It's difficult to overstate just how badly the Millennial generation are doing relative to their Baby Boomer parents. Regardless of the financial or economic metric you look at, the outlook is grim. A recently released report, using data from the Federal Reserve (and therefore, highly likely to underestimate the magnitude of the problem) is only the most recent confirmation in what is beginning to feel like one of my most frequent complaints about the current financial system.
Net worth is as "good" a place as any to start. Using the Fed's own numbers, Millennials are worth only $10,900 compared to Boomers' $25,035 at the same age. That's almost 150% more for the Boomers, and holy hell is the outlook bad when you correct for a realistic inflation rate. Boomers were probably worth more than triple, or even quadruple, in real goods at the same age as Millennials today.
That's not too surprising when you consider how annual expenses work and look at the difference between Boomer and Millennial salaries in 1989/2013. Boomers made $50,910 annually vs. the Millennial's $40,581 in 2013. Let's not even get into the difference in real purchasing power we'd see if we corrected for a non-hedonically adjusted inflation rate.
"But Lexiconical," you stammer, "aren't the Millenials a better educated generation, going to college and graduate school at record rates? Won't this long-term approach result in the tortoise overtaking the hare in the long race of like?"
In a word, no. This whole "education" story you've been sold recently is a bunch of hooey. Despite the massive amount of student loans this generation has been forced into on the railroaded-path to permanent financial servitude, we are still making substantially less in 2013 than Boomers were with similar credentials. Millenials with degrees averaged $50,000 - better, but still less than the average Boomer, most of which had no degree.
This just drives home a point I was telling students a decade ago - today's Bachelor's Degree is yesterday's High School diploma. Little did I know I was actually under, not over, selling the magnitude of the degree inflation caused by shoehorning endless students with no long-term plan into six-figure debts for Macrame and Gender Studies degrees.
It's no surprise that cryptocurrencies are most popular with the Millenial group. They are the ones most in desperate need of an escape from the fiat-inflation value extraction cycle perpetuated by most corporations mainstream governments.
I guess this is where one might say "buy Bitcoin."
The effects on the global, US $ based financial system when Millenials are expected to take over the crown of "economic core/primary spenders" are going to be disastrous. The money simply won't be there.
It will either be gone, or on a public ledger somewhere, in blockchain form. Bad news for future Bear Stearns/Lehman Brothers 2.0.
Disclaimer: This is not financial advice and I am not a financial advisor.
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Sources: Google, Young Invincibles.org, US Census, US Federal Reserve, Fortune, ZH
Copyright: YoungInvincibles.org, TheCollegeInvestor.com, Reddit
You are telling me, it is getting really bad here in Toronto.
Asset price inflation has been the greatest negative for Millennials. Using California numbers (I know high cost of living) the average home price is 10 times the average income. Historically people were able to purchase homes at 3 times income. To save a traditional downpayment, fund retirement and pay for all other basic living expenses is an impossible task on income that has not increased since the 70s. Basically unless you were smart enough to study, understand and excel at Computer Science you are screwed.
Central bank creating asset bubble after asset bubble is the worst thing to happen in the 21st century. #endthefed
I don't know what is, call it inflation or call it depreciation of money but one thing is clear and that is wealthy getting wealthier and poor getting poorer.
I'm from the generation just before yours, and it's not much better for us. For what it's worth, we're the ones the media used to lament about, yet somehow we have survived and aren't all homeless or drug addicted. We are however deeply in debt, working too many hours, neglecting children sent to crumbling schools in which teachers are losing interest in teaching, completely insecure about retirement, while also taking care of aging parents. Some of us own homes, but many can only afford it if we first work in a big city for a decade or two, then move away from the life we've known to start over someplace less expensive. (That's what I'm about to do.)
I think the problem is that the raison d'etre of neoliberalism is to lower the cost of production to as close to zero as is possible, and human labor is the primary cost of production. So since we switched away from Keynesian economics to NL in the 70s we've been in a slow death spiral. It can't improve for us if the system is in fact doing what it is designed to do. We're just in general too poorly educated to actually understand what it is designed to do, so you have people basically voting for their own exploitation.
Crypto to the rescue! Seriously, I do think that it is the trump card in the deck. That's why it frightens the hell out of so many of the old guard. How will they get you to volunteer to serve in their army to protect their access to exploited global resources if you aren't pretty much an indentured servant?
Many people are in the same boat. Here in Melbourne, cost of housing in established decent areas are pushing a million+ you can still get something for 450k if you dont mind living 45mins from cbd on a 200m block in a paddock, you know developers paid nothing for.
Its good information. I agree with your blog. Thanks for sharing such a good post.
Most millenials I know drive a nicer car than I can afford.
Economic vampires everywhere, hoarding money & spending it only to create systems & laws to take more from future generations. They create heirs with huge fortunes, but the world they leave behind to live in only gets worse & worse for everyone, heirs included.
The next planned “collapse” will result in even more economic inequality, more debt for the bottom 90% & those 1%ers everyone complained about for a little bit, will turn their billions into trillions. The “hippy” generation was laughed at & moved to the suburbs & became critically indebted by banks promising them prosperity.
You can’t take money with you, might as well use those resources to create a better world before you leave.
Yep.. I guess I'm still considered as a millenial depending on when you start counting (35 y/o right now) and I certainly always have felt that my generation is fighting an uphill battle. Everything is owned, every good job is taken. I've never had an actual non-temporary contract, and my net worth is so low that I'm not even going to mention it here. It's not that I don't have skills or abilities, as I am university schooled like the millenials in your post.
I think Bitcoin is indeed going to shake things up though. This is one thing that millenials do get and which older generations don't seem to get.
With Bitcoin and blockchain millenials, often seen as a kind of 'useless generation' are going to end up revolutionizing the world in ways that other generations can only dream of, it's going to turn out I think.
Curious to know Lexi, what age are you? Since you wrote about a decade ago!
I think I might be a millennial but Im not sure.
That's why I am working at a factory and commuting to pay my way through college. Won't take out another federal student loan after my first semester. It is immoral to have debt you do not expect to pay and it is immoral how US debt is backed. I may lack a social life now, but once I am out of college, I will have nearly complete economic freedom and a degree in CS backed by real know how knowledge.
You have a minor typo in the following sentence:
it should be millennia instead of millenia.No, actually it should be millennial.
I hate my n key.
Thanks.
Your proofreading needs a grammar nazi of its own 😂
Thanks for the post
i've always loved the word hooey. so thanks for using it in this post, it made me smile. i like smiling, it's important ;)
Really true, in my opinion the educational system and the banks which provides the education loans both play an collective role and people who lack the handsome money they really get effected due to this and their children then lack the seat of the school or college which their parents dreamed about and literally speaking nowadays education and house loans are really pushing people into debt trap. Thanks for sharing and wishing you an great day. Stay blessed. 🙂
I honestly don't know what to believe. Stats can be manipulated ie stats like most people dont have $500 in savings. Well savings accounts don't pay crap so of course nobody lets money sit in savings, that doesn't mean they don't have money in crypto, vanguard, stocks, checking accounts, cash, gold, silver, etc.
Not saying this isn't true but stats can be manipulated and the media loves doing these articles about how screwed millenials are, yet the next week I'll see an article about how a huge percentage of millenials have over $100,000 in savings. Of course they kind of twist which ages fall into millenials. It used to seem the media meant under 25 years of age however now were seeing millenials tagged as being upwards of 40 years of age.
Very interesting discussion though. I think some millenials are screwed and some saw what happenned in 2008 and are taking their finances seriously.
To get a clearer picture we can look at the effect that technological innovation has on increased efficiency per worker, or how the massive population growth in other nations suppresses wages for some industries, along with the destruction of tariffs and taxes from trade and the opening up of some labor markets over the past decades.
Way too many factors pushing wages down and too much money printed going into the pockets of those who already own all the assets, so it's to be expected that the working class who need to buy into those assets is screwed.
Crypto to save the children!
There are so many reasons for this generation being screwed but deep inside me I just have this feeling things might turn out fine than expected. Of course each individual has to re-educate themselves financially as the school system dows not teach financisl literacy. This is an interesting read
Universities and bankers that are taking advantage of young students with student loans are going to be in for a rude surprise. For now the going is good but there will be a time when there is a significant revolt from students which will likely be caused be a poor job market resulting in defaulting on student loans (oh wait you can't!) . This will spread through the financial system and before you know it there is another crisis.
The one shining light for younger generations is the internet has given them a chance to find additional sources of income and the cost of starting their own business is very little.
This makes so much sense @lexiconical. I was definitely and still am driven by the failed cause of fiat currency. I can't be making excuses when there is such definite volume of capital in the digital sphere. I also watched a lot of Jetsons and dreamed of that life when I saw moms cleaning other people's houses..
I agree with you on everything you said but want to add one more point. Millennials are now pretty much in charge of their own retirement too and put it off because they "can't afford it and have plenty of time to save for retirement." Gone are the days of being able to work one company for your entire career and have them pay you a pension when you retire after 30+ years of dedicated service. Now, we are left to fend for ourselves and most people are not educated on retirement accounts because they were never taught. It is a sad state of affairs honestly. Thanks for the post!
Ivy
Hmm yes dude loan is bad thing try to go away from this system and all things that your share so good thanks to share
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But people are buying without knowing what they're doing, at the wrong time, etc. I worry that for many it's the new lottery. And I think it was comedian David Mitchell that said "the lottery is a tax on hope."
Vote out the useless leaders and usher forth a new generation!
Man, as a millennial, I can say it is much worse than they say it is. I graduated with a degree in a STEM field, and the STEM shortage is a myth. They are just saying this to get more people to study STEM to lower the traditionally good wages those fields paid. If I could do it all over again, I wouldn't have gone to college. I would of just taken free online classes on various topics and capitalized on that.