Why young people are worse off than their parents — and what to do about it

[beanhead]

I found this very interesting. He covers a lot of topics, including hoping that the US does not turn into Japan or Italy in terms of demographics.

https://www.ted.com/talks/scott_gallowa ... ubtitle=en

[captainspoke]

I think his numbers are off for 25- and 30-year olds, the different past generations and now. And this is not a rant, but an illustration.

At 25 I was just out of peace corps, and, well, quite poor. I'd just re-entered uni, and was waiting for GI bill and some kind of grant. I lived in the cheapest place possible, a poorly heated basement apartment. Uni was cheaper then, but also cheap because as a vietnam-era vet my state waived tuition (but not fees), and with GI bill and some grants, I subsisted. I also qualified for and got food stamps for a couple years in there.

Even at 30, another one of his markers, I was still in grad school, just about to leave for beijing, and this was '82-'83, looong before teaching in china was lucrative. I felt flush when they gave me my return airfare in dollars. I moved on to teach a while in taiwan, where I lived in a hostel/dorm room the whole time. Then on to seoul where I finally made some money, then tokyo. We bought our house here in '89, when I was 38yrs old. I don't fit his 25 and 30 year old mileposts at all.

My father, born in 1918, was 25 in 1943. That was the year he parachuted out of a damaged B-17, was captured, and spent the rest of the war as a POW. In 1948, at 30, he'd gotten back, married, and had the first kid. The first house I'm sure they owned was this one, which still looks like it looks in pictures I see of it back in the early 50s (with the red shutters, different color then, but basically the same). A nice little levittown-like crackerbox, which zillow tells me is estimated to be worth $129,000 today. He missed the 25 and 30yr old mileposts, too.

I have an older brother who went to uni, graduated, and then was drafted. I think he spent his 24th birthday in vietnam, and at 25 was probably staring around in amazement at being back in 'the world' (as soldiers called life back home). I'd have to check, but I don't think he had a house till his later 30s.

I have an older sister, and after graduating she spent a couple years teaching elementary school on the south side of chicago--some of her uni loans would be forgiven if she did that. She was probably finishing that work and moved north when she was 25. She later got married, and was also into her 30s before they bought a place.

People talk about high interest rates and expensive houses now, but early in reagan's 1st term ('80-'81) interest rates hit something like 18% or higher (paul volcker's solution to the inflation of the 70s). And the inflation of the 70s (and stagflation) is described this way: (and the 70s inflation was the result of deficit spending on the vietnam war and the great society)

In the winters of 1972 and 1973, Burns began to worry about inflation. In 1973, inflation more than doubled to 8.8%. Later in the decade, it would go to 12%. By 1980, inflation was at 14%. Was the United States about to become another, post-WWI Weimar Republic experiencing the brutal effects of crippling inflation? Some actually thought that the era of the great inflation was a good thing. The Great Inflation period would finally come to an end once later Fed chair Paul Volcker pursued a bold but painful contractionary money policy to control it.

Earlier and mid 70s there were the oil shocks, and sometime in there the US stock market lost half its value--a 50% decline.

I would suggest that in comparison, more recent things like the 2008-2009 great recession, and the covid/corona pandemic were handled (muddled thru?) comparatively well. The inflation these days? --Imagine the 70s when it was 8, then 12, and then 14%.

blah, blah, blah...

[Tsumitate Wrestler]

I would suggest that in comparison, more recent things like the 2008-2009 great recession, and the covid/corona pandemic were handled (muddled thru?) comparatively well. The inflation these days? --Imagine the 70s when it was 8, then 12, and then 14%.

blah, blah, blah...

The data tells the real story in my opinion.

https://www.statista.com/statistics/106 ... m-wage-us/

When adjusted for inflation, the 2023 federal minimum wage in the United States is around 40 percent lower than the minimum wage in 1970. Although the real dollar minimum wage in 1970 was only 1.60 U.S. dollars, when expressed in nominal 2023 dollars this increases to 12.04 U.S. dollars. This is a significant difference from the federal minimum wage in 2023 of 7.25 U.S. dollars.

[TokyoWart]

I would suggest that in comparison, more recent things like the 2008-2009 great recession, and the covid/corona pandemic were handled (muddled thru?) comparatively well. The inflation these days? --Imagine the 70s when it was 8, then 12, and then 14%.

blah, blah, blah...

The data tells the real story in my opinion.

https://www.statista.com/statistics/106 ... m-wage-us/

When adjusted for inflation, the 2023 federal minimum wage in the United States is around 40 percent lower than the minimum wage in 1970. Although the real dollar minimum wage in 1970 was only 1.60 U.S. dollars, when expressed in nominal 2023 dollars this increases to 12.04 U.S. dollars. This is a significant difference from the federal minimum wage in 2023 of 7.25 U.S. dollars.

That graph of the real value of the federal minimum wage is highly misleading. Today only about 1.3% of US hourly workers work at the minimum wage. That is the lowest fraction of the workforce working at the minimum wage level since they started gathering statistics in 1979. I agree with Captainspoke. Life is much, much better now than it was for my parents or grandparents.
https://usafacts.org/articles/minimum-w ... 0in%201979.

[Tsumitate Wrestler]

That graph of the real value of the federal minimum wage is highly misleading. Today only about 1.3% of US hourly workers work at the minimum wage. That is the lowest fraction of the workforce working at the minimum wage level since they started gathering statistics in 1979. I agree with Captainspoke. Life is much, much better now than it was for my parents or grandparents.
https://usafacts.org/articles/minimum-w ... 0in%201979.

A good point. This data from PEW suggests purchasing power has remained very flat.

Link. https://www.pewresearch.org/short-reads ... r-decades/

But despite the strong labor market, wage growth has lagged economists’ expectations. In fact, despite some ups and downs over the past several decades, today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. And what wage gains there have been have mostly flowed to the highest-paid tier of workers.

[TokyoWart]

A good point. This data from PEW suggests purchasing power has remained very flat.

Link. https://www.pewresearch.org/short-reads ... r-decades/

Yes, but here again there are important confounders (some of which are noted in that article from Pew). Benefits have risen much more than wages and that includes not just the expensive health insurance costs paid by employers but also the employer contributions to retirement accounts, student loan payments, etc, which have increased during this time period.

I think it is better to think in terms of how much employers need to pay in total compensation. That has doubled since 2001 which is greater than the change in CPI.

https://fred.stlouisfed.org/series/CIU1010000000000I#0

And look at this table which reveals that government workers are actually more expensive than private industry workers when you consider the entirety of what they cost on an hourly basis (this despite what we hear in the US about government workers being under-paid compared to the private sector).

https://www.bls.gov/news.release/ecec.nr0.htm

[captainspoke]

Tho it probably works both ways, there are some intangibles that are not reflected in salary type of data.

One strong one might be that leaded gas was in use up till the mid 70s. Unleaded gas from then on, esp after the complete ban in the 90s, has got to be worth a boost of a few IQ points, with follow-thru effects on crime, education, and so on.

Besides significantly better mileage, cars are way safer now than then--crash/crumple zones, testing of that, steering columns that won't spear the driver, seat belts (then belts with tensioners, and shoulder belts), airbags, etc.

I can remember going to a local school to get a little sugar cube to eat (very seriously done), and this has to be '59 or later since we moved that year and it was in the new location. Polio was still present in the 50s and before, and my dad's oldest brother had had it--he lived, but he always kept one hand under his chin to support his head, since it affected his neck/upper back.

What you know as the MMR vaccine, which every child here gets as a matter of course--the different parts of that were only developed in the 60s, in the US, and measles actually killed more kids than polio at the time.

From about '65 thru '72, young men in the US could be drafted, and sent to the war in vietnam. (Some unlucky guys were drafted into the marines.) It wasn't used initially, but the govt instituted a lottery. In 1970, my birthday was drawn early, number 10 (out of 366 birthdays). That meant I was certain to be drafted, since each year they took about 130-140 of the birthdays. One way to avoid it was to go to university, but then, like my brother, you got drafted when that was finished. Another "out" was to get married and have a kid--they wouldn't take a young father and send them to war. Another was thru connections to get into the national guard or army reserve (president Bush), and of course, with money you could get a diagnosis of bone spurs.

The point there is that guys were getting drafted and sent to vietnam then, and nobody is worried about that kind of thing now.

Back to disease: My mother died of cancer in 1974. It only took 10 months. Perhaps not hers, but many cancers today are far more survivable/curable than they were in the '70s. Also, smoking rates were very high then, and public awareness has changed a lot for the better.

Oh, and now there's this thing called the internet, and everyone has a mini computer and camera and other things all compressed into one in their pocket. With access to pretty much everything--wikipedia plus millions of songs and the rest of the world in your shirt pocket. Phone calls to the US when I got here were still exorbitant--several dollars a minute. Now you can make a video call free anywhere in the world. What's that worth in terms of pay-per-hour or standard of living?

[beanhead]

Interesting points in this guy's rant that I think are relevant to many of us:

- social security (and therefore state pensions, nenkin) should be means-tested, NOT based on what you have paid in
- tax on profits from capital should not be lower than tax on salaries

He says that 'the old' are stealing the future from 'the young'.

Not necessarily original ideas but delivered very powerfully, by a man apparently worth $100M.

[Deep Blue]

- social security (and therefore state pensions, nenkin) should be means-tested, NOT based on what you have paid in

This is my biggest fear for the UK national insurance funded pension system.

[captainspoke]

And I'm not arguing the opposite of what prof g is saying (that black is white and white is black), but that the picture(s) that I see show far more complexity than the simplifications inherent in a 15-20min talk--while the speaker is, shall we say, trying to be (trying to match his rep as being) as impactful as possible.