Are Millennials the new serfs?
Stanford economist Raj Chatty finds that someone born in 1940 had a 92 percent chance of earning more than their parents; a boomer born in 1950 had a 79 percent chance of earning more than their parents. Those born in 1980, in contrast, have just a 46 percent chance. [See also Figure 9 of last month’s report.] Since 2004, homeownership rate for people under 35 have dropped by 21 percent,
The costs of purchasing a house are even more lopsided: In Los Angeles and the Bay Area, a monthly mortgage takes, on average, close to 40 percent of income, compared to 15 percent nationally.
Like medieval serfs in pre-industrial Europe, America’s new generation, particularly in its alpha cities, seems increasingly destined to spend their lives paying off their overlords, and having little to show for it.
the wealth of the top 0.1% should exceed the wealth of the bottom 90% for the first time since 1941.
Politics has reduced itself to a theatre of symbolic gestures in which pressing issues are left unaddressed. Behind all the electoral volatility lies stasis.
Tom Mclellan calculated that six mandatory “spending items already account for more than all of the tax revenue coming in, and that is before you pay a single federal civilian employee’s salary, before any discretionary spending, before any research grants, any foreign aid, any NASA rockets, any state dinners, any toxic waste cleanup, any wall-building, any highway or airport improvements, etc.”
The spirit of risk-aversion is also infecting corporate America. The once lavish budgets companies devoted to research and development are now spent on legal compliance and human resources. Corporate income is no longer invested in future growth. Earnings are instead returned to shareholders through dividends or share buybacks. The rate of US start-ups has also slowed to a historic low.
Edward Gibbon wrote that risk aversion was already a problem among the Athenians: “In the end more than they wanted freedom, they wanted security. When the Athenians finally wanted not to give to society but for society to give to them, when the freedom they wished for was freedom from responsibility, then Athens ceased to be free.”
Wages for young people fortunate enough to get a job have gone down. inflation-adjusted wages of young college graduates (four years only) have fallen by more than 5 percent. Unemployment rates for young college graduates have been running for years now in the neighborhood of 10 percent and underemployment rates near 20 percent.
Average is over is the catchphrase of our age, and it is likely to apply all the more to our future.
This maxim will apply to the quality of your job, to your earnings, to where you live, to your education and to the education of your children, and maybe even to your most intimate relationships. Marriages, families, businesses, countries, cities, and regions all will see a greater split in material outcomes; namely, they will either rise to the top in terms of quality or make do with unimpressive results.