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ITulipers,
I wrote the following response to an article by Dr. Russel Eckel back in March of 2008. It reveals more about myself than I believe that I have done thus far on this forum. Still, after coming across it today for the first time in more than two years, I think that it bears repeating for the community. It consists of my views on generational economics at the time and was originally posted here.
Thank you all for the thoughtful and practical debate I find here.
-Dan
I wrote the following response to an article by Dr. Russel Eckel back in March of 2008. It reveals more about myself than I believe that I have done thus far on this forum. Still, after coming across it today for the first time in more than two years, I think that it bears repeating for the community. It consists of my views on generational economics at the time and was originally posted here.
- Dan Carrigg Says:
March 10th, 2008 at 7:44 am You’ve done a good job at naming a phenomenon that many (especially those in my age group ‘millenials’) have intrinsically noticed. The supposed ‘boom’ from ‘03 until now did not help us out. Most of us are saddled with debt from student loans, and many more I am noticing are unemployed as of late. We all knew that we were completely priced out of the housing market. In fact, this has been a subject much talked about for the last four years, if only amongst ourselves.
Having little to no market investment, this recession (I’m willing to take the risk of calling it that) will not hurt us on that end. Housing price downturns will not matter to a generation that (at least in the more urban areas of the country) never had a chance to own. What will be of huge issue, though, is the job market. Millennials, while they have the least to loose here, will be targeted for job cuts at least as much as boomers are shuffled into retirement.
From here, it definitely feels like we have less of a chance to live as well as our parents had. I think that this is an often unspoken, yet accepted fact. Often as I feel debt closing in on all sides, I find myself locked in argument with boomers who insist that things were just as tough when they were this age. The debt to income ratio does not bear this out.
Point being, some worked full time and went to night school, but almost everyone I can think of (who can find full time employment) is doing this now. Student loans are crippling. Try finding a studio apartment anywhere in the Northeast where jobs are available and you will be paying no less than $700/mo. … more than most boomers' mortgages (those who did not max out home equity loans). At entry level wages, rent becomes two weeks' pay…and student loans become the third. Try paying all of your bills, food, and gas with $400/mo. and then wonder why gen y is not willing to put in the time at entry level. It immediately seems like a better option to re-enroll in school, defer loans, and try your best juggling work and school all the while hoping for better opportunities on the other side.
There are many reasons for this. New homes were built too large and opulent. There is nothing wrong with raising a family in a humble ranch (no, we don’t even need a dishwasher). I cannot speak for the whole generation, but I am sure that many of us are used to less than stellar amenities and could continue to live without optional equipment.
Secondly, I think that boomers created a “giant sucking sound” long before the liquidity crisis in the form of home equity loans. They took out $1.5 trillion in 2005 alone (about 15% of US GDP). Much of that went to the spoiled among this generation who got away without massive student loan debt. They may be a different case than the one I am presenting here. All the same, home equity loans focused a large amount of our national wealth in the hands of one generation (most silents I’ve talked to have even found this strange).
Thirdly, there is another confusing force at work here. One only needs to see the expansion of gambling in the form of state programs and casinos to start to feel it. Many millenials, myself included, earned more take home pay from tips (in some cases twice as much) than we do in entry-level pay. To be sure, total compensation packages help round this out, but the reduction in spending power is easy to feel. People are tipping more. 20% at restaurants is becoming common in an age of increasing meal and drink prices. People are also gambling more. Even the expansion of 401(k)s and 403(b)s is a testament to that. By the way, it is extremely rare these days for low-paying public jobs to provide a pension for millennials. They commonly phased those out for people born after 1978 (after gen x).
Finally an interesting shift has happened between ‘excess’ or ‘luxury’ items and basic necessities. I like to think of this as a ratio between pairs of jeans and houses. Since 1950 this has migrated from 1:300 to about 1:10,000. Now wonder why we ‘don’t take care of our crap’ and throw things away so often. Perhaps if the cost of necessities (housing, energy, food) continues to rise tailors and cobblers will come back into fashion, but as long as super-cheap labor inputs are plugged firmly into the system, I’d doubt it.
What’s the lesson here? I do not think that all of the ’self-esteem in the classroom’ proponents of describing the millennial generation see the bigger socio-economic picture. We’ve been expected to work longer hours and go to school longer than past generations. While the work is not tough (in a physical sense) and the times are not too trying (as of 2008!), it does not take a prophet to see that once detached from the huge buying power of boomers we have negative earning power. Moreover, walking into a company that expects you to gleefully join the “excel army” (I’ve coined the term, and I’m rather fond of it) while you can plainly see that processes are outdated, slow, and that if they were to hire a computer programming consultant for six months they could eliminate two jobs, is depressing. Spending all day doing what an algorithm could do and knowing that fact is depressing…and there are many people doing just that.
It takes a while, I think, for this generation to get used to process-oriented thinking. We tended to have systemic thinking thrust upon us, and we tend to go about our business assuming that pushing for systemic understanding and efficiency is important, not the details…that’s what spell-check is for. You pointed this out in your Obama-Clinton article (the author of the blog on which this was posted), but it should be repeated that we grew up learning about ‘ecosystems’ and ‘economic systems’ and ‘computer systems’ and systems after systems after systems. Not processes.
Moreover, computers have a way of being able to solve most routine processes (think grammar check, spell check, etc. etc.). While an older manager may not be so aware of this, we generally know it to be true. But what we generally miss until later is that, for now, the process is still important. Learning processes is the mode of thought ingrained in most boomers and gen xers, and it is neither to be disrespected, nor trifled with. There is a certain value to “the way things are done” even if it is hard for us to see. Acknowledging that, and remembering it, I believe will serve millennials well.
-Dan
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