Posts Tagged ‘Millennials’

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You know your generation’s screwed when even Monopoly is mocking you.

Back in 2016, I argued that Millennials were in fact generation screwed.

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For example, in 2010 (when some of them were 20 to 24 years of age), their unemployment rate was 17.2 percent, much higher than the already high national average of 9.9 percent.*

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Partly because of the difficulty they had finding jobs, but also because they have been saddled with high student and healthcare debt, the typical Millennial family lost ground between 2010 and 2016, falling further behind the typical wealth lifecycle than any other birth cohort. According to the Federal Reserve Bank of St. Louis (pdf), a typical 32-year-old family respondent in 2016 (born in 1984) was 34 percent ($12,000) below the 32-year-old benchmark established by earlier generations.

No wonder Hasbro decided to lampoon their inability to purchase real estate.

Still, the authors of the report thought there were grounds for optimism, since “These families have many more years to earn, save and accumulate wealth.”

Except now, according to Vox (first in early April and now in May), Millennials have been screwed again.

As someone on the tail end of the millennial generation, I was lucky enough to still be in school when the 2008 recession hit. Yet financial anxiety has been an omnipresent part of how I see the world. It feels as though the one-time hallmarks of adulthood — buying a house, having kids, stability, even thinking about these things — are no longer milestones, but irresponsible dreams. Meanwhile, millennials older than me, many of whom are in their 30s and began their job searches in the thick of the 2008 recession, are even more financially fragile.

In fact, Millennials have every reason to be concerned, about their present and their future. They (and the next younger cohort) appear to have been most affected by furloughs, layoffs, and pay cuts in the midst of the current economic crisis. Moreover, we know that those making less money and those working in certain sectors (such as hospitality, restaurant services, and retail trade) have been more likely to be laid off than other, often older workers. And yet still Millennials have to continue to pay off their student loans and healthcare debts and make their rent payments.

The last time I analyzed the situation of Millennials, I discovered they were more inclined to identify as members of the working-class (and not, for example, as middle-class) and more critical of capitalism than previous generations.

I wonder now, when they’re being screwed a second time in their short lives, how they will identify and what economic and social arrangements they will end up criticizing.

Millennials still have plenty of time, if not to accumulate wealth, at least to change the world.

 

*For the sake of comparison, the difference between the two unemployment rates in 2007 was only 2.8 points.

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Economic inequality in the United States and around the world is now so obscene, and has convinced more and more people to do something about it, that the business press has initiated a campaign to deny its very existence.

They and the folks they represent are losing the battle of public opinion. And they’ve decided to do whatever they can to turn things around.

First up was the Economist, the “newspaper” of record for liberal capitalism [ht: sk], claiming that new research undermines the pillars of the seemingly universal belief that “inequality has risen in the rich world.” Yes, as I have documented from the very beginning on this blog (e.g., here, here, and here), there are plenty of mainstream economists who have attempted to prove that inequality isn’t really a problem—either because it doesn’t really exist or, if it does, it’s not something we can or should do much about. And so the Economist managed to find pieces of research that call into question some of the key pillars of the inequality argument—that the gap between the top 1 percent and everyone else is growing, the middle-class is shrinking, capital is gaining at the expense of labor, and wealth inequality is soaring.

I won’t waste readers’ time repeating the arguments I’ve made on all four of those points over the past decade. You can use the search function at the top of the page to see what I and others have written on these issues—or look at the latest report from the Congressional Budget Office, which I discuss below.

What’s more interesting is where the Economist wants to take the discussion—away from wealth taxes (of the sort being proposed by Bernie Sanders and Elizabeth Warren) and toward the sorts of policies that, while they won’t lessen the degree of inequality, conform to the Economist‘s fantasy of liberal capitalism. Thus, they propose more building (so that young workers can afford housing), antitrust regulation (as if capitalism didn’t have an inherent tendency toward monopoly), less regulation of high-income professions (to create more competition for those high-paying jobs), and fewer restrictions on immigration (but only for “high-skilled” workers).

That’s the Economist’s derisory attempt to minimize the existence of inequality (against most of the available evidence and widespread belief) and to devise some tiny tweaks in existing economic arrangements (and avoid more serious efforts to lessen the degree of inequality).

The Wall Street Journal has also decided to confront the growing campaign against economic inequality—by attempting to show that Donald Trump’s administration has done more to decrease inequality than Barack Obama’s, by promoting economic growth through deregulation and increased business investment. Now, it’s true, Obama oversaw a bailout of Wall Street and a return (after a brief hiatus in 2009) to the same unequalizing trends that predated the Second Great Depression. So, that’s a very low bar to surpass.

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And even though the wages of low-income workers have been rising at a faster rate in recent quarters (the supposedly “happy wages of a growing economy”), it is still the case that the wage share of national income (as seen in the chart above) is still less than what it was in 2008 (when it was 44.9, compared to 43.2 in 2018) and far below its postwar peak in 1970 (at 51.6).

To rely on continued growth to solve the problem of inequality is simply a pipe dream, which is even less convincing than the castle in the air invented by the business press on the other side of the pond.

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The fact is, the Congressional Budget Office [pdf] projects that income in the United States—both before and after transfers and taxes—will be more unevenly distributed in 2021 than it was in 2016. That’s because, even though average incomes for the bottom four quintiles are expected to grow, incomes for the top quintile (and especially for the top 1 percent) are expected to grow even faster.

Thus, for example, since 1979, while the average incomes of the middle three quintiles are expected to grow (after transfers and taxes) by a total of 57 percent, the incomes of those in the top 1 percent are projected to increase by a whopping 281 percent by 2021.

There’s no other way around it: inequality in the United States is obscene, and something—much more than minor regulations and continued growth—needs to be done to overcome it.

As it turns out, Americans are fully aware of the problem. For example, according to Gallup, the overall opinion of capitalism held by young adults (both Millennials and Gen Zers) has deteriorated to the point that capitalism and socialism are tied in popularity.

And a new Reuters/Ipsos poll finds that nearly two-thirds of respondents agree that the very rich should pay more.*

Among the 4,441 respondents to the poll, 64% strongly or somewhat agreed that “the very rich should contribute an extra share of their total wealth each year to support public programs” – the essence of a wealth tax. Results were similar across gender, race and household income. While support among Democrats was stronger, at 77%, a majority of Republicans, 53%, also agreed with the idea.

Moreover, when asked in the poll if “the very rich should be allowed to keep the money they have, even if that means increasing inequality,” 54 percent of respondents disagreed.

That’s the reason the Economist and the Wall Street Journal have decided to launch their campaign about inequality—to attempt to undermine the widespread belief that inequality is growing and, even more, to challenge any and all efforts to actually do something to create a more equal economy and society.

Such a campaign may satisfy their readers, at least in the short run, but the problem itself will remain. This election year, I expect the growing gap between the tiny group at the top and everyone else to overshadow their shabby efforts and culminate in a movement they simply won’t be able to contain.

 

*Ironically, another recent attempt to undermine the Sanders-Warren proposals of new, higher wealth taxes actually serves to reinforce how extreme wealth inequality is in the United States. While admitting that “only a small segment of the population would be subject to the top rate,” the American Action Forum’s Douglas Holtz-Eakin and Gordon Gray [pdf] can only conclude that the taxes would have “broad impacts” only because the wealth holdings of that group “constitute a significant share of the investable wealth in the economy.”

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If you listened to or read the text of President Trump’s State of the Union speech Tuesday night, you might have been surprised by the explicit mention of socialism.

Here, in the United States, we are alarmed by new calls to adopt socialism in our country. America was founded on liberty and independence — not government coercion, domination, and control. We are born free, and we will stay free.

Or maybe not—since just last year the Council of Economic Advisers apparently found it necessary to issue a report, on the cusp of the midterm elections, to push back against the fact that “socialism is making a comeback in American political discourse.” And Fox News is engaged in its own campaign against socialism, since “support for Karl Marx’s collectivist ideas is steadily increasing.”

The irony, of course, is that Trump and his principal media outlet are in part responsible for the growth of support for socialism and for policies that are often associated with socialism (such as raising taxes on the income and wealth of the rich).* Claiming that “our country is vibrant and our economy is thriving like never before” and then scapegoating immigrants in “organized caravans [that] are on the march to the United States,” while ignoring the effects of the largest tax break for large corporations in U.S. history—which, while boosting economic growth, executive salaries, and the stock market, leaves American workers further and further behind—makes the case for socialism even more compelling.

But interest in socialism was growing even before Trump took office, especially among millennials. The question is, why?

As I’ve noted before, the members of Generation Y are generation screwed, with lower earnings, fewer jobs, more part-time employment, and a higher unemployment rate than any other generation in the postwar period. As a result, they’re more likely than their elders to think of themselves as working-class and less likely to identify as middle-class.

For Malcolm Harris, the problem is exploitation:

This is a fundamentally capitalist story. Workers have always been exploited, but that rate of exploitation. . .is increasing exponentially for millennials.

What Harris is referring to is the growing gap between productivity and workers’ wages. And it really doesn’t matter how that gap is measured.

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Harris refers to the numbers produced by the Economic Policy Institute, according to which”net productivity” has grown 6.2 times “hourly compensation” since 1973.

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Alternatively, we can look at the gap between real output per person in the nonfarm business sector and real weekly earnings, which has increased by a factor of almost 10 since 1980.

Both measures point to increasing exploitation—to a growing gap between what workers produce and what they receive back as their pay. And it’s that exploitation—which neither Trump nor, for that matter, “conventional American economists” want to talk about—that is generating interest in socialism today.

Workers, especially young workers, are suffering the consequences of increased exploitation and beginning to look beyond capitalism, to different ways of organizing the U.S. economy and society. Socialism, since at least the end of the eighteenth century, has been the name for those alternatives.

Why is there growing interest in socialism in the United States today? The answer is clear. It’s capitalist exploitation, stupid!

 

*Such policies now include abolishing billionaires. However, Farhad Manjoo, who tried to sort out good from bad billionaires, never asks where those billions come from.  If he did, he’d discover the ways an increasingly unequal and unjust distribution of income is tied to—as both condition and consequence—a fundamentally unequal and unjust structure of production.

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