The Next Recession Will Destroy Millennials | Hacker News Reader

The Next Recession Will Destroy Millennials

theatlantic.com

41 pointspseudolus38 comments

- Trillions in student loans

- Billions in rent paid to older generations every year with no hope of buying a house

- Earning less than the previous 2 generations were at this age. Less assets than the previous 2 generations had at this age.

The crux of the article is that another recession will drag these issues into Millennials' middle age, effectively destroying the American dream for a whole generation. If the next recession is large enough, I can believe that premise.

> If the next recession is large enough, I can believe that premise.

The great recession is so named because it is supposed to be much worse than your average recession - a one-in-a-hundred-years recession. It makes sense considering how the financial system leveraged itself on toxic assets.

The question is, how confident can we be that we won't have two horrific recessions in a row? At face value the concept of a "one in a hundred years" recession seems to imply that this won't happen. But as an individual I wouldn't say I'm particularly confident that the market is sane.

Interest rates are going down to join the rest of the world in negative interest rates, despite the states supposedly being in an expansion. Shiller PE ratios suggest stocks are overpriced similar to pre-recession and pre-depression highs. The latest batch of IPOs seems full of companies that are not profitable and may never be profitable and yet your average investor is now exposed (through e.g. their index funds). A seemingly infinite pool of capital with nowhere to go props up wildly questionable companies like WeWork. Real estate values in top cities have blasted off into outer space as this infinite pool of capital looks for more places to park cash.

Maybe we can add in more ordinary concerns too, like average citizen's debt rising, corporate debt rising, sovereign debt rising, etc

It's quite possible that the next recession will be of the ordinary variety, but it's not impossible we will end up with Great Depression 2.0 at some point. If I were a fiction writer imagining the setup to a next great depression, I imagine it would look similar to the world today.

As the article mentions, many people really never got out of the last recession. If we have another one, for them it will be just a continuation of a large one, making recovery even more difficult that it is now. Lost time, opportunities, compounded gains and mixing it with less income and higher cost of living makes it a situation not easy to overcome.

We are still bearing the consequences of the big bail out, forcefully paid by most of us instead of allowing some events to follow their natural path and the chance that things eventually balanced out. The artificiality of that solution has created abnormal behaviors and conditions such as the access to cheap money and a double standard for financial instruments, like personal vs institutional debt. Those situations effectively devalue money and allow arrangements that are very paradoxical from an economic standpoint as you pointed out.

As it has been mentioned in other comments here, I don't think this is limited to Millennials. Just by looking at the diversity of the economic statistics per state in the US you can see it is a more generalized problem. I would not consider that a complete "economy" has recovered from a recession when the numbers tell us we have just delayed aftermaths and major factions of it are still underwater with very bad prognosis.

What's working in our favour, though, is that we (millennials) have nothing to lose!

No seriously, if the market crashes, what would we lose? We have no assets that would be devalued. We have shitty jobs so we don't really care if we lose those, we can pick them back up pretty easily. I don't need a car if I don't have a job, so you can take that too. I'm used to eating like a peasant from going through university, so no worries there either.

The only thing I would be upset about losing would be the internet, as that's where most of my "assets" lie (subscribers, digital assets like in-game currencies, items or characters, etc.)

I'm a millennial and I'd be kinda bummed if I have to move out and sell my car. Don't know why I'd sell my car though, kinda need it to get around.

I fail to understand why every article about millennials is biased with the American college system. Student loans are something not existing in Europe. And American salaries (at least in IT) are 3x-4x higher than here.

As millennial myself, the big struggle for us is the expensive housing market (you cannot but anymore a house in a city without a loan, compared to GenX and baby boomers), the expensive car market (a medium car, say a VW Golf or similar, reaches quickly over 25.000 €), the incredibly low wages (Youngs are earning nothing-to-800€ max)

Where you live is there an expectation that you could have bought a house without a loan? In the US buying a home without a loan is virtually unheard of (outside of wealthy parents giving cash)

Your last points were exactly what the article was about. Student loans are mentioned in exactly three sentences in the entire article. Did you read it with a bias towards expecting that to be the focus?

It seems like the pressures millennials face are fairly similar in the US and Europe, at least.

In the US baby boomers and GenX were not buying houses without loans. Maybe it was different in Europe.

Not everyone in the US needs student loans. My state has a 100% tuition scholarship that is funded by the lottery. You have to stay in state unless the degree isn’t offered in the state.

A lot of people I know with the highest loans made the most short sighted and insane decisions. I can give a few examples.

I don't think it is biased so much as targetted to the US. It kind of has to be that way because otherwise its overall relevance deteriorates if say it lists rising private health insurance costs, reeducation camps for being involved with the illegal capitalism because it combines US millenials and North Korean millenials.

>I fail to understand why every article about millennials is biased with the American college system

American writer, American website, discussing future American recession? For that matter, I've NEVER heard anyone use 'Millennial' 'Gen X' or "Baby Boomer' to describe a non-American.

Am I the only one getting tired of all these articles that reify demographic cohorts created by marketing people ("Millennials", "GenX", etc.) and then treat them as some sort of monolith? If Millennials are defined as "individuals born between 1981 and 1997" then you're talking about people between the ages of 22 (just graduating from university) and 38 (potentially with over a decade and a half of work experience). That's an incredibly wide (and arbitrary) age range. You also have diversity in education levels (high school, undergraduate, graduate) and geography (large metropolitan areas, smaller regional cities, rural). There are real issues that need to be addressed - rising income inequality, the cost of higher education, the healthcare disaster in the US, housing, etc. - but wrapping it in generational mumbo jumbo distracts from that.

It's pretty straightforward. The Millenial age cohort is doing worse than all others before it and the timing of their entry into the job market is placing many into precarious financial positions.

The millennial age cohort is defined arbitrarily. Why 1981-1997 and not 1980-1996 or 1982-1998 or perhaps a range that's narrower by a few years?

"The Pew Research Center defines millennials as born from 1981 to 1996, choosing these dates for "key political, economic and social factors", including the September 11th terrorist attacks, the Great Recession, and the Internet explosion.[36]"

I wouldn't say it's arbitrary. People who've spent their lives studying the sociology of generations came up with those ranges.

It's arbitrary in the sense that it's not grounded in anything objective or measurable. This is an old historiographical problem you can find argued about at length under the heading 'periodization'.

And it will not destroy other non millennials ? Total click bet article just talking about same thing that we have lots of debt and next crisis will be tragic and probably bigger than last time. So what ? We have already been through great depression and now people have way more information to deal with this. In defense to Millennials , they are under lots of debt but they are also open to staying at home with parents, working through multiple jobs, get higher education for better jobs so you know what it will all be fine.

Is this an editorial or an article? If this is considered real journalism by the Atlantic I don't think I'll be clicking on links form them anymore. This is absolute rubbish and dripping in bias.

It's the Ideas section ("ARGUMENTS. ESSAYS. INQUIRIES."), so it's editorial. Either way, it seems to be well-researched as far as I can tell. What's your specific gripe with it?

e.g.

> The net worth of your average Millennial household is 40 percent lower than for Gen X households in 2001 and 20 percent lower than for Baby Boomers’ households at the end of the 1980s.

This links to a federal reserve study.

> What's your specific gripe with it?

My specific gripe with it and most articles these days is that it's driving an agenda, the hallmark of which is the omission of any contradictory evidence. In the course of their research, they certainly encountered evidence that contradicted their hypothesis, yet when they went to print all this was omitted.

If someone is exploring an idea, I like it to at least approximate the approach of good scientific research paper. Propose a hypothesis, present the data (supporting or otherwise), have a discussion and then suggest a conclusion for consideration.

As opposed to find data that supports your hypothesis, throw out all other data you encountered along the way and since you have a foregone conclusion, no discussion is necessary.

The other thing I'd like to see if anyone predicting the future to also pen an alternate piece using scenario planning.

"In my previous essay, I predicted X will happen around year Y. In this essay, I'm going to imagine that it is year Y and it turns out that my prediction of X was completely wrong and I will explore all the possible flaws in my previous essay to determine what went wrong.

This approach forces people to be their own devil's advocate.

Can you please point me towards some legit data that shows Millenials are crushing it and are not, in fact, having worse financial outcomes than previous generations?

While inequality is up, the median income is at an all time high:

https://en.wikipedia.org/wiki/Household_income_in_the_United...

Lowest infant mortality rate at all time:

https://www.macrotrends.net/countries/USA/united-states/infa...

I'd also say that we're lucky to be alive at a time when you can make a very generous salary without having a degree as a professional software developer (source: myself).

I think there are a lot of people who overextended themselves getting a degree with little to no monetary value but that's definitely not the whole story for this generation.

You might read the article you linked to at wikipedia. It doesn't really support your point. Real (inflation adjusted) figures are more useful than nominal for measuring income growth.

From the Wikipedia article:

"According to the CBO, between 1979 and 2011, gross median household income, adjusted for inflation, rose from $59,400 to $75,200, or 26.5%.[18] However, once adjusted for household size and looking at taxes from an after-tax perspective, real median household income grew 46%, representing significant growth."

Also things like: "U.S. economic growth is not translating into higher median family incomes. Real GDP per household has typically increased since the year 2000, while real median income per household was below 1999 levels until 2016, indicating a trend of greater income inequality"

And: "Total compensation's share of GDP has declined by 4.5 percentage points from 1970 to 2016. This implies that the share attributed to capital increased in that period."

Also: "Measured relative to GDP, total compensation and its component wages and salaries have been declining since 1970. This indicates a shift in income from labor (persons who derive income from hourly wages and salaries) to capital (persons who derive income via ownership of businesses, land and assets). This trend is common across the developed world, due in part to globalization.[16] Wages and salaries have fallen from approximately 51% GDP in 1970 to 43% GDP in 2013. Total compensation has fallen from approximately 58% GDP in 1970 to 53% GDP in 2013"

The whole picture here is a pretty mixed bag and not at all a case for how median wage to the average worker is phenomenal.

As I said, inequality is up hence the lower portion of GDP going to labor. Overall, labor is making more than they were before though.

Are you actually trying to use a time series starting before Millennials were even born to try to prove a point about financial situations today? On top of trying to apply median household numbers at the national level to a single cohort? Please stop. Look at actual data like [1]. Or at least look at the whole picture like [2] instead of cherry picking income data and acting like you can just stop there.

[1] https://news.stanford.edu/2016/12/08/todays-children-face-to...

[2] https://www.cnbc.com/2019/01/11/millennials-households-earn-...

What factors are causing that rise? More people living at home? More roommates to lower enormous housing costs?

Since 1979 probably the biggest driver to increasing household income would be increased participation of women in the workforce.

From TFA: “With the baby boomers occupying most of the top jobs and much of the housing, Millennials are doing less well than their parents,” concluded Credit Suisse. “We expect only a minority of high achievers and those in high-demand sectors such as technology or finance to effectively overcome the ‘millennial disadvantage.’”

Yes, the Wikipedia article I posted refutes the article's claim and does so with data.

Which part of the Wikipedia page you linked to refutes the article? If anything, the figures in the Wikipedia page corroborate the article.

For example, this one shows net worth broken down by age range. https://en.m.wikipedia.org/wiki/File:U.S._Income_and_Net_Wor...

You can see that the median net worth of households below 35 gained a paltry 4% in net worth, while the 35-65 cohort gained 2-6x times that. If you look at the mean net worth, it's even more skewed.

How does low infant mortality refutes the poor economic prospects of millenials, a generation having less kids than any to date? That is a complete non-sequitur.

Median household income is very marginally higher than ever, while debt is substantially higher. Cost of living isn't inclusive of the cost of education that is probably the biggest economic burden unique to millenials.

No one is debating that you can (momentarily) make a lot of money as a software dev without a degree. It still accounts for a small portion of the economy.

You might find that it's better to seek out writing from a variety of sources if what you want is to see a wide spectrum of opinions. There is a type of news that tries to fit in everyone's opinion, but it is dying because very few people actually want that.

I already do that. The problem is that too many people all over the political spectrum don't do that and they have the right not to seek out competing viewpoints, but they also have the right to vote. As a result, an externality of all this biased agenda-driven content masquerading as journalism is that bad politicians with bad policies are elected, and I and others are hurt by that.

Not every issue has a "both sides". Data is pretty universal in showing that the millenial cohort is pretty financially precarious

Do you have a link to that data?

There were multiple links in the article. 30 seconds on google scholar will show you as many additional ones as you want, ex. [1][2]. Asking for links here is not really appropriate.

[1] https://www.bls.gov/opub/mlr/2014/beyond-bls/millennials-aft...

[2] http://www.frbatlanta.org/documents/pubs/econsouth/14q1.pdf

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