown that people who graduate college in the wake of a recession have their lifetime earnings negatively impacted. But that’s just a cyclical thing with certain microgenerations being unlucky to have landed in the trough. Is there any real evidence that this time is different? I am sceptical, and suspect that in five years all this talk will be forgotten again until the next time.
It’s not “different” because it never stopped and has been going on for decades. The economic bottom third of the workforce has seen its wages stagnate or decline since the 1970s, not just in the last few years.
That would still support my case, that nothing has really changed. But the people making these declarations about their generation’s misfortune almost invariably have college degrees, and have parents who also have college degrees. Maybe I needed to be more precise about that in my OP, but this is what I’m really specifically talking about: my scepticism that for the college-educated middle class, there is an intergenerational decline happening other than for a small microgeneration (say, those born in the middle to late '80s).
Furthermore, median household income, adjusted for inflation, is currently higher than it was when Bill Clinton cruised to reelection on the strength of the economy. You can see on that graph that it is higher now than it was at any time before that as well, even compared to the previous peak of the late '80s before the GHW Bush recession.
It’s true. Remember in the late 80s when everybody could afford a $200 smart phone and the monthly data plan to go with it?
Nowdays nobody can seem to afford that.
Yeah, I’d really love if these commentators looked at the availability of new consumer goods and the increased reliability of luxury items like cars and electronics in 2014 versus even 1994.
That brings up the matter that there are many ways to measure how rich people are. One can measure strictly wages, the amount of money that people are paid for working. One can measure, ore broadly, all of the benefits that people get for working, including pensions and health care and so forth. One can measure all the money that people get, including government handouts. One can measure what people earn on their own investments as well as what they get from outside sources.
Overall, I expect the upward trend to continue as long as the USA has economic freedom. We’ve been slipping a little bit in that regard, but we’re still among the most free countries in the world.
I grew up in the '50s and '60s and I was just miserable all the time at not having a flat screen HD-TV and a cellphone.
Not. :rolleyes:
Are you miserable because you don’t have a VR TV and a really smart digital assistant? Wealth is based on what we compare with, not the ultimate.
I graduated from college in 1973. No one worried about student debt. No one worried about being able to find a job. No one was running scared the way my kids and their friends were. My son-in-law graduated from a fairly high ranked law school - large numbers of his classmates couldn’t find law jobs. That wouldn’t have happened back when I graduated.
This might not be the only time in history this has happened, but it is not lazy kids kvetching either.
I’m saying that while I work a middle class job, I don’t feel like I’m “poorer” than my parents because of many of the luxuries I am able to afford on my middle class salary. The TV I bought a few years ago for $500 is better in every conceivable way than the TV my parents bought in the mid 90s for $1000. My 12 year old car has required fewer repairs (and is still operating) than the car my mother bought in the early 90s (which only made it to 9 years).
Student debt is bad and finding a job is difficult, I’m not disputing those things. Because I’ve got my fair share of debt and it took me a few years to find a job. But to pretend that my generation is hobbled in some way is just misplaced boomer pity and whininess from everyone else.
But do Baby Boomers need to stop giving out the same advice they were given back in 1970s and 80s? Yes! And younger people need to stop taking their cues from people who are significantly older than they are. Anyone who casually says, “Oh, don’t worry about student debt! Study whatever you want! Buy a house, any ole house, and you’ll be making a good investment! Quit your job and follow your dreams! You’re a loser if you can’t be passionate about what you do for a living!” is full of shit and needs to be ignored. Fortunately, most Boomers are wisening up. But those myths are still floating out there, leading kids astray.
I don’t see why it is controversial. In the past you had pensions, matching 401ks, affordable health care, affordable higher education, affordable real estate.
Now most of that is gone. Add in the fact that debt has exploded both consumer via student loans and credit cars and public debt. So now we have to have austerity to keep the system solvent.
And medical care is a little better, but not enough to justify the price. Is health care in 2008 really worth 2x the money as health care in 1997?
So people have tons of private and public debt. There are fewer jobs relative to population. The jobs aren’t keeping up with inflation. People have to fund their own retirement. Spouses have to work, so now you need to fund childcare. The great compression is over and all economic growth goes to the top.
Consumer goods are more reliable (mostly) and more plentiful as well as cheaper. I say mostly more reliable because Chinese imports do tend to have a lot of low quality items.
Good question. Note that the Boomer demographic also skews per-household results. All in all, “per household” statistics seems to me to give poor perspective. (Despite this, and despite a recent uptick, the linked graph clearly shows a slight 1999-2010 downtrend contrasting with a strong 1983-1999 uptrend.)
In the past I’ve linked to graphs showing a severe downtrend in working class relative income since the early 1980’s and won’t link again. That recent college graduates seem severely discouraged compared with prior generations seems pretty clear.
To measure prosperity based on the increasing power of electronic gadgets shows faulty perspective. (Unless one finds it cute to claim that a billion people today are “richer than medieval Kings.”) When I was a kid, doctors made house calls – that represented a tangible convenience that might not even be equaled by a Ferrari with which to drive to doctor’s office!
They do all the time. Usually in the context of “poor people don’t need any help… why 90% of them own color televisions and 75% have cell phones! That’s not real poverty…”
Absolutely.
The OP uses the word “poorer”, but I don’t think he meant it financially.
Obviously, our gadgets and our cars today are cheaper and better than in the 1950’s or the 1990’s.
But I do think there is some legitimacy to the OP claim. There is a general feeling of insecurity now; a feeling that individuals cannot control their own future, even if they work hard.
There was a similar feeling back in the 1980’s-but it was not felt on the individual level, it was seen as a national problem. That was the time when “Japan, Inc” was seen as overpowering the American economy, especially the auto industry, and there was no way to stop them. But Americans had a feeling that “we’re all in this together”.
Back then, people worried, and whispered to their friends, that “those Japanese corporations and their worker-bee employee/slaves may beat us, but it is because of their very different culture.They pledge total, undying loyalty to their companies, their culture of honor and saving face motivates their assembly line workers to work hard, etc…But at least we have our culture of western freedom. We won’t become like them, because it would destroy our national pride.” So individuals who lost their jobs blamed it on the Japs…not on the failings of our own society.And they still had hope to find another job that would provide the American dream.
Now, people realize that times have changed, permanently. The good ol’ days are over.
So, yes, many people feel ( as the OP says) “poorer” than previous generations.
They know * for sure* that there is no such thing as a good job and a financially secure future.
And that is a new phenomenon in recent American history.
You’re correct that it will be the first WESTERN generation to be poorer than the preceding one. With globalization, we’re going to have to compete with a lot of well-educated foreigners. Even with current income levels, people in the West are paid at least 5-6 times more than university-educated people in developing countries. This is despite the fact that they work 10-12 hour days.
Also, using median household earnings isn’t a perfect way to measure prosperity. If you look at the fact that CPI takes into account rent, which has been abnormally low due to interest rates, you’ll see that using normal rental prices derived from the property price would give you a much higher rate of inflation. Therefore, you’re underestimating past income levels and thus real income has barely grown in the past decade. I would also argue that the main expense and symbol of prosperity for most people is their home. Even if real income has risen, housing prices (at least in Canada and much of Europe) has grown much faster. A typical family home in my area has doubled from $400k to about $800k in the past decade. That requires 7% per year growth in your paycheque figure. By the time the millennials grow up, they definitely won’t be able to afford a house (in the cities) like their parents. How are they supposed to a 20% deposit on a million-dollar home with stagnating income growth? At best, they can hope to raise a family in a small apartment for most of their lives.
Besides this, millennials (my age group) seem to have forgotten the concept of saving money. If you look at historical charts, household saving used to be about 10% several decades back compared to 2-4% nowadays. Everyone seems to want the latest gadgets or a car despite the fact that they’re in student debt.
Owning a $200 cell phone isn’t equivalent to having a house, well-funded retirement, health care, debt-free education for oneself and ones kids, some level of job security, investment in training workers for advancement, and the option of having a stay at home parent. Gadgets are fun, but they are a drop in the bucket when comes to the instability and fundamental problems the current generation faces.
