Millennials – The Wrongologist

35% of Americans Meet The Criteria To Be Middle Class.

The Daily Escape:

Stoney Brook Grist Mill, Brewster, MA – February 2024 photo by Michael Kerouac

Wrongo and Ms. Right spent Sunday with one of our daughters and son-in-law. We spoke about the Ezra Klein op-ed in the NYT about why Biden should step aside. One of Klein’s points is that in presidential campaigns, the candidate is always the campaign’s biggest asset, and that Biden isn’t being used by Democrats as if he is their biggest asset.

Elsewhere, some pundits are saying that the Democrats need to forget campaigning on policy: Dems always try to find things people like and tell them they’re going to help them — and after that, show them the candidate’s character, biography, and qualifications for office.

Instead, the Republicans campaign by appealing more to emotion than intellect, using a negative message to develop enthusiasm.

While Wrongo is happy that Dems want to campaign again on an anti-Trump message, he still thinks policy is the right way to appeal to at least two types of voters: Those who rarely vote, and those who voted Democratic last time but are less enthusiastic this time. These voters think our political system hasn’t produced results for them, and they’re looking for promises to change that in order to get their votes.

While we keep touting Biden’s economic performance, Wrongo recently found a very important poll taken last November by the WaPo that asked Americans how they defined being in the middle class:

“About 9 in 10 US adults said that six individual indicators of financial security and stability were necessary parts of being middle class….Smaller majorities thought other milestones, such as homeownership and a job with paid sick leave, were necessary.”

They also asked how many of those markers of being in the middle class people said they had achieved, and the results are a staggering rejection of how well the US economy is working for many people:

“Just over a third of Americans met all six markers of a middle-class lifestyle. While about 9 in 10 Americans had health insurance, only three-quarters had health insurance and a steady job. With each added measure of financial security, more Americans slipped away from the middle-class ideal.”

Let’s get into the findings. Here’s the WaPo chart about what factors Americans think it takes to be in the middle class:

It’s arbitrary to pick six, but they were the most frequently mentioned. A secure job. The ability to save. To afford an emergency. Paying the bills without worrying. Healthcare. Retirement. It’s a sensible list. And in the poll, huge majorities agreed those are the key criteria for a middle class life.

The Very Big Problem with this is that when the WaPo asked the same respondents if they had the ability to meet those criteria, the numbers are startling. Here’s the second WaPo chart:

Just 35% of people say that they meet the criteria that almost everyone, (~90%) agree should make someone middle class. If that’s true, America needs to redefine “middle” class. The majority in this survey did not have the financial security associated with being in the middle class. More from WaPo:

“The most common barrier was a comfortable retirement, something that about half of middle-income Americans over 35 felt they were on track to achieve.”

Think about what this research is really showing us. America no longer has a middle class. While ~90% of people agree on what a middle class life is, only a minority can afford it. This means we have a “phantom” middle class: Americans want to be middle class, but only a minority of them are. So what class does that make the majority?

What this research appears to show is that America is building something more like a permanent underclass.

Acknowledging this issue would be a great starting point for Biden to gain traction with low propensity voters and with the Gen X and younger voters who make up most of the low enthusiasm cohort of Democratic voters.

As Anat Shenker-Osorio puts it:

“Democrats rely on polling to take the temperature; Republicans use polling to change it.”

This time around the Democrats need to emulate Republicans who work at moving the needle instead of chasing it. And this middle class problem is an issue that will move the needle.

Fortune Magazine’s Tiffani Potesta writes that Gen Xers personify the problem of middle class life: (emphasis by Wrongo)

“Gen Xers expect to keep working longer than they planned–and will be the first generation to go into retirement with less financial security than their parents and grandparents.”

Gen X will be the first to reach retirement under a new paradigm: the widespread move from Defined Benefit plans to Defined Contribution or 401(k) plans in the US. This is a barely cited yet fundamental societal change that shifted the responsibility to save for retirement from employers to individual employees. More:

“…the numbers do not add up: Gen Xers reported that on average they will need roughly $1.1 million in savings to retire comfortably, yet they expect to stop working with only about $660,000 saved–a savings gap of around $450,000.”

Still more:

“According to a report from the National Institute on Retirement Security, the average account balance in 2020 for private retirement accounts among working Gen Xers was $129,994. This is woefully short of the amount of savings most of us will need to be secure in retirement.”

What’s worse is that the median account balance was scarier: $10,000–and 40% have zero savings.

For a society to be staring at the next few generations not being able to retire and not to be members of the middle class is very troubling, particularly in terms of what’s likely to happen if that’s the case. Losing our middle class is almost a sure path to autocracy, possibly through the rise of fascism and/or authoritarianism.

Biden and the Democrats need to acknowledge these problems are real and pledge to do everything possible to return America to having a true, bell-curve shaped middle class. They can run generally against Trump as “order vs. chaos”, but Trump is running on “America’s decline”, which includes the financial insecurity of millions of Americans. Biden needs to call that out specifically, along with ideas on how to fix the problem. That would make financial insecurity an issue for Democrats equal to abortion, something that targets a specific group and encourages them to get to the polls in November.

If Bernie Sanders isn’t too old to rage against economic insecurity, then Biden is old enough to do the same.

The Coming $73 Trillion Wealth Transfer

The Daily Escape:

We’ve been on Cape Cod for a few days visiting daughter Kelly. Here’s a sunset photo taken this week at Campground beach, Cape Cod, MA – August 2023 iPhone photo by Wrongo. Smoke from Canadian wildfires made the sunset colors more vibrant.

Welcome to our Saturday Soother! But first, let’s talk about the coming generational transfer of wealth that’s underway as the wealthiest generation (the boomers) retire. According to Ben Carlson, 10,000 baby boomers will be retiring every day between now and the end of this decade.

The first boomers were born in 1946, meaning they’re 77 and on the fast track to 80 years old. Fortune Magazine pegs the wealth transfer from boomers to their kids at $73 trillion (with another $12 trillion going to charity). That means the boomers have $85 trillion in personal wealth!

That sounds great, since so many in our younger generations really could use a little help right now. But fewer people than you might expect will actually receive a sizable inheritance. This is due to the fact that the top 10% of America’s wealthy own something like 90% of the stock market. The concentration of today’s wealth will lead to fewer people benefiting from the generational handoff.

Here’s a chart from the NYT:

According to the NYT, ultra-high net worth households — people with $5 million to $20 million in liquid net worth — make up 1.5% of the population but will constitute 42% of the money that gets passed down in the years ahead. Many of them are boomers. From the NYT:

“A key reason there are such large soon-to-be-inherited sums is the uneven way boomers superbly benefited from price growth in the financial and housing markets. The average price of a US house has risen about 500% since 1983, when most baby boomers were in their 20s and 30s, prime years for household formation.

As US corporations have grown into global behemoths, those deeply invested in the stock market have found even bigger returns: The stock market, as measured by the benchmark S&P 500 index, is up by more than 2,800% since the beginning of 1983…”

Those rates of growth in financial and real estate assets will probably never be seen again. We’re passing a slow growth economy on to the next generations, while their own salaries and savings are having trouble keeping up with inflation.

Some worry that retiring baby boomers will crash the stock market by spending down their portfolios in retirement, leaving nothing to inherit. While it could happen, it’s unlikely that it will. The inequality of stock ownership means few people in the top 10% will never come close to spending all of their wealth in retirement.

So the wealth transfer will be more of a stream than a tsunami. Given the longevity of the wealthy, the money is going to be passed down slowly over time. A married couple that is retiring today has a 50% chance of at least one spouse living into their 90s.

Wrongo sees more and more people in the younger generations talking about how much they need help from their parents right now rather than decades down the road. The challenge is that parents need to be sure that if they make early transfers of wealth, that they keep enough on hand to maintain themselves securely in their advancing old age.

This can only be done by families having honest discussions around very awkward subjects. Talking about it can be helpful. It may be possible to work something out where some of the inheritance is parsed out slowly so the parents can enjoy seeing the kids (or grandkids) use some of the money while they’re still here.

Enough! It’s time for our Saturday Soother, where we ignore the also-ran candidate show that the Republicans put on in Wisconsin, and where we also ignore the perp walk in Atlanta. Instead, let’s focus on clearing our heads for next week’s outrages.

To help clear your head, grab a comfy chair by a window, and pour a mug of cold brew over ice. Now, watch and listen to Beethoven’s “Septet, op. 20”. It had its first performance in 1800 and was one of Beethoven’s most popular works during his lifetime, much to the composer’s dismay! He ultimately wished he had never written the piece.

Today we listen to the first movement, “Adagio – Allegro con brio” played in 2014 by the WDR Symphony Orchestra in Cologne, Germany. The WDR is a German radio orchestra:

Monday Wake Up Call – April 24, 2023

The Daily Escape:

Mountain Park in Globe, AZ – April 2023 photo by Karen Coffelt

(Earth Day was yesterday. Wrongo was at the first Earth Day on April 22, 1970 in NYC. Then-mayor John Lindsay closed Fifth Avenue from 59^th Street to 14^th Street. Nearly one million people marched downtown. It was an upbeat and friendly crowd. In July of 1970, Nixon established the Environmental Protection Agency by executive order.)

Today let’s return to talking politics. Axios had an interesting chart from Gallup on the distribution of voters by party preference:

We spend our days listening to politicians who’s Parties, individually, now represent a minority of Americans. This trend means there are serious challenges ahead for our two traditional Parties. It also adds some context to our evenly split politics.

Here’s an analysis of the vote share of independents by Party in recent elections: (the numbers do not total to 100% because voters who chose “another” or didn’t vote aren’t shown)

Interestingly, the Democrats have lost 10 points of independent support from 2020 to 2022, but the GOP only gained 1%. At the time, the Associated Press reported:

“Republican House candidates nationwide won the support of 38% of independent voters in last month’s [2022] midterm elections, VoteCast showed. That’s far short of the 51% that Democrats scored with the same group in 2018…picking up 41 seats. The GOP’s lackluster showing among independents helps explain why Republicans flipped just nine seats…”

Going back to the trends in the first chart, Axios reports that Gallup analyst Jeff Jones says a big reason for this change is driven by the younger generation:

“It was never unusual for younger adults to have higher percentages of independents than older adults….What is unusual is that as Gen X and millennials get older, they are staying independent rather than picking a party, as older generations tended to do.”

So who are these independents? Krystal Ball explains in a YouTube video that most of these “independents” are younger voters, millennials and Gen-Z. They’ve also stayed more disillusioned than their elders.

This means that the nation is evenly split between those who think that one of our two political parties is telling the absolute truth, while the 49% majority basically don’t trust either to have their back.

The question with independents is whether they are truly a part of some mythical center or if they are a segment (half) of the population that isn’t politicized, meaning they don’t believe they have a personal stake in elections.

Or are independents simply that half of the US electorate that just doesn’t bother to vote?

The American political system is dysfunctional. That’s making people opt for being independent rather than Democrat or Republican. They see the choice between the Parties as choosing between the red shit sandwich and the blue shit sandwich.

Time to wake up America! Democracy is our country’s feedback mechanism, but just 46.8% of us voted in the 2022 mid-terms. So it’s clear our current brand of democracy isn’t working. More of us need to vote, and that means we have to help our Parties change. We don’t need a third Party; we need our two Parties to reflect what grassroots America needs. More about this tomorrow.

To help you wake up, and in honor of Earth Day, watch and listen to Neil Young perform “After the Gold Rush”, live at the Shoreline Amphitheater in 1993. He’s playing a pump organ, which generates sound as air flows past the vibrating reeds. Also, he’s wearing Uggs:

Sample lyric:

Look at Mother Nature on the run In the twentieth century
Look at Mother Nature on the run In the twentieth century.

She’s still trying to outrun us 50 years later.

It’s Impossible To Buy A $200k Home Anymore

The Daily Escape:

Mt. Hood sunrise – February 2023 photo by Mitch Schreiber Photography

Happy Valentine’s Day for those who celebrate! If you don’t celebrate, find someone or something to give a little bit of love to.

In all of the hype about the Super Bowl and Rihanna’s halftime show, you may have missed that homes selling for less than $200k have basically disappeared in America.

John Burns, a real estate consultant, reports that they are now 0% of the new home market. They were 40% of the market 10 years ago. Burns also says that $500k+ new homes have grown from 17% of the market to 38% of the market during Covid. He provides this handy chart showing how average home prices have changed since 2010:

At the same time, sales of homes going for $500k or more (red line) have shot up from less than 10% to nearly 40% of the new homes market and represent the largest share of new home sales.

This isn’t great for Millennials looking to buy their first homes, or for retirees who have to downsize. It also explains why many first-time homebuyers are angry.

It’s not only the $200k and under segment that has fallen off a cliff. New homes going for between $200k – $300k now make up just 11% of the total, down from 80% of all new home sales in the year 2000.

Ben Carlson shows Federal Reserve new home price data going back to 2000 that breaks down new homes price points more clearly. He says that those being sold for $750k and up have gone from less than 1% to more than 10% of the market.

A few reasons for the shifts: First, we’re not building enough new houses anymore. Second, we’ve seen changing tastes drive demand toward larger homes, helping move the market to a new floor in home prices. Inflation didn’t help either.

We overbuilt in the 2000s housing bubble, and that led to more than a decade of underbuilding ever since. There was a brief spike during the pandemic housing craze but that has abated with mortgage rates rising so rapidly in the past year.

In 2002-2006, we were building around 120,000 new homes per year. In 2022, it was more like 65,000 units per year. Tastes have changed as well. Houses today are substantially larger than they were in the 1950s, 1960s, and 1970s.

In his book The Fifties, David Halberstam talks about how the housing market played a huge role in the rise of the suburbs following World War II. Then houses were about 1,300 square feet. In the 1970s, the median size of a new home in the US was 1,525 square feet. Today it’s around 2,500 square feet.

Tastes have changed. People want bigger houses. They want open floor plans for entertaining, bigger bedrooms with more bathrooms, and more storage space for all of their stuff.

It’s also true that homebuilders aren’t incentivized to build starter homes anymore. In the 1950s the government helped out the troops and their families. With the GI Bill, the federal government took some of the risk that homebuilders wouldn’t be able to find mortgages for all the new houses they were building.

Local zoning regulations have made it difficult to get approvals to build new homes. So builders have moved upmarket in home size to justify those upfront expenses. Starter homes aren’t as profitable as they once were.

There’s a big change in the buyer’s market as well. The WSJ quotes John Burns: (emphasis by Wrongo)

“You now have permanent capital competing with a young couple trying to buy a house.” Burns estimates that in many of the nation’s top markets, roughly one in every five houses sold is bought by someone who never moves in.”

The Atlanta Journal-Constitution in an article last week entitled: “American Dream For Rent: Investors elbow out individual home buyers. Metro Atlanta is ground zero for corporate purchases, locking families into renting’. The Journal says a generational housing shortage, inflated construction costs and a surge in consumer demand all contributed to the historic rise in prices.

But there’s little doubt that a flood of cash from institutional investors has exacerbated it. They quote Maura Neill, a realtor in Alpharetta:

“They go after every listing under $500,000…it’s like clockwork…The property gets listed and, sight unseen, they make offers within an hour.”

This is late-stage capitalism at work. Young working couples are increasingly shut out of buying homes. America is failing them. It would be helpful for families to build equity by purchasing homes instead of renting.

Pricing families out of home ownership carries risks to a cohesive society.

We should have a federal tax policy that disincentivizes ownership of multiple single-family homes, by investment funds. The way to remedy this is to steer investors to other assets that don’t directly impact individual welfare to the same degree as single family housing.

Saturday Soother – March 26, 2022

The Daily Escape:

Crocus in bloom, Holliston, MA – March 2022 photo by Karen Randall

Let’s take a look at three stories that didn’t get their due this week. First, from the LA Times, about gang infiltration of the LA County Sherriff’s department:

“The top watchdog for the Los Angeles County Sheriff’s Department has identified more than 40 alleged members of gang-like groups of deputies that operate out of two sheriff’s stations…..Inspector General Max Huntsman said his office has compiled a partial list that includes 11 deputies who allegedly belong to the Banditos, which operate out of the East L.A. sheriff’s station, and 30 alleged Executioners from the Compton sheriff’s station.”

Huntsman told the LA Times that about a third of the 41 deputies on his list had admitted that they had gang tattoos or belonged to the groups. Allegations aren’t proof but apparently, there is a long history of allegations like this one surrounding the LA Sherriff’s department.

Also consider this article in the WaPo about police wrongdoing:

“The Post documented nearly 40,000 payments involving allegations of police misconduct in 25 departments, totaling over $3 billion. Departments usually deny wrongdoing when resolving claims.”

They found that more than 1,200 officers in the departments surveyed had caused problems resulting in at least five payments each by their municipalities. More than 200 had 10 or more payments for actions that resulted in lawsuits. New York City leads the way with more than 5,000 officers named in two or more claims, accounting for 45% of the money the city spent on misconduct cases. There are 36,000 officers in the NYPD. That’s 13.8%.

Settlements rarely involve an admission of guilt or a finding of wrongdoing. City officials and attorneys representing police departments say settling claims is often more cost-efficient than fighting them in court. Since there’s no formal list of bad actors, there’s little reason to hold these officers accountable.

Law enforcement throughout America gives itself a black eye whenever stories like these are written.

Second, the NYT reported that several of the Republican Senators who suggested that Judge Ketanji Brown Jackson had given uncommonly lenient sentences to felons convicted of child sex abuse crimes had all previously voted to confirm judges who had given out similar prison terms below prosecutor recommendations, the very problem they had with Judge Jackson:

“But Mr. Hawley, Mr. Graham, Mr. Cotton and Mr. Cruz all voted to confirm judges nominated by President Donald J. Trump to appeals courts even though those nominees had given out sentences lighter than prosecutor recommendations in cases involving images of child sex abuse.”

You can read the article for the examples.

Hypocrisy is fuel for politicians, so maybe we shouldn’t be surprised. We know that Sen. Graham had voted only a year ago to confirm Judge Jackson, despite the sentencing decisions she had made as a district judge, the same ones that he now objects to.

Third, Bloomberg reported that private equity money is again pouring into residential real estate markets. They cite Phoenix, AZ as a prime example: (brackets by Wrongo)

“The median home [in Phoenix] was worth about $285,000 at the beginning of the pandemic; it was valued at $435,000 two years later.”

That’s a 53% increase. This is also true in NJ, where Wrongo’s son just got an all-cash offer from an investment group for his home, sight unseen, at 11% higher than the closest offer from a retail home buyer who needed a mortgage.

This is turning first-time home buyers into long-term renters, with real-world consequences.

Home equity represents a huge portion of individual wealth in the US, especially for moderate-income families that have few other opportunities to use borrowed money to purchase assets that can increase in value over time. Price appreciation lets owners accrue wealth which can be tapped later on when they have a large or unexpected expense.

Wall Street’s spin is that there just aren’t enough rentals for families who want to live in good neighborhoods but can’t afford a down payment. So they’re providing a necessary economic service. You be the judge.

Enough of this drama! It’s time to find a way to let go of the tragedy in Ukraine and the clown show surrounding Judge Jackson for a bit. It’s time for our Saturday Soother.

Here on the fields of Wrong, it’s time to take down the deer fencing and put up the bluebird nest boxes. We also need to watch what we can of college basketball’s March Madness.

To help you get ready for the weekend, grab a chair by a large window and listen to Mozart’s “Turkish March” played here on bamboo instruments. It was performed in 2015 by Dong Quang Vinh on a bamboo flute along with the Bamboo Ensemble Suc Song Moi, in Haiphong, Vietnam:

Monday Wake Up Call – January 10, 2022

The Daily Escape:

Kohler-Andrae State Park, Sheboygan, WI – January 2022 photo by Nick Schroeter Photography

Wrongo rarely delves into religion, but since Pope Francis had comments on the slowing global population growth, Wrongo has thoughts. From the Guardian:

“In a move likely to raise the hackles of millions of cats, dogs and their human cohabitees, Pope Francis has suggested that couples who prefer pets to children are selfish.”

The Pope said that owning a pet instead of having kids meant that:

“…civilization grows old without humanity because we lose the richness of fatherhood and motherhood, and it is the country that suffers”.

Ouch. As someone who has had both children and dogs, Wrongo knows that taking care of a pet is far from selfish. As Bloomberg’s Lara Williams said:

“…the Pope could do better than to rhetorically kick puppies. There are solid economic reasons for the decline of birthrates across the world, and they need addressing.”

This isn’t a new trend. Despite optimistic predictions for a post-pandemic baby boom, last year, the US recorded the lowest rate of population growth since we began gathering data. In the year from July 2020 to July 2021, only 392,665 people were added to the US population. That’s about a tenth of one percent growth. It’s also the first time since 1937 that the population grew by fewer than 1 million people.

Here’s Bloomberg’s graph of our reproductive performance:

Meanwhile, pet ownership has been increasing, especially among younger generations. The American Pet Products Association’s annual survey revealed that millennials are now the biggest cohort of American pet owners. A 2021 AlphaWise survey revealed that 65% of 18-to-34 year-old Americans plan to acquire or add another pet in the next five years, driving a predicted 14% increase in US pet ownership by 2030.

But the falling birth rate is concerning. According to the US Census Bureau the proportion of married couple households with children fell from 40% in 1970 to 20% in 2012. While seven in 10 households included a pet.

So why are people delaying having children? A Morning Consult survey revealed that, no surprise, money is the top reason for millennials being childless, followed by the other key ingredient to starting a family: a willing and appropriate partner. The poll showed that 38% of millennials say that children are too expensive, while 33% of millennials said they hadn’t found a suitable partner.

Millennials face more economic hurdles than the older generations: high levels of student debt, stratospheric real estate prices and career instability all have been exacerbated by the pandemic. The recent rise in inflation also makes the cost of living, and thus the costs of raising a child, more expensive.

Here’s the comparison of the average cost of raising a child versus owning a dog. Pets are way cheaper:

This shows that pets aren’t cheap, but they’re far less expensive than having a child. The lifetime cost of a dog is just 15.6% of the cost of a baby. Cats are cheaper, but that isn’t necessarily a reason to choose to have one in your life.

The cost differential makes it clear why millennials might not feel financially secure enough to bring a child into the world, while the financial costs of adopting a pet is much more achievable. A few things to remember:

Pope Francis took the name of the patron saint of animals
Having children is a choice, it shouldn’t be an obligation
Catholic opposition to birth control and abortion rights hasn’t led to “loving families”

The Pope shouldn’t weigh in on the intensely personal decision about whether to have a child, any more than parents, or family friends should. And the Pope shouldn’t be condemning the childless pet owners of the world as selfish when people are simply struggling to make good life choices.

He, along with politicians, should be committed to doing more to tackle the underlying reasons why the people who might want children feel that they have to delay it.

Time to wake up, Pope Francis! How many times does the Roman Catholic Church need to hear that they should stay out of people’s bedrooms?

To help him wake up, let’s all listen to Billy Bragg perform “Ten Mysterious Photos That Can’t Be Explained‘ from his 2021 album, “The Million Things That Never Happened”. In the 1980’s, Bragg was described by Rolling Stone as “a contemporary, urban British folksinger”. Still true today:

Sample Lyric:

The conspiracy acts
The cyberchondriacs
Gripped by their fevered imagination
They switched the filters off
Too much is not enough
You know that you can overdose on information

But you know that you can’t overdose on The Wrongologist!

The Coming Wealth Transfer

The Daily Escape:

Storm at North Clear Creek Falls, CO – April 2021 photo by mattbnet

Our current economic worries tend to overlook that Baby Boomers are retiring in increasing numbers, and quite a few are beginning to die. They’re leaving a giant pile of money to their heirs, what the media have called “the greatest wealth transfer” in modern history. OTOH, we should remember that it will probably cost $500,000 to pay the projected private college tuition in 20 years.

From the WSJ: (emphasis by Wrongo)

“Baby boomers and older Americans have spent decades accumulating an enormous stockpile of money. At the end of this year’s first quarter, Americans aged 70 and above had a net worth of nearly $35 trillion….That amounts to 27% of all US wealth, up from 20% three decades ago. Their wealth is equal to 157% of US gross domestic product, more than double the proportion 30 years ago…”

It gets better: In a 2019 report, Cerulli Associates projected that older generations would hand down some $70 trillion between 2018 and 2042. Roughly $61 trillion will go to their Millennial and Gen X heirs, with the balance going to philanthropy.

Millennials, (at least, some Millennials) are one day soon going to be a lot richer than they are today. A key question is whether this new-found wealth will change them. Looking at Millennials’ voting patterns, they gave Biden about 60% of their ballots in 2020, while voters over 45 gave him 48%. In Blue America, it was even more striking. Voters under 40 voted overwhelmingly for Bernie Sanders in both of his Democratic nomination bids.

Turning to wealth, Millennials’ have relatively meager financial assets. The St. Louis Fed calculated that in 2016:

“…the typical older Millennial family was 34% poorer than we would have expected”

Millennials’ home ownership rate trails their predecessors at the same point in their life cycles, with roughly half of millennials still paying rent. Such statistics have led a few headline writers to declare Millennials “one of the poorest generations ever.”

Many in politics think that the Millennials will remain political lefties and that they will soon be the most politically influential generation. But if Millennials do retain their leftist leanings, it won’t be because of their lack of wealth. When the Boomers finish their wealth transfer, Millennials will go from the poorest to “the richest generation in human history.”

Will this change their politics to be more like those of their Boomer parents? Will the family “trickle down” of wealth redraw the lines in American politics? That’s doubtful. The impending wealth transfer will be regressive: A Federal Reserve study of intergenerational transfers in the US found that Americans in the top 10% of the income distribution were twice as likely to receive an inheritance as those in the bottom 50%.

But even though the wealth transfer is concentrated at the top of the pyramid, some of it will reach a broader base. Capitol One estimates that more than half of the estates that will transfer over the next 30 years will go to low or middle-income households.

That means a substantial group of lower income Millennials are going to get some money from their parents.

About 48% of Millennials own their homes. Those who secured homeownership early have generally seen their net worth rise: Between 2015 and 2020, the median sales price for a US house increased by 14.5%. And of course, one Millennial’s rising home equity is another’s rising rent.

College-educated Millennials are much closer to matching the Boomers’ rate of saving than non-college-educated Millennials. And the racial divide in Millennial wealth is huge. White Millennials lag White Boomers in wealth accumulation by just 5%. Black Millennials, meanwhile, own 52% less wealth than previous generations of Black Americans had accrued by their age. Worse, Black Millennials have been losing ground on their predecessors in recent years.

The “great wealth transfer” will exacerbate all these inequities. Wealthy, White Millennials will claim a massively disproportionate share of the impending inheritances and gifts. And as familial wealth is transferred, the Millennial rich and upper-middle class will be the wealthiest generation that America has ever known. While working-class Millennials, meanwhile, are poised to enjoy less economic security than their parents, as their wages fail to keep pace with the rising costs of housing and health care.

Wrongo’s and Ms. Right’s kids stand to inherit a significant chunk of change if we were to die today. The missing piece of this analysis is that we don’t know how long we will live, and what long term care will cost to keep us going. That may eat up a significant amount of the money we’ve saved in our lifetime.

But let’s hope that whether it’s a little money or a lot, it won’t stop them from fighting for universal health care and an expanded right to vote.

Let’s also hope that they won’t suddenly start voting for a death cult peopled by morons and Ted Cruz.

Getting Younger is Key to Democrats’ Future

The Daily Escape:

Canyonlands NP, UT – photo by Xymic

Like Biden, Wrongo is a member of the Silent Generation, but he always confuses the names and age groupings of the generational cohorts. Here’s the breakdown by cohort, age and number of each:

Silent Generation: Born between 1928 and 1945. There are about 23.6 million in the US
Baby Boomers:  Born between 1946 and 1964. There are about 68.7 million in the US
Gen X: Born between 1965 and 1979/1980. There are 65.1 million of them
Gen Y, or Millennials: Born between 1981 and 1994-1996. There are 82.2 million of them
Gen Z:  Born between 1997 and 2012-2015. There are 86.4 million of them in the US

Gen Z is now the largest demographic cohort, with Millennials just behind them. Boomers now represent 21% of America’s population, and Silents are 7%.

But Boomers and Silents still control our political lives. While true for both Parties, leadership in the Democratic Party skews really old: Biden is 78, Sen. Dianne Feinstein is 87, and House Speaker Pelosi is 80. Majority Leader Steny Hoyer is 81, Majority Whip Jim Clyburn is 80, while Senate Majority Leader Chuck Schumer is a relatively young 70.

NY Mag’s Eve Peyser:

“If you’re starting to get the feeling that the country is governed as a gerontocracy, you are correct. People over 50 make up 34% of the US population, but 52% of the electorate, according to Pew. And it’s not only political power that baby-boomers and the Silent Generation have a tight grip on: Americans over 55 own two-thirds of the wealth in this country.”

Here is a chart from Pew that shows the distribution of the new Congress by age:

There are 31 Millennials in the House, and only one in the Senate. According to another Pew survey, in 2018, the most common age for all Americans was 27, while the most common age for White Americans was 58! The over-representation of Boomers and Silents in Congress means that White interests are similarly over-represented in US politics.

This isn’t happening everywhere; it’s a distinctly American problem. More from Peyser:

“If you look at other countries, they’re not similarly controlled by older politicians. I think that the explanation here is the two-party system….[A multiparty system gets] young people involved in politics, voting, organizing, running things, organizational politics, [which] means that they are able to start accumulating institutional power.”

Democrats must let younger politicians have a crack at leadership. That was the point of Sen. Chris Murphy’s (D-CT) successful push in January for a change in the Senate’s rules to allow more junior Senators to chair better and more influential subcommittees.

It was also tried in the House. Rep. Katie Porter (D-CA) pushed Pelosi and House Financial Services Committee Chair Maxine Waters (D-CA) to be more confrontational in some committee hearings. But Porter lost the argument and is no longer a member of that Committee. However, she remains on the House Oversight Committee, and like Murphy, she has a bright future.

The Democrats have a few other young stars that can become future national leaders. In 2016, Frank Bruni showcased a few in the NYT. Among others, he mentioned Stacy Abrams, Julian Castro, Pete Buttigieg, Hakeem Jefferies, and Gina Raimondo. Two (Buttigieg and Raimondo) are now in Biden’s cabinet, while Abrams and Jefferies are already powerful Party leaders.

Several House members, including Jamie Raskin, David Cicilline and Alexandria Ocasio-Cortez are emerging leaders who help skew the Party younger, but change will be slow. From Peyser:

“We have not yet reached the peak of Boomer culture. We’re going to see the highest number of people turning 65 in US history in 2023,”

By 2028, Millennials and Generation Z will make up almost exactly half of eligible voters. In other words, things will change, but only as the Boomer generation retires from politics, and when we actively help convert eligible voters into registered voters.

Increasing their number could pivot on the fate of HR-1 in the Senate. It would ease the way for more young people to participate in politics, since it requires every state to create systems for automatic, same-day and online voter registration. That could significantly reduce the biggest barrier to more young people voting in American elections: our complex registration system. So far, fewer younger voters have been willing, or able to navigate it.

Strategically, the Republicans will continue trying to suppress voting, while also trying to woo more Boomers to their side. Democrats will work to expand the voter rolls and also get them to turn out, particularly in swing states.

Younger voters are likely to be more progressive than the older Democrats. But even the oldsters in the Party will follow them, as Biden is doing today.

Saturday Soother – August 3, 2019

The Daily Escape:

Wotans Throne, North Rim, Grand Canyon NP, AZ – photo by phantomcloud.

The WSJ has an important story on how people with what seems like pretty good household incomes, are getting more and more indebted trying to keep up a middle class lifestyle:

“The American middle class is falling deeper into debt to maintain a middle-class lifestyle.

Cars, college, houses and medical care have become steadily more costly, but incomes have been largely stagnant for two decades, despite a recent uptick. Filling the gap between earning and spending is an explosion of finance into nearly every corner of the consumer economy.

Consumer debt, not counting mortgages, has climbed to $4 trillion—higher than it has ever been even after adjusting for inflation. Mortgage debt slid after the financial crisis a decade ago but is rebounding.

Student debt totaled about $1.5 trillion last year, exceeding all other forms of consumer debt except mortgages.

Auto debt is up nearly 40% adjusting for inflation in the last decade to $1.3 trillion. And the average loan for new cars is up an inflation-adjusted 11% in a decade, to $32,187, according to a Wall Street Journal analysis of data from credit-reporting firm Experian.”

The Journal gives a generally sympathetic portrayal, provided you don’t go deeply into their comments section, where readers spout platitudes about Millennial’s lack of fiscal responsibility. Here’s a chart from the WSJ using some recent work by Georgetown bankruptcy law professor Adam Levitin showing how much certain costs have risen relative to wages:

Biden?

The Daily Escape:

Azulik Hotel, Tulum Mexico, – 2019 photo by Phoebe Montague

A long-time friend of Wrongo and Ms. Right who is also a reader of the Wrongologist, emailed that a friend who is a well-placed Democrat in DC, said the Party plans to push Joe Biden for a single four-year term “to bring us together in healing”. He would also appoint a younger VP who would appeal to Millennials.

After a little digging, it seems that may be the plan. CNN reports that Biden is considering:

“The early selection of a running mate, which one aide said would help keep the focus of the primary fight on the ultimate goal of unseating Trump.”

If Biden would commit to one term, selecting his VP candidate early would lay hands on that person as the presumptive Democratic nominee in 2024. It sounds like a really bad idea, one that also would preclude Biden’s selecting one of the existing candidates for the 2020 nomination.

This strategy would have precluded Biden getting the VP nomination in 2008. Obama couldn’t have picked Biden early, because Biden was also running for president. And even once Biden dropped out, he wasn’t prepared to immediately back Obama over Hillary Clinton for the nomination.

Biden has tons of history for his primary opponents and the Republicans to pick through. Ryan Cooper, writing in The Week, said:

“Joe Biden is about to ruin his reputation….The most immediate problem for Biden personally is that he has #MeToo written all over him…..there are already vast compilations of footage of him being far too handsy with women in public settings.”

The Wrongologist

Geopolitics, Power and Political Economy

Category: Millennials

Monday Wake Up Call – January 10, 2022

The Coming Wealth Transfer

Getting Younger is Key to Democrats’ Future

Saturday Soother – August 3, 2019

Biden?