Article 100: Are Millennials Really Screwed?

I am happy to written a hundred posts.  I have really enjoyed it, but it would certainly be great to get some more readers to read and interact with.

My grandpa, a loyal reader to this blog, died this week and lived great life.  He was married over 50 years and had five kids.  Now compare that with the future of millennials, do we think we will have the same chances of a great life?  This article is inspired from reading a Huffington Post article explaining why we are screwed.  I’ll go point by point to show that we definitely have forces working against us, but we can still make it.

Education

The cost of education has skyrocketed.  A summer job at minimum wage would pay for one and a half years of tuition in 1976, but now it would only cover about 30%.  There is certainly a return on investment in education and I think the fact that people are paying shows that they believe so as well.  However, now there is very little certainty that a college education will provide you with a good job.  College graduates still get paid more than others, but maybe it is time to consider an alternative routes like plumbing.

Careers

You certainly can’t control the economy when you graduate and many of the graduates during the Great Recession were forced to compete with many others for low-paying jobs that didn’t require a degree.  These people were forced into a holding pattern making student debt payments while the economy recovered.  Not all the jobs came back either as globalization and technology made it great for employers to earn greater profits with fewer employees.  When the dust settled these people with five-year-old degrees and no relevant experience were competing with new graduates.

Furthermore, companies are able to divide their operations into core functions and contract the rest.  Rather than employing a security guard, a company can pay another company to do it.  Many contracting positions last less than two years, so the workers have very little certainty with their careers and can be terminated at any time.  A janitor many years ago had stability and benefits, something very few people can count on now.

Housing

There are debates in the FIRE community whether it is better to buy or rent, but I would say they lean towards rent.  Meanwhile, home ownership is a pillar of the American Dream and can provide stability, but housing near jobs can be so expensive.  I would not have guessed it, but zoning makes it difficult to put more units where they are needed.  Here in Austin it is getting a little better with plots being split in two, but if you go to the nicer parts you will see little to no multi-family buildings.

Now, most of the good jobs are centered in big cities, but big cities cost lots of money to live in which means that rent gobbles up the higher wages.  That is why I advocate not living in the Bay Area.  Austin is a great place, but I can imagine it, along with many other major cities, becoming increasingly out of reach for the lower-wage workers.

Health care

Since there are fewer jobs providing benefits, workers are often faced with high premiums and deductibles. Fortunately, the ACA allowed children under 26 to stay on their parents’ plan.  When most Americans have less than $1000 in their savings then a small injury can wipe them out.  It is crazy to me how it could be cheaper to fly outside the country for a procedure than to do it nearby.

Safety net

The government provides some benefits to those who are in a bad situation.  However, the requirements are very stringent and don’t add up to the poverty line.  I don’t know much about this the safety net because fortunately I haven’t had to use government benefits.  What people are often rely on are their families.  However, wealth has been decreasing for many making things tougher.

Conclusion

No longer is the path nicely paved to a good career and solid retirement.  Graduating in a recession has never been easy and persistence is necessary to get ahead.  Having well-off parents certainly makes things easier, but life isn’t fair.  As for readers of this blog I would recommend using hustle and hacking to get ahead.  Instead of saving up $5,000 for a trip to Europe, keeping good credit could get you that trip for under $1,000.  There are serious problems here that we can’t ignore, but many sacrifices could help you save.  Having multiple roommates, avoiding a car, and drinking sparingly are not fun, but it will help you build wealth.  Please don’t be one who spend hundreds at the bar and then doesn’t buy health insurance.