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The areas you mentioned declined because they lost jobs first, not because the rich fled......
Why are there always ppl who start shouting communism the second we start having discussion about inequality?
The rich fled and then they lost jobs.
Regarding income inequality, Communism is the fix. You can live this wonderful paradise life of Karl Marx and Kim Jung Un or live in an unequal country that sux like the USA. You make the USA like your paradise and the result is the same...just see how the Soviet Union did, China under Mao...
You know what's really a scary time? 20 years from today.
Boomers will have phased into history for the most part, using up most of the money their generation accumulated. The many millennials, middle aged and above, will have little saved for their retirement, no competitive job experience, still paying for their student loans and mortgage if they have one that is, and have been pinching pennies all this time to save for their kids college. There is no more inheritance, not even much jewelry or furniture. Many millennials will be back to their parents house.
It's 2034. The United States is now the second largest economy, after china. Years of recession has completely transformed America. Except for some large urban centers, most places have been quiet and unchanged for decades. Population dwindled. Alcoholism spreads. Struggles have not been effective, though the poor did win a lot of welfare over the years. China, India, and Brazil have become much more powerful. Many jobs opportunities are there, so are highly talented people.
Then who does have the competitive job experience? Many millenials are working in tech, finance, biotech, etc. These people will gain experience and move into more senior roles in time themselves. Things are tough, but not everyone is flipping burgers.
There are lots of people doing well in major urban centers. In small towns and rural areas, not so much, but even there you can find success stories. I agree that the population is going to major urban centers over the near to medium term, but some urban centers will become prohibitively expensive. Once it becomes too expensive, those who are priced out go somewhere else. The pendulum will swing the other direction at some point.
In your scenario, there won't be any inheritance because the boomers will be exhausted because of nursing home bills.
The people I know who aren't doing well aren't doing well largely because of the decisions they made, whether that's an unplanned kid, unwillingness to move to areas where there are jobs, a criminal past, or whatever. There are people out there who are truly struggling, and while I have sympathy for them, most people are muddling through.
Do you think Generation Y 's net worth is going to be much smaller than that of generation x and baby boomers?
Several things
1 student loans and high college tuition
2 lack of middle class jobs
3 stagnant wages
4 global competition
Along the Generation Y people you know, how are they doing?
it's unfair to give an outlook of the generation Y people I know, but all are doing fairly well. I graduated from Lehigh, 2004, and I guess I'm on the very front end of Gen-Y, or very tail end of Gen-X, depending on who you talk to.
I've read over the years that Generation Y has a very high rate of paying their monthly credit card bill in full (which is true of essentially everyone I know that would talk about this type of stuff).
Gen-Y has a large number of college graduates, and unemployment for college grads is 2.9%. Maybe recent grads struggle to find a job, but I think eventually, they do just fine.
Student loans? Average debt when I graduated (of people who had debt) was around $24,000. Today, it's around $29,000. Hardly a horrendous burden given the upside the degree provides in most cases. Sure, horror stories of the dude who graduated with $100,000 in loans and is working as an assitant at a law firm, but that's the exception, not the norm. Sure, some kids having trouble finding the job in the field they want take a job at Starbucks in the meantime, but again - exception, not norm.
Wages have been stagnant for around 40 years. Why is this a Gen-Y issue?
Gen-Y folks I know are fine with moving to China to get a job in this globally competitive world. I know 4 people from my area working in China, 1 working in Hong Kong, and numerous working in Europe.
Net work for Gen-Y? Most concerning thing is the aversion to saving in retirment accounts given witnessing the 2008 crash. But I think long term, aversion to debt of this generation (outside of student loans, which isn't horrible debt to take on), Gen-Y will do just fine in the net worth category.
Do you seriously think this time we will pass this through nicely too? I doubt it. The economy will stay in this thing for another ten to twenty years. This is the new normal. If this generation turns out okay like you said it would be the result of their adjustment and lower expectations, not the economy's improvement.
Lower expectations? Or realistic expectations? In the 90s and early 00s when people were spending 140% of household income and purchasing homes with the thought of them appreciating 20, 30, 40% within years, were those "high expectations" even remotely realistic?
Maybe not living in a world of credit card and HELOC debt for the next 10-20 years won't be such a terrible thing. Maybe we'll consume less, freecycle more, and shop at thrift stores more. Maybe I'll borrow more tools from my neighbor than buying tons of shiny tools I'll use once (just looking in the garages of some of my baby-boomer neighbors, it's like they could start lucrative rental businesses).
Gen-Y is just operating differently than previous generations. We aren't worse off in our eyes, but every other generation loves to talk about how we are worse off.
I graduated with student loans and paid off $40k because my parents weren't wealthy enough to pay the entire tuition bill (had a decent job pre-2008) and still have about $15k in loans left. Over 10 years from graduating, my income has steadily gone down. I still am nowhere near owning a home.
It's easy for people with jobs to say that you would easily get a job if you 'just tried', but it isn't as easy as trying when the industry you used to work in and have trained your life for simply dies off. It takes years to re-train, start from the bottom rung again, and move your way up to where you were supposed to be when you were 25 but are now 35. My situation is NOT unique and it's why Gen Y will be the first generation in US history to have less wealthy than the previous generation before it.
curious - what's the industry that died off, and how are none of your skills transferable to other jobs? what was your undergaduate degree?
You are being generous when you state we will be less wealthy. Actually we will be at poverty.
In reality, the U.S. has been stealing from the world's resources now pretty steadily since Nixon took us off of the gold standard giving us a fiat currency. Basically the economy has been debt-based and dependent on our ability to print the dollar. Check the news, and it's not hard to see that the dollar is in big trouble. Hyperinflation of the currency is not a far-fetched concept. Global leaders have publically announced the desire to move away from the Dollar as the World's Reserve Currency. When this happens things in this country are going to be a LOT different than now.
Add to this the outsourcing of jobs in America, the advancement of technology which will eliminate the need for certain jobs, etc.. Also add the NUMBER OF BABY BOOMERS THAT WILL BE DEPENDENT ON SOCIAL FUNDING (for Medicare, Social Security, Disability, etc..) Sure the claim is that they paid into it so now they deserve it back. Well the reality is that Social Security was initially implemented with an age expectancy of around 70 years old. People are living longer and extracting more. So that is fiscally insolvent, and NO WAY is it going to be around for our retirement. Actually the concept of saving for retirement is a joke of a concept really when it comes to the Generation Y. We're just trying to survive here. Forget about family, homes, etc.. There is no stability for these things in this economy.
Currency bubble, Real Estate Bubble, Student Loan Bubble, etc.. just a bunch of bubbles about to pop. That's what the Generation Y and their children get to look forward to. The jobs available in Erie, PA here (a big city) are mostly food service jobs that pay little. Most jobs posted don't even require a degree and the pay is mostly minimum wage to like $12/hour. Who in the world could support a family on that type of wage? I can barely provide for myself without being out on the road with a sign asking for work.
I have two degrees, and was even looking toward going back to school for a job in healthcare working as a PT. The cost of education is like $120 thousand dollars all in an environment of declining healthcare reimbursement, medicare cuts, Obama care.. etc.. The advanced education is not even needed to perform the job at a high level at the market rate. The reason it costs more is due to greedy educational institutions and lobby groups. Selling the "American Dream" at mortgage rate prices. Like it is in many professions now.
A quick search showed lots of non food service jobs in Erie. They may not be what you like though. But - why stay in Erie? Pitt. is growing quite nicely right now. Or just move to a different state. What are your two degrees?
A key thing that Baby Boomers had on their side was insane appreciation in the stock market and housing markets during their prime saving years.
Let's look at where things were in 1974, the year mathjak called out. A year when many older boomers were getting a start. The S&P 500 closed at 87.69 on June 24 of that year. Today it is nearing 2,000. The median house price was $35,100. Last month it was $213,400. (Links: http://www.census.gov/const/uspricemon.pdf , Existing home sales up 4.9%; best gain since '11 )
If you kick in inflation, OK, they're not as eye-popping, but still wonderful deals. That 87.69 in today's dollars would be $423, and that $35,100 house would be worth $169,400 in today's dollars. (Link: CPI Inflation Calculator) So even net of inflation and after the big crash, these boomers had some substantial home price appreciation. However the S&P 500 index is 4.5 X as valuable as it was 40 years ago.
None of this discounts hard work, saving and individual agency that people are calling out in this thread. You needed to have savings in order to take advantage of these trends. BUT, as far as the magnitude of wealth boomers were able to accumulate, this is huge. Boomers didn't save that much in nominal dollars out of each paycheck, but the savvy ones were able to multiply those savings again and again.
It is far from automatic or expected that any generation would have opportunities like this. For a counterexample, all you need to consider is the period from June 1999 until today, 15 years exactly. BOTH the S&P 500 and the median home price are DOWN net of inflation in the past 15 years. Imagine a Gen Xer entering the workforce in 1999, and what a different deal they got.
Anyway, if Gen Y doesn't get lift like this on assets, I can't see them topping the Baby Boomers in wealth.
if you're on the front end of Gen-Y and have been saving on a monthly basis, you would have seen quite positive appreciation from 2009-2014. When I graduated college in 2004, job prospects looked good, but the cost of everything looked obscene. I remember conversations with coworkers my age and younger over the next 2 years about how it would be a decade before we could even feasibly save a down payment if we wanted to put 20% down. Of course, our slightly older coworkers were doing interest only mortgages, 0 down, mortgae + construction loans, etc. A few years later, and things got cheaper for us. If we managed to hold on to our jobs. Suddenly, buying a home was possible.
Anyways, my point is, we're only briefly into the gen-y investing period, and a sort of "reset button" was hit on the S&P, DJIA, etc. right as we really started. People with a long term outlook should be doing reasonably well right now, provided they were in the right industries. it's the folks who graduated in 2008, 2009, 2010 who probably are suffering the most. they lost a few years of income, most likely, due to the economic times when they happened to graduate. but i think long term, they'll be ok too.
I am of Gen-Y and know many age group that are doing just fine. We work, have little debt, contribute to our 401Ks and Roths, and pay our taxes.
The ones that are whining are those that rang up a ton of student debt because they were too lazy to work during college and breaks, and then compounded their destiny for failure by tattoing themselves into jobless oblivion.
if you're on the front end of Gen-Y and have been saving on a monthly basis, you would have seen quite positive appreciation from 2009-2014. When I graduated college in 2004, job prospects looked good, but the cost of everything looked obscene. I remember conversations with coworkers my age and younger over the next 2 years about how it would be a decade before we could even feasibly save a down payment if we wanted to put 20% down. Of course, our slightly older coworkers were doing interest only mortgages, 0 down, mortgae + construction loans, etc. A few years later, and things got cheaper for us. If we managed to hold on to our jobs. Suddenly, buying a home was possible.
Anyways, my point is, we're only briefly into the gen-y investing period, and a sort of "reset button" was hit on the S&P, DJIA, etc. right as we really started. People with a long term outlook should be doing reasonably well right now, provided they were in the right industries. it's the folks who graduated in 2008, 2009, 2010 who probably are suffering the most. they lost a few years of income, most likely, due to the economic times when they happened to graduate. but i think long term, they'll be ok too.
Many will, but I think there is going to be a segment of these people who are going to remain behind. I graduated in 2010 and had to take whatever job I could get because times were tough. I spent the next year learning my job and applying for other work. Before I knew it, I had been at the job for two years, and was way off course professionally. I was stuck in a call center with few transferable skills. Since I was no longer a new grad, I couldn't get into that pool, and was stuck in the general applicant pool, but without the seniority or skills.
I did eventually get a professional job...after nearly four years. Since 2010 I've worked and lived in four different states (IA, IN, TN, VA, MA). A lot of the folks I graduated high school and college with are still stuck, and the longer you are stuck, the harder it is to get back on track.
In terms of taxation, the system a favors the rich. But young people are struggling because opportunities are lacking. Wealth is yesterday's achievement. Opportunity is tomorrow wealth.
A wealth tax would discourage people from making an effort.
part of the reason opportunities are lacking is because a small number of people are holding a large amount of money. sure, some of it is sitting in investments, but it's not the same as if that money was moving through our economy via goods and services being purchased. I'm not sure I'm comfortable with a direct wealth tax, but there's some truth to the point. the bottom line, if people hoard money, it removes it, basically, from the overall economy. people in the bottom and middle generally spend most of their money. that's what keeps demand for goods and services growing, which creates the need for more jobs. investment has a role, but the scales have become far too lopsided, thus, depressing the ability for the large majority of the population to spend money.
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