Let’s Give Millennials a Break

During a hike in Utah, a woman walking alone asked my wife and me for directions and we ended up spending about fifteen minutes talking about all kinds of things, including our twenty-something children. Her college educated son works for $14/hour doing the things he loves. He lives in beautiful Park City, Utah, and works for a resort doing golf course work in the summer and snow work in the winter. In his life, there is a fine line between work and recreation and he’s happy.

Her husband works for Fidelity Investments and even at that traditional institution, workplace changes have been made to accommodate the younger workforce. One of the more troubling things for her husband is the change in the office dress code. Now every day is a casual day and the Baby Boomers are having some difficulty accepting the change. I did not say it at the time, but I don’t feel a casual dress code is a big deal.

Let’s think about what that generation has gone through so far. We elders have given them a world which is not in the best of shape. We have also made promises that we have broken, and we have taken actions which make their futures very uncertain. With all that in mind, is it really a bad thing to have jeans in the workplace?

So, what am I talking about? We told them that they had to get a college education and in the process, acquire decades worth of debt. With that college degree, we told them, they would be successful. Then we made very bad financial decisions – with the criminally negligent assistance of financial institutions – and drove the world into the most severe economic downturn since the Great Depression. The newly graduated Millennials entered “adulthood” with a huge debt burden, extremely poor job prospects and little opportunity to begin their independent lives.

The economy has improved and the job prospects are better, but that rough start left a lasting impression. This is not a generation that needs a lot of stuff. Many saw their parents lose everything because the house was lost to foreclosure, or the retirement plan was lost to an employer’s bankruptcy. If it wasn’t their parents, it was some other relative or the parents of their friends. These Millennials learned to live without because they had little choice.

What about a recent graduate beginning his or her career today. Assuming the retirement age is raised to 70, the retirement party will be in 2064. Don’t reserve the hall for the party just yet. According to the Bank of England, automation will replace 50% of human jobs in the U.S. and the U.K. in the next 10-20 years. By 2064, that percentage will be much higher. This has the effect of increasing the power of those who own the robots and automation software, and reducing the power of workers who are still employed by those companies. It’s a simple supply and demand situation. With more workers competing for fewer jobs, wages and benefits will decrease.

We can’t stop automation and I am not suggesting that we try. Instead, I worry about the Millennials and how they will be able to adapt to such an uncertain future. Still, they are a resilient bunch and they have learned from our mistakes.

Baby Boomers and Gen Xers were (still are?) driven by consumerism. We bought more, we bought better, and we bought too much. The housing bubble of 2005-2007 was driven by investors’ desire to get a good return from a safe investment. In the beginning, bundled mortgages were a safe investment, but with such high demand for these products, middle and upper management at financial institutions began bundling highly questionable mortgages and calling them high quality. As a result, housing prices soared because anyone could get a mortgage on any property with no income verification. Crazy, huh? That’s my generation for you!

Not only did the Baby Boomers and Gen Xers get these crazy loans, they cashed in their equity by refinancing. And what did they do with that money they got out of their houses? They bought cars, big screen TVs, recreational vehicles, boats, etc. Take a look at the stock performance for most companies that sold consumer products during that period. It certainly paints a picture of our poor financial judgement.

So there are now more Millennials than Baby Boomers, and we elders are waiting for them to take up the consumerism charge, but they have little incentive to do so. One way to think of John Maynard Keynes’ Paradox of Thrift principal is that it is better for the individual to save more and spend less, but it is worse for the economy if everyone does it. The country needs this largest generation to buy stuff to keep the recovery going, but this generation doesn’t buy what it doesn’t need because they have experienced the negative effects of others’ overindulgences.

House and car ownership by Millennials is low and in general, they like to live in a way that has minimal negative impact on the environment. Many in this generation are freelancers or entrepreneurs and can choose where and how to live. Again – not good for the older generation.

So now we older Americans are affected by the actions of the younger generation. Without them buying more stuff, there will be fewer jobs and less money going into Social Security to support our retirements. There will be less money going into Medicare to pay for our doctor and hospital bills. Because only the first $118,500 of wages is subject to Social Security tax, the ever increasing number of “very rich” have no positive impact on the Social Security program, so we need the Millennials.

That’s certainly a switch, isn’t it? After years of “Get off my lawn!” thinking with respect to the younger generation, we now want them to act as irresponsibly as we have. We want them to support our habit, so to speak.

OR… we can change our behavior to support them. Maybe we should behave in a way that gives them hope. Our “Me first” attitudes haven’t given the younger generation the confidence to move forward. Our news streams spend a lot of time telling how bad things are, even when there are positive data to report. If we were to become more philanthropic and equitable, Millennials may begin to feel hopeful. With that hope comes children and a lot of money is spent on children.

So, let’s give Millennials a break and start acting in a way that gives them hope. I believe that is the best way to benefit all generations in this amazingly complicated country.

About tonyj126

I'm a 50+ married man who always seems to have a large backlog of work to do, but also a lot of flexibility in my schedule. Much of the work I do is volunteer or taking care of extended family members. I suffer from, as my priest calls it, "the sin of self-sufficiency," which means I can figure out how to do most things myself, and consequently, reduce the need for community to solve problems. As a logical extention (at least to me), I find myself called to comtemplate the country's and the world's woes and offer my observations. I hope someone out there will find them useful.
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