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OK Boomer: The truth about Millennials and the economy

OK Boomer: The truth about Millennials and the economy

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Jamin Hubner

Last year I gave a lecture at a university in Rochester, New York entitled “From Boomers to Doomers: How Scientific Reductionism Gave Birth to Contemporary Nihilism.” It tried to explain and explore a major shift in optimism to pessimism from the post-WWII era to the present, with special focus on science and philosophy.

But there’s an economic side to this ongoing dialog. What dialog? Well, boomer parents (those born from around 1946-1964) complain that their millennial children (born 1982-1996) aren’t working as hard as they did, earning as much, and spend too much time doing a whole lot of nothing on their phone. Why is it so hard for millennials (sometimes called the “doomer” generation) to just find a job, buy a house, stay out of debt—and find happiness in all that? (It’s the American dream!)

Millennials, on the other hand, complain to their parents that it’s not easy finding a job and doing all those things, and that they don’t want to live the same kind of life as their parents to begin with. They’d rather live in a sustainable tiny house in the simple life than climb corporate ladders and live in a 5,000 square foot house. They’d rather drink beer from a local microbrewery than from a corporate brand. They’d rather watch Netflix on their tablet than cable on a TV in their bedroom.

These are largely stereotypes and/or generalizations, of course. But the economic expectations and divergences between generations are real. Let’s look at some major case studies.

Consider the cost of housing relative to income. In the 1970s, the average cost of a house was around $23,600. The average household income for the same period was about $9,800/yr. So the cost of a house was about 2.4x annual income. Today, the average cost of a house is about $382,000, while the average household income was $63,000. That means the cost of a house is about 6.4x annual income. So it’s almost three times as expensive to own home for young millennials as for young boomers.

Consider education. Using the same income figures as above, the average annual cost of university education in the U.S. was $500/year (public) and $2,000/year (private), which compared to income are ratios of .05 and .20. Today, that cost soared to a whopping $11,300 (public) and $41,400/yr (private), which compared to income are ratios of .18 and .66. Higher education today is over three times as expensive for millennials as for boomers. The same goes for cars ($3,500 then vs. $33,000 now).

In short, the major financial purchases of life became disproportionately expensive. Though many consumer goods have gotten cheaper (like electronics), wages have not otherwise kept up.

These microeconomic case studies are compounded by macroeconomic evidence. A few weeks ago, the Washington Post published an essay entitled “The unluckiest generation in U.S. history: Millennials have faced worst economic odds, and many will never recover.” The article includes a graph of “how much inflation-adjusted gross domestic product per person grew during each generation’s first fifteen years in the workforce, starting at age 18, averaged across all the birth years within each generation.” By age 33, boomers experienced about 38% GDP growth, while millennials at age 33 experienced about 15% GDP growth. Once again, the economic difference between the two is about a factor of 2 to 3.

All of this means that the economic expectations set on young Americans today should be different than they were in the past—if they are to be relevant, realistic, and fair. The world was very different a half-century ago, and we’re not going back. Many boomer parents realize this, and have been thoughtful and generous in bestowing capital to their kids (cars, down-payments on houses, college degrees). Others see it differently, and wonder if their kids will live in their basement forever. Regardless, millennials are not as optimistic as their parents for good economic reasons. Most jobs won’t allow them to buy a house anymore, for example.

So, why? What caused these massive economic differences between generations? There are certainly many variables. But when the shifts are dramatic and economy-wide, the causes are usually those that affect the entire economy, not just a segment. And when one asks what would have caused the “big three” (housing, education, cars) to be so inflated while other consumer goods weren’t, the answer is clear.

Housing, education, and cars entered share one thing in common: people borrow big money to get them. Mortgages, student loans, car loans. Banks do the lending, and they borrow from commercial banks all the way up to the Federal Reserve central bank, which has monopoly control over currency and the credit system. Inflation (price increases from money printing and the credit system) doesn’t affect all sectors of the economy equally, but affects different sectors in “waves,” much like a drop of ink a pool is the most colored where it was dropped, and then it fades as it goes out and becomes more diluted. So when the central bank manipulates interest rates, it causes tidal waves throughout the economy, but at different rates and times.

In future essays, we’ll look at this process in more detail. For now, it’s sufficient enough to just note how easy money at the banks causes price inflation, and that millennials really are paying the price for all those decades of easy money.

Dr. Jamin Andreas Hübner is the CEO of Efficient Business Consulting LLC and a professor of economics at Western Dakota Tech. For comments, questions, or corrections, write to

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