economic perspective of a millennial

[Thailandnotes]

“A baby born in 1956 would have graduated from high school in about 1974, from college in 1978 or so. Look at almost any historical chart of the American economy, and you see two sharp breaks in the 1970s. First, in 1974, household incomes, which had been rising since World War II, flattened. Real wages started to stagnate. The poverty rate stopped falling. Health insurance coverage stopped rising. Those trends have continued ever since.

"Second, a little later in the decade, around the time today’s 55-year-olds graduated from college (if they did—fewer than 30 percent have a four-year degree), inequality began its sharp rise, and the share of national income going to the bottom 40 percent began to fall. Productivity and wages, which had tended to keep pace, began to diverge, meaning that workers began seeing little of the benefits of their own productivity gains. The number of jobs in manufacturing peaked and began to drop sharply…If there was ever going to be a generational war in this country, that high school class of ’74 would be its Mason-Dixon line.”

Thirty More Years of Hell

http://jacobinmag.com/blog/2012/02/t...years-of-hell/

[jk]

Re: economic perspective of a millennial

thanks. links to links, interesting byways. and as illustrated in one of the links, a bbc blog "dream on," i doubt today's millennials are more radical or idealistic than the boomers were in the late '60s and early '70s. of course the difference is that the latter had the spoils of wwii to play with, as pointed out in 30 more years of hell.

[davidstvz]

Re: economic perspective of a millennial

Fascinating. I'm surprised there is no mention of oil though. Isn't there a pretty obvious connection between US oil peaking in the 70's and the slow and steady decline of real income from there on out? And now world oil peaking leading to an ongoing global economic catastrophe. The financial system stopped working because the economy stopped growing. It stopped growing because the energy has been cut off? Am I simplifying too much here?

[Master Shake]

Re: economic perspective of a millennial

Well, that's 10 minutes of my life I won't get back.

[Thailandnotes]

Re: economic perspective of a millennial

Well, that's 10 minutes of my life I won't get back.

Actually, I hesitated posting it, but I had just been to a wedding and chatted with a bunch of people age 25. I've known several of them since they were 12. They were on the same page.

[thriftyandboringinohio]

Re: economic perspective of a millennial

I finally read it. Rather long-winded, but has a few good nuggets and conveys a certain mood that I see widely in my younger friends.
Student loan debt might be the flashpoint. One young friend will raise the subject at every chance. He works hard for $40K / year trying to bear a student loan payment of $1800 / month. Yes, that's half his before-tax salary.

[World Traveler]

Re: economic perspective of a millennial

Thailandnotes,

Thanks for posting. I thought article was fascinating, I even followed up on some of the links, which were equally fascinating.

I don't think some members of the baby boomer generation realize how good they had it, compared to today's young. I'm 63, so I'm on early end of the boomers (born in 1948). I started college in 1966. I worked part-time during school year and full-time in summers, attending University of Illinois. Like many of my friends, I paid my own way through college and graduated with no debt. Because jobs were easy to get, paid well compared to today, and tuition at state universities was cheap, due to the substantial university subsidy from state of Illinois, which was the norm in those days. I got a degree in history, but had no trouble finding a job, I worked for federal civil service and insurance companies for several years, at good pay, and always had my own apartment.

I got an MBA from the University of Houston (U Texas system), from 1976-1978, went full-time, and again worked my way through, graduating with minimal debt, because tuition was only $300 per semester, cheap even for then, due to the substantial subsidies from the state of Texas. And again, no help from Mom and Dad, who didn't have the means to do so. Getting a job afterwards was a breeze, I got 4 job offers and picked the highest bidder.

Try doing that today. States have cut their university subsidies to the bone, so tuition has skyrocketed. After 2 decades of off-shoring American jobs to the rest of the world, the job market today for American's young and educated is abysmal, unless they have a very specific, highly desired background (like my son, an electrical engineer who graduated with honors and is a math semi-genius).

Today's young people really do face a much harsher environment than we did as young people. The question is, how do we, as a nation, make the U.S. the land of dreams and opportunities for them, as it was in my youth.

[dcarrigg]

Re: economic perspective of a millennial

I finally read it. Rather long-winded, but has a few good nuggets and conveys a certain mood that I see widely in my younger friends.
Student loan debt might be the flashpoint. One young friend will raise the subject at every chance. He works hard for $40K / year trying to bear a student loan payment of $1800 / month. Yes, that's half his before-tax salary.

It's no longer something you can thumb your nose at. A lot of people are glib about student loans, and blame the kids for not majoring in business or engineering. But even if you are the type to deem a liberal arts education worthless (which I am not), how many kids do you know who have everything figured out and make brilliant financial moves at 18?

Soon student loans will soon outmatch home equity loans in raw volume of debt. It's the only consumer debt type that has grown (and its growth accelerated) through the recession. Once the volume of student loan debt passes home equity loans, it has only mortgages to contend with for the crown.

Think of it. What is right now the third most common debt by type for Americans, and the fastest growing, is now a type of debt that nothing, not even bankruptcy, can absolve.

When student loans become the biggest debt segment before the bubble bursts, there could well be a generation that will never be able to pay. Throw them in prison, they'll say (and they're doing that occasionally even now). Their crime was trying to get educated.

This has to be the dumbest choice a society has made that I can think of. And yet, here we are.

Boomers had much cheaper tuition, better job prospects, student loans that were written off with bankruptcy, and no debtors' prisons.

Why should anyone expect some millennials not to feel targeted?

[thriftyandboringinohio]

Re: economic perspective of a millennial

It's no longer something you can thumb your nose at... how many kids do you know who have everything figured out and make brilliant financial moves at 18?

... a type of debt that nothing, not even bankruptcy, can absolve.

... Their crime was trying to get educated.

This has to be the dumbest choice a society has made that I can think ..

These things you mention are the ones that really infuriate my young friend. He admits he paid a little too much and took too long to graduate. But he graduated from the University of Dayton in 6 years, not some top-tier ivy league school and not ten or twelve years.

What really steams him is his private lender's total unwillingness to negotiate something more manageable for him. The kid's a natural business person and a good negotiator, he's tried hard for a couple years to get his lender to extend the period with interest so he can manage the cash flow. Fifth Third is totally inflexible, they insist on half his salary rather than a third.

There's a multitude like him in the same jam, and all smart, hard working, realistic, practical.
Not a cohort we want as adversaries.

[Master Shake]

Re: economic perspective of a millennial

Why the big student loan burden? Because the cost of college far outstripped the rate of inflation over the past 30 years? Why did the cost of college outstrip the rate of inflation for the past 30 years? Because of the government-supported funding of students loans for college and the absurd concept that everyone needs/merits/deserves a college education, regardless of whether or not they are educable.

[thriftyandboringinohio]

Re: economic perspective of a millennial

Why the big student loan burden? Because the cost of college far outstripped the rate of inflation over the past 30 years? Why did the cost of college outstrip the rate of inflation for the past 30 years? Because of the government-supported funding of students loans for college and the absurd concept that everyone needs/merits/deserves a college education, regardless of whether or not they are educable.

All good points, Master Shake. Like any bubble, a source of crazy easy credit is at the heart of it.

One unusual feature here is that student debt cannot be discharged by any method; our young professionals are stuck with this for life, too bad for them. Had my young friend borrowed the same amount of money and spent it on drugs and prostitutes, he could discharge it with a bankruptcy. Because he gave the money instead to the University of Dayton ("Catholic in our faith. Global in our mission.") he must find some way to pay back every penny, with interest. Fifth Third can and will garnish his wages and even his social security as an old man if it comes to that.

[dcarrigg]

Re: economic perspective of a millennial

Why the big student loan burden? Because the cost of college far outstripped the rate of inflation over the past 30 years? Why did the cost of college outstrip the rate of inflation for the past 30 years? Because of the government-supported funding of students loans for college and the absurd concept that everyone needs/merits/deserves a college education, regardless of whether or not they are educable.

There is certainly truth to this. I'd add in the construction boom at universities, state spending cuts, the increasingly opulent living standards, and the insane rate of growth in athletics spending to round out the picture.

Regardless of all of this, it is not the 18 year old kid's fault. Especially when (s)he think they're doing the right thing and doesn't necessarily know any better. I truly think most of these kids are well-meaning. Punishing them with the country's only form of unforgivable debt still seems over-the-top to me. This is not even to mention some of the more predatory tactics of the for-profit institutions.

Sure, nobody made them do it, but they're young and don't know better. This is especially true when they repeatedly hear the "go to college, get ahead" mantra throughout high school, at home, and in the media.

If they come out in their 20s, in debt, unemployed, and therefore angry, why should we be surprised?

Still, private research institutions rely much more on gifts and endowments than you may realize - it's about half of their income (more than cumulative tuition). They get to play the capital gains game. The public institutions cannot generally do this - certainly not as well because of the history of the different types of institutions, so they fall behind, or make it up in other ways.

Oh, and just to put some data behind the expenditures:

[jpatter666]

Re: economic perspective of a millennial

Why the big student loan burden? Because the cost of college far outstripped the rate of inflation over the past 30 years? Why did the cost of college outstrip the rate of inflation for the past 30 years? Because of the government-supported funding of students loans for college and the absurd concept that everyone needs/merits/deserves a college education, regardless of whether or not they are educable.

This has been discussed before, but I also blame colleges that seemed more interested in creating the ultimate leisure resort than an institution of learning.

[lektrode]

Re: economic perspective of a millennial

“A baby born in 1956 would have graduated from high school in about 1974, from college in 1978 or so. Look at almost any historical chart of the American economy, and you see two sharp breaks in the 1970s. First, in 1974, household incomes, which had been rising since World War II, flattened. ..
…If there was ever going to be a generational war in this country, that high school class of ’74 would be its Mason-Dixon line.”
...

lets see: my parents separated/divorced beginning then (after MA put one of the 1st no-fault auto ins laws on the books, thus decimating my ole mans biz) - check.

grad'd HS in '76 - no chance or interest in college - check.

took night jobs in factories (so could ski 7days/week) - saw no future after 2nd one bankrupted by united steel union - check

forced by lack of income in 1981-82 to leave the comfort of home and seek opportunity (during the 81-82 downturn) - took job paying slightly more than min wage - check.

by mid 80's: saw no future in manufacturing (for a former skibum w no degree) - check.

fast forward 30years: economic devastation (along with .gov ineptitude) crushes whats left of my small biz - check.

yep - if there ever was a generational mason-dixon line, would say that we've crossed it (again)
and are headed south... metaphorically speaking...

[lektrode]

Re: economic perspective of a millennial

Why the big student loan burden? Because the cost of college far outstripped the rate of inflation over the past 30 years? Why did the cost of college outstrip the rate of inflation for the past 30 years? Because of the government-supported funding of students loans for college and the absurd concept that everyone needs/merits/deserves a college education, regardless of whether or not they are educable.

+1

just like pretty much everything else the .gov "helps us with" and then turns to shit, while the political class makes hay with, that lower manhattan then ships off to the cayman islands....

with nearly all of it directly the result of liberal feel good politix/policies, leading directly to the great meltdown of 2008-09, capped/crowned by what? bailouts of the banksters, give-aways to the med insurers/drug co's, bailouts of the auto unions (while screwing the stockholders and used car buyers), another 5or6 TRILLION in national debt, while nearly 50% of US are on some sort of public/taxpayer funded program or another?

and thats just the past 4 years....

beautiful!

even osama couldnt have done a better job....