The Angst of the Millennials is Financial

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Y’all, we’re struggling.

And the Urban Institute, a nonpartisan economic and social policy research firm, has the numbers to back it up.

According to the Urban Institute’s report, average household net worth, even with the fallout from the Great Recession, nearly doubled from 1983 to 2010, but not for those born after 1970. Their average inflation-adjusted wealth in 2010 was 7 percent below similarly aged individuals in 1983.

If you are of a certain age, say mid-20s to about the late 30s, you are most likely going to be worth less than your parents when you reach their age. Also, your economic outlook beyond that is pretty gloomy: a less stable retirement and the prospect of having to work harder, longer in life.

Ten dollar wallet

Folks of a certain generation — ours — are working awful hard to be less financially secure than our parents were.

Why? Because we’re worth less now, and the prospects are poor for us being worth any more any time soon.

This hinges on several factors.

For one, the thing that we were raised to believe would be the smartest investment we’d ever make – home ownership – ain’t what it used to be. Even the most financially vulnerable among us could count on the continued value owning a home would give us. We could even use the equity in said home over time to take out relatively low-interest debt for renovations, relief from higher-interest debt (credit cards, for instance) and for other expenses as necessary. But most of us who own homes now are deeply underwater. We probably overpaid, in the first place, for a home whose value was artificially inflated by the housing bubble, and now the home is worth less than it was when we purchased it.

In addition, to get into the home in the first place, many of us accepted some of the other financing mechanisms that were once quite popular, like the interest-only loan, or the adjustable rate loan, rather than the 30-year fixed option that most of our parents bought into (or even 15-year fixed for some). And for many, when the interest rates climbed, foreclosures followed. For these unfortunate many, the prospect of enjoying the benefits of home ownership anytime soon is virtually nil; and what’s more, the damage done to their credit scores will make it difficult to enjoy reasonable interest rates on any form of debt anytime soon (assuming they can access debt at all, given how financing rules have tightened).

Second, wages are stagnant, but the cost of everything else continues to climb. We long for gas to be back down to $3.50 a gallon. Milk is about $5 a gallon. Global drought conditions (paired with unsavory, profit-driven market factors) mean that even more income is going toward necessities, leaving less that can be invested or saved. A dollar, saved in an interest-bearing account or invested 10 years ago is worth more today than a buck in your wallet. But if the bottom line at the end of the month is zilch (or even in the red), then there’s not really anything to save or invest. This is why so many people have so little in savings, or are a paycheck away from destitution.

(Another note on monthly expenses: I don’t know about you, but I have a cable bill. I pay for Internet, too, and that’s how I’m able to write and post this piece. I also pay a Netflix subscription, and a subscription to read the New York Times online – damn their paywall. These are luxuries, yes, unlike the water bill and power bill and gas bill. But they’re also expenses that my parents weren’t paying at our age. These non-necessities are actually pretty typical expenses for folks my age – early 30s – however, and they take a mega-bite out of the ol’ monthly budget. My parents had five television channels – including PBS and TBS – and a Blockbuster card for video rentals. Just sayin’.)

As for wages – the third part of this financial Trifecta from hell – they’ve dropped precipitously since their peak in 1999, when most of us were either in high school or just getting our first entry-level position. The prospects of them going up anytime soon aren’t very good, either. Even though the average wealth for Americans has doubled over the past 50 years, adults age 40 and younger have accrued substantially less wealth than their parents – even as they’ve paid more for housing, more for college and more in monthly expenses like fuel, groceries and, well, “niceties.”

Raises? Forget about it. What you make walking in the door is what you can expect to keep making in most industries. And with the job market being what it is, most of the time you’re just glad you can walk in the door at all.

The Urban Institute suggests some relief, but it’d have to come in the form of federal regulations that would require employers to automatically enroll employees in retirement accounts that would require that the employee would have to intentionally opt out, or programs to make home ownership even more affordable for low-income families (of which there are more and more).

Those are steps. And I can’t propose any better or find any fault with them. There are other ideas that come to mind – an agriculture bill that would make a meaningful impact in the cost of groceries, for instance – but that’s just a drop in the pond.

So the generation that has been loathed for a poor work ethic, for “odyssey years” without gainful employment, for being layabouts and burdens may still have an excuse: there’s simply little incentive to aim for more. We’ve had our wars, our peace movements, our politics and upheavals and revolutions like our folks had; but we’ve yet to be shown a reason to hope things will get better.

“If these generations cannot accumulate wealth, they will be less able to support themselves when unexpected emergencies arise or when they eventually retire,” the researchers observed. “This financial uncertainty could reverberate throughout the economy, since entrepreneurial activity, saving, and investment tend to build on a base of confidence and growing wealth.”

If this is something you’ve come across tooling through your RSS feed in the morning, relax. Hit the snooze. Sleep in.

It’s all the same, anyway.

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