A recent opinion column on Talking Points Memo began
On Tuesday, CNBC asked, if housing is getting more affordable, “why aren’t Millennials buying?” A piece in USA Today last month called us “skittish from the recession”—Hmm, wonder why?—and Bloomberg Businessweek thinks we’re just discerning shoppers. The most egregious of the what’s-up-with-Millennials articles, however, is still a 2012 piece for The Atlantic that called Millennials “The Cheapest Generation.” It expended more than 2,000 words to explain “why Millennials aren’t buying cars or houses, and what that means for the economy.”
“The largest generation in American history might never spend as lavishly as its parents did—nor on the same things,” it reads. “Since the end of World War II, new cars and suburban houses have powered the world’s largest economy and propelled our most impressive recoveries. Millennials may have lost interest in both.”
No one, the writer noted, mentioned student debt.
I’ve made this point many times, and I will not belabor it here and now. (Okay, maybe a little.) But the fact remains that the American economy depends upon consumption. There are plenty of reasons to be concerned about a consumer economy–there are cultural consequences that are anything but pretty–but at this point in this country, those concerns are beside the point.
Anything that reduces people’s ability to buy what American businesses are selling hurts the economy, and that hurts everyone–be they “makers” or “takers,” Captains of Industry or proprietors of the local Subway.
When the great majority of Americans lack buying power–when large numbers of the working poor have no disposable income, when hundreds of thousands of college graduates (and dropouts) have little or nothing left after making the payments on their student loans–economic growth comes to a screeching halt.
The oligarchs who oppose efforts to raise the minimum wage, the lackeys they’ve installed in elective office who are eviscerating unions under the rubric of “right to work,” and the retail and fast-food operators who are expanding their bottom lines by paying their employees less than a living wage, among others, could learn a lot from Henry Ford. Ford was, from all accounts, a thoroughly unpleasant person, but he understood a key fact that escapes too many of today’s poobahs: his profits–the success of his business– depended upon workers who were paid enough to afford his cars.
He understood something that is becoming clearer every day: pigs may get fed, but hogs get slaughtered.
Sometimes it’s useful to consider the economy from the simplest perspective. It’s both everything that we labor for, and everything that we have. All of us together.
There is some evidence that the more that we have, accumulate, the harder we are inspired to labor. Although, among the many retired folks that I know, laboring seems more a way of life than an accumulation strategy.
When I look from a broader perspective though I also see evidence comparing Americans in general to other cultures that I’ve experienced that suggests we work harder than others for the latest shiny object which the more one has the less valuable they seem.
Are there cultural options that are practical to reach? Consider a return to our previous cultural standards of wealth distribution. The American dream. Start slow and a little bohemian. Have that first little house and functional car and still worry about the bills as training for responsible money management. Move up as responsibility and maturity and value to the economy grows. Let your kids experience some going without in their formative years.
Most of us consider having such as a good rewarding life. Are the milenials seeing that as well, despite mass media’s constant advertising that they are entitled to more? And more? And more?
Perhaps they’ll hold a mirror up to those who revel in excess and show them how rediculous they look. Perhaps they’ll be the first generation to see that all of that excess sucks up not only labor which could be better invested but also natural resources from our dwindling account. History will judge us by not what we accumulated but by what we landfilled.
The biggest obstacle between our culture of excess and that of satisfaction? Wait for it. Oligarchy. If they own the country they will define their rediculousness as the standard. The millenials get less; the future gets less; the earth gets screwed; but the oligarchs get strut. Pomp. Power.
We dreamt the American dream because it was a tribute to life well lived. The millenials can still have that dream. After we the people resume democracy.
I am the Aunt of a millenial. She’s not cheap. She buys carefully. She buys quality items that will last. She IS frugal. She’s fortunate that she has no student debt but, has watched her friends struggle, and friends of her parents struggle to stay employed, to make enough money to keep houses. She’s reticent to take on huge debt. Many of her generation don’t trust the stability of the economy or the current Congress or captains of industry.
As far as housing being affordable. It isn’t when it’s more than 30% of your take-home income.
We need party leaders that do NOT bow and scrape to wall street. Both parties do that now. See Bill Moyers program from last Friday night on PBS
How can anyone afford a house even when interest rates are below 5%? The bankers made it nearly impossible for anyone to qualify for a loan unless you make 6 figures and have minimal debt. If a 20-30 something person graduated from college with 40k in debt and only makes 40k a year, they will never be able to save up for a house. Never. The bankers want 20% down and unless their parents can fork over a down payment, they will not be able to save that much money. Their boomer parents probably got downsized and used their 401k savings to either help pay for the kids college or to survive while they searched over a year or more for another job. The GOP, they built that and with no help from the Democrats.
It is time to begin educating ourselves what we as individuals and a global society must do to survive. Rifken, Klein and many others are writing to help us. Until we read the specifics, and until political, cultural leaders, religious and secular leaders trumpet those specifics we will not make enough progress. Let the trumpeting begin!
Let us not forget our smaller, “regular” bills such as charge card interest we pay out which is unconscionable vs. less than 1% interest income on CDs and/or savings accounts which should be embarrassing for banks to offer or print on our statements. We must factor into buying decisions the incompetence in all workplaces; how many vehicle manufacturers have recalled millions of their products due to lack of safety – which they should have been aware of before putting these vehicles on our roads. How much higher do their mistakes and incompetence run up our costs? I can’t speak to the housing market as I live in a 60 year old house that can be expected to be falling apart. The media plays a large part in what we buy and where we buy it but priorities in all media has become questionable in content and in fact. Look at the front page of the Indianapolis Star today; with all that is going on locally, nationally and world-wide, pet medications takes up much of the first section of the paper. I don’t remember seeing headlines this size since Bin Laden was killed; it did have a larger picture but I believe the print was smaller. Big Business = Big Money = Big Politicians = ripping off the middle income and below who support all of the above in the style to which they have become accustomed. On my barely above federal poverty level income (I’m one of those on the government tit living on Social Security and PERF); I’m hanging onto every penny waiting to see which dies first, my 18 year old Pontiac Sunfire or my furnace of indeterminate age.
It is important to look at that old black and white photo of the 1950’s and early 1960’s of our economy. The Major Axis Powers of Germany, Japan and Italy had their industrial bases destroyed by Allied bombs and ground fighting . Mainland China had emerged not only from a War with Japan, but also a Civil War.
Our “Boomer” Generation simply did not have to compete in it’s early stages with our former rivals and Allies. They were still recovering from WW 2. My Baby Boomer memory may be cloudy but the vast majority of the Consumer Goods we bought were Made in the USA. Now our Industrial Base that has been gutted – by so called Free Trade.
The once solid and dependable jobs spread out across the USA that provided Health Care and a Retirement check from your company are no more. Union busting and off shoring of jobs have led to an economy where you the worker are disposable. Consequently there is the real fear your job could be gone to tomorrow.
I have posted this Alan Watts’ quote before but it bears repeating, “Man is going to computerize himself out of existence.” This plays a big part in the employment condition today which, of course, controls our buying power. ’tis the season; but many will have another bleak holiday celebration just trying to survive. Wonder how the Koch brothers are celebrating the holiday; or are they only celebratiang the outcome of the November 4th election?
JoAnn – on the contrary, technology has the potential to level the playing field: my grandchildren will live by their smarts, what they need they can build w/their computer and a 3D printer, grow most of their food, produce failing body parts. We went to the moon. They can survive life here.
My only knowledge of this is anecdotal as a parent of two Millennials. But the quote you mentioned applies to them. They have no interest in suburban homes or automobiles.
They don’t have student loan debt, they have good jobs, they could buy those things. But they don’t want them.
They want to live in urban areas. They don’t want a car, don’t need it, no place to park it anyway. They can grab a Zipcar when they need wheels.
They spend lavishly, but on different things.
I’m with Chuck. And also they value their mobility. Nothing in the last 5-6 years could do more to inhibit mobility than owning a home, especially one that is worth less than what you paid for it when you want to sell it. And even worse if the outstanding mortgage balance is greater than what the market will yield. It may be temporary, but it could also signal (as many writers have asserted) that the real estate crash of ’08 was seminal and will change purchasing behavior for decades to come. Just like the effect the Great Depression had on my parents generation. I don’t think it is, because the people of this great nation seemingly have little capacity for remembering anything that wasn’t on their Twitter or Facebook page this morning.
But giving the Millennials the benefit of the doubt, I believe they are making rational decisions in a micro-economic sense. The decent paying jobs with opportunities for career advancement are mostly in the big urban centers where real estate is very expensive. Combine that with mortgage lending policies that require 20% down, a pristine credit score and NO other significant debt, INCLUDING student loans, and you’ve priced a $250,000 apartment out of the reach of anyone under 40. And besides, many young adults see other things in the world they’d much prefer to spend their discretionary income on.
Sorry to put this in, but I have this pet peeve about old Henry Ford. He did recognize that building a cheap car and paying his employees relatively well so that they could afford it was making money for him, but he did NOT plan that. It was a fortunate accident that he did have the good sense to recognize was helping his bottom line. He hated unions, didn’t want to build the Model T and only paid better wages to reduce his 50% turnover rate. People hated working on the assembly line and kept quitting. — sorry – rant over
To add to my earlier comment regarding vehicle manufacturers recalling milions of their products due to unsafe features, I found an interesting article on Huff Post Business report dated yesterday, 12/15/14. “GM Death Toll Related To Ignition Switches Rises To 42” While 42 deaths doesn’t sound like a worthwhile issue to report; ask the families and friends to those specific 42 who were killed due to GM negligence. The GM attorney in charge of paying off these victims stated they have received 251 death claims and 2,075 injury claims since August. GM knew about the faulty ignition switches in Chevrolet Cobalts and other small cars for more than a decade but didn’t begin recalls till February. No number of these specific recalls was reported. Where were these faulty ignition switches manufactured? Where were they installed in vehicles and why did no one begin recalls for more than a decade when they were aware of this life threatening issue? Why are there millions of vehicles being recalled due to faulty parts and incompetence of employees at all levels except for the mega-bucks going to the 1% who rule this country by shipping jobs to foreign countries? Why should Americans spend their hard-earned, less-in-value dollars on a product that could kill them? My father retired 40 years ago from GM after 37 years of hard labor; they were trusted American manufacturers for many years. This should evidence the reduction in quality of products since shipping work to foreign countries which also cut jobs to American citizens, who are the primary purchasers of these products. Buying power means little if the quality of products you buy cannot be trusted…or can kill you.
My daughter-in-law worked at Rolls Royce for years; she was “laid off” a year ago, her unemployment ended months ago and as of January 1st her Rolls Royce sub pay will end leaving her with no income. She can reapply for her former postion at minimum wage! Is this America? Prior to working at Rolls Royce, she worked production line at Ford Motor Company on English Avenue. She has worked production line, manual labor all her adult life except for a few low-level jobs between Ford and Rolls to feed her family and will have no buying power after January 1st, joining the escalating ranks of the poor in America. She will probably join the ranks of those whose homes were repossessed due to her inability to make mortgage payments. I will have better buying power on my barely above federal poverty level income on Social Security and PERF. After January 1, 2015, when Republicans take over the Senate and their maintained control of the House, we will soon begin looking back on these times as “the good old days”. And, God in all his forms forbid, the possibility of Pence as president after 2016.