Younger generation mobility at 50 year low

[Moonbeam]

Tax the rich
Feed the poor
Until there are no
Poor no more

It's quite a conundrum, eh?

Not even similar notions I would say.

 

[DisgruntledVirus]

Well, count me out of the 20's something that article is talking about. I'm 27, own my own house when I was 26 (full disclosure: family gave some financial help to do it), have a car I enjoy, and don't have credit card debt at all. So yeah I have a lot of debt out there, it's tied up in my car, student loans, and the house. All of which are paid on time along with bills. I have money going into 401k, roth, and traditional IRAs, and some being set aside for emergency fund reasons.

I see three main problems with my peers. First off, they were part of a generation where parents would tend to just give their kids things. Lots of things. For example, a friend in HS was bought a brand new Mustang for her 16th birthday. She totaled it, they bought her a new one. It happened 2 other times. Many of my peers were just given things as they grew up, and now expect the same in their adult lives. Second, and I see a ton of it in the dating scene, is people went to college because they were told they needed to. But then their parents paid for college, and let them choose what they wanted to go to school for. And after they changed majors a few times, they ended up with some utterly useless degree. Or one that would make their lives difficult. Like an archivist (works at a library but couldn't support herself on her own that well, but her husband is a well off IT guy), English major (many of them are unable to find jobs, or get low paying jobs doing stuff like technical report writing), gym teacher (because it would be "fun" but doesn't have a job in teaching and is trying to get into IT because he knows it), psychology (where you don't really get to start making money until you get a masters or higher, so many of them are in jobs like Starbucks or something. Only one has an adult job and she is doing pretty well, although she has a shit ton of student loans from going to a private school), or art majors (who just can't get jobs and work at craft stores or something). I could go on, but the point is that many of my peers got degrees that they thought they would enjoy. Which they might enjoy the field, however many of them didn't ever go "oh... wait... this job makes $35k/year starting out... hmmm maybe I should pick something else that will let me pay off student loans and live on my own..." Third, and finally, many weren't ever taught any kind of fiscal responsibility (partially in line with point 1). They got credit cards and went on spending sprees. Or they took out more loans than they needed with the mindset "well I already have $70k in debt... what's another $3k?" and kept doing it. They would go on vacations, or but new TV's, or more expensive cars, or take your pick. But they got sucked into the credit trap.

On top of all that you had the financial collapse in 2008 that constricted the job market, so all these jobs that my peers were expecting when they graduated (because they were there for a lot of their college careers) weren't when they graduated. But I can't tell you how hard it is going out and dating trying to find a girl who has her shit together, has a future career path, and is not a financial idiot. I'm sure the same is true for guys but I don't date them so I wouldn't know from that side of things

 

[DisgruntledVirus]

Those would be the 20 somethings that applied themselves in school, formed a smart career plan, pursued it aggressively, and landed a good job out of college. . . Unfortunately they are in the minority. However even these fortunate few only have a tenuous hold on the American dream; If their position is downsized or they stray off the straight and narrow they will lose it all and be up to their eyeballs in debt.

I'd probably fit into that category. I have a career path, landed a good starting job out of college, and have the so called American Dream of home ownership. Now while I have some protections in place, if I got downsized I would be scrambling to get a new job. That said, I have open offers from companies in the area that if I'm looking to come and talk to them (and would probably be able to get a job making close to what I am now if not a bit more). And I'm going to get a roommate to get some extra income with unused space in the house (which will have a large portion going to paying down debt like student loans).

 

[Orignal Earl]

Bull - us young folk can't afford that huge house with granite countertops, and nobody's about to lend us the money either. Not to mention that housing prices haven't simply kept up with inflation - they've skyrocketed upwards in major urban areas.

The Globe & Mail - 2012 vs. 1984: Young adults really do have it harder today

No doubt you could get a better deal in '84.
I'm sure you could fit your family into a $150,000 home just fine today too though, maybe even something smaller and more affordable.
A quick search shows me hundreds of homes in smaller cities across Canada for that price
If a home is on the top of your list, the first thing I would do is get out of TO

 

[desy]

I'll concede globalization has put downward pressure on wages and housing is more expensive but most consumer goods are cheaper. a TV in the 80's cost $600 for a 25" tube, my parents first microwave $500, my dad paid $200 for a basic +-X/ calculator.
Levis in the 80s $50 and people used to spend more on groceries back then.
386 computer with 14" vga monitor 2G and on and on.
Winter vacations were rare for most people we went once in 1980 to Hawaii and that was a bonus that paid for my parents cause he was w a company 25 yrs and they picked up the tab for us kids.
Eating out? rare? bag lunches yep, everyday
My dad took a thermos of coffee to work, remember those?
Saturday nights for my parents in the 60's was coffee crackers and cards and we had peasant vision on the TV til I was 6

 

[werepossum]

Well, count me out of the 20's something that article is talking about. I'm 27, own my own house when I was 26 (full disclosure: family gave some financial help to do it), have a car I enjoy, and don't have credit card debt at all. So yeah I have a lot of debt out there, it's tied up in my car, student loans, and the house. All of which are paid on time along with bills. I have money going into 401k, roth, and traditional IRAs, and some being set aside for emergency fund reasons.

I see three main problems with my peers. First off, they were part of a generation where parents would tend to just give their kids things. Lots of things. For example, a friend in HS was bought a brand new Mustang for her 16th birthday. She totaled it, they bought her a new one. It happened 2 other times. Many of my peers were just given things as they grew up, and now expect the same in their adult lives. Second, and I see a ton of it in the dating scene, is people went to college because they were told they needed to. But then their parents paid for college, and let them choose what they wanted to go to school for. And after they changed majors a few times, they ended up with some utterly useless degree. Or one that would make their lives difficult. Like an archivist (works at a library but couldn't support herself on her own that well, but her husband is a well off IT guy), English major (many of them are unable to find jobs, or get low paying jobs doing stuff like technical report writing), gym teacher (because it would be "fun" but doesn't have a job in teaching and is trying to get into IT because he knows it), psychology (where you don't really get to start making money until you get a masters or higher, so many of them are in jobs like Starbucks or something. Only one has an adult job and she is doing pretty well, although she has a shit ton of student loans from going to a private school), or art majors (who just can't get jobs and work at craft stores or something). I could go on, but the point is that many of my peers got degrees that they thought they would enjoy. Which they might enjoy the field, however many of them didn't ever go "oh... wait... this job makes $35k/year starting out... hmmm maybe I should pick something else that will let me pay off student loans and live on my own..." Third, and finally, many weren't ever taught any kind of fiscal responsibility (partially in line with point 1). They got credit cards and went on spending sprees. Or they took out more loans than they needed with the mindset "well I already have $70k in debt... what's another $3k?" and kept doing it. They would go on vacations, or but new TV's, or more expensive cars, or take your pick. But they got sucked into the credit trap.

On top of all that you had the financial collapse in 2008 that constricted the job market, so all these jobs that my peers were expecting when they graduated (because they were there for a lot of their college careers) weren't when they graduated. But I can't tell you how hard it is going out and dating trying to find a girl who has her shit together, has a future career path, and is not a financial idiot. I'm sure the same is true for guys but I don't date them so I wouldn't know from that side of things

Well said, and congratulations on getting your life together so well, so young.

 

[DucatiMonster696]

I'll say it again, as I stand firm on this point and that is "Income inequality" takes a back seat to Income Mobility. Income mobility in the sense of how is it easy to attain a job, move from that first job to a new higher paying job, etc is what is important for the average person.

A person comparing themselves with the likes of Bill Gates and lamenting the gulf and disparity in relative wealth is a pointless endeavor when the real issue is whether or not that person is able to easily move up the next rung on the ladder of success or not in their own life and what artificial barriers exist which block their ascent or weigh them down.

 

[DucatiMonster696]

In Germany, about 65% of high school kids go off to do vocational training, which in turn creates arguably the world's most innovative and robust export economy.

Could it be that the US is neglecting nearly two-thirds of its high school graduates by providing only one path to future success through a college/university education?

Well sadly this nation has pushed the fallacy that EVERYONE needs to get a college education due to politics. Worst of all is this message has been shoved down the throats of students for whom college will more than likely lead them to burying themselves in debt and eventually dropping out, of which already occurs to about 44% of all students who attend colleges in the US. So you get a kid who barely managed a C average in high school attempting to gain a college education where the standards are significantly increased in terms of personal performance and self-discipline and they failing at higher rates because pushing them into higher academia is tantamount to pushing them off a cliff because policy makers falsely believe they will grow wings and fly.


http://www.theatlantic.com/business...so-many-americans-drop-out-of-college/255226/

 

[LegendKiller]

Student loans are an undeniable problem. SL debt, just at the federal level, has hit $1tr with another $150bn+ at the private lenders. The federal number is increasing by more than $100bn/yr.

Nobody gives a shit. I talk to any number of politicians and finance people and they just say "ohh well, they can't discharge it" or, if you say, what if they could discharge it they say "well, they have to prove economic hardship, they have been paying thus far, so they will have to continue to pay". If you point out that they live in their parent's basement they merely say "ohh well".

It's like they can't even conceive of the massive problems this is creating, beyond the student loans. If kids are living with the parents the parents can't retire which means mid-tier experienced people can't move into those positions which makes it so new positions don't open up. That stagnates employment for the younger generation while destroying household formation. That's not even getting to the problem of parents co-signing.

Sure, the degrees are shit, but the loans are shit too.

It doesn't matter who I talk to, nobody understands. I am seen as the crazy guy. It's just astounding that nobody can see this as one of the biggest problems facing an entire generation of young people. This reminds me of when I worked at a major bank and discussed the housing bubble in 2006 in the DC area. They thought I was crazy, there had never been a nation-wide bubble! There can't be one! Impossible! The ignorance is astounding.

 

[yllus]

No doubt you could get a better deal in '84.
I'm sure you could fit your family into a $150,000 home just fine today too though, maybe even something smaller and more affordable.
A quick search shows me hundreds of homes in smaller cities across Canada for that price
If a home is on the top of your list, the first thing I would do is get out of TO

Great, all young people need to do to own a home is move hours away from big cities and all of the jobs that are found in them. Problem solved.

 

[OverVolt]

Yea they are screwed but so are the boomers pensions so who cares.

 

[OverVolt]

People who were in their late-20s and early-30s during the great depression got to enjoy the biggest spoils from the abundance of the 1950s. So it may work out pretty well for us. We just need another war with Germany.

I do have alot of faith as a young guy that sticking this out will pay off later.

This is a hell of alot like the 1970's manufacturing boom where everyone went into manufacturing right out of highschool and in the long run they all got laid off.

 

[OverVolt]

Great, all young people need to do to own a home is move hours away from big cities and all of the jobs that are found in them. Problem solved.

No no they commute 3hrs/day with $3 gas in their 1998 camry.

 

[OverVolt]

Well said, and congratulations on getting your life together so well, so young.

He got money from his parents.

My parents are basically screw ups despite me being pretty good with money/finance so I'll have to search my arse for some money.

Oh there's none there, just my own money.

 

[ch33zw1z]

My parents had no money, so anything I've done has been out of my own pocket. I will not advocate my kids go to college unless they have a good idea of what it is they're going to go for and get a job in afterwards. My parents gave me no guidance in this area, but pushed religious guidance all the time. I'm not complaining or attacking my parents here, it just will help me help my kids with their future. If my kids want to be tradesmen, that's fine with me. College isn't a requirement for adulthood or life. As long as people still reside in this country, then there will always be work for electricians, carpenters, metal workers, etc...

My .02..

 

[the DRIZZLE]

Student loans are an undeniable problem. SL debt, just at the federal level, has hit $1tr with another $150bn+ at the private lenders. The federal number is increasing by more than $100bn/yr.

Nobody gives a shit. I talk to any number of politicians and finance people and they just say "ohh well, they can't discharge it" or, if you say, what if they could discharge it they say "well, they have to prove economic hardship, they have been paying thus far, so they will have to continue to pay". If you point out that they live in their parent's basement they merely say "ohh well".

It's like they can't even conceive of the massive problems this is creating, beyond the student loans. If kids are living with the parents the parents can't retire which means mid-tier experienced people can't move into those positions which makes it so new positions don't open up. That stagnates employment for the younger generation while destroying household formation. That's not even getting to the problem of parents co-signing.

Sure, the degrees are shit, but the loans are shit too.

It doesn't matter who I talk to, nobody understands. I am seen as the crazy guy. It's just astounding that nobody can see this as one of the biggest problems facing an entire generation of young people. This reminds me of when I worked at a major bank and discussed the housing bubble in 2006 in the DC area. They thought I was crazy, there had never been a nation-wide bubble! There can't be one! Impossible! The ignorance is astounding.

I totally agree. It's particularly infuriating because the solutions are relatively straightforward compared to something like healthcare. We need to let markets properly price risk and allocate capital and increase the transparency of employment outcomes so both borrowers and lenders can make better decisions.

The fucked up financing system creates the shitty education system. In an ideal world borrowers would be smart enough to make good decisions for themselves but one of the takeaways from the housing crisis is that we need lenders to be the grown ups in the room. Things like the student loan forgiveness programs make things worse because they basically turn student loans into a call option for the borrower on the value of their education.

The really shitty thing is that a person who wants an education can see all of this, but still has to pay the inflated prices because they are simply a price taker. They can take a scholarship at a lower ranked school but that has an opportunity cost and by definition not everyone in the system can do that.

 

[sportage]

I still believe linking healthcare insurance coverage to work/employment causes many to feel trapped, chained to a job they hate, a job they despise, and depressed about that.
Another pretty nice thing Obamacare would do, if allowed to survive for the best interest of the working class, is finally cut that chain.
More employees would have the freedom to move to better, more successful careers.
End up much happier in their life.
And excel at their profession, even if that were only flipping burgers.
How many people hate their job, but feel stuck and can not quit only because of health insurance? Especially workers with families that depend on that insurance.

And that is reason #45 to support ACA Obamacare, which is in 95% of the citizens own best interest.
Memo: If you are not qualified as a multimillionaire, you are in that 95%.
But they don't want you to believe that, now do they?

Not off topic here. There is a direct link to mobility and healthcare.
Not to mention all those folks feeling despair when locked into a go nowhere job, then eventually and most likely going postal or suicidal.
Not to worry...however.
The NRA will always ensure an active part with that.
Funny how all this is kinda "linked" together in a weird perverted sort of way. No?

 

[waggy]

I still believe linking healthcare insurance coverage to work/employment causes many to feel trapped, chained to a job they hate, a job they despise, and depressed about that.
Another pretty nice thing Obamacare would do, if allowed to survive for the best interest of the working class, is finally cut that chain.
More employees would have the freedom to move to better, more successful careers.
End up much happier in their life.
And excel at their profession, even if that were only flipping burgers.
How many people hate their job, but feel stuck and can not quit only because of health insurance? Especially workers with families that depend on that insurance.

And that is reason #45 to support ACA Obamacare, which is in 95% of the citizens own best interest.
Memo: If you are not qualified as a multimillionaire, you are in that 95%.
But they don't want you to believe that, now do they?

Not off topic here. There is a direct link to mobility and healthcare.
Not to mention all those folks feeling despair when locked into a go nowhere job, then eventually and most likely going postal or suicidal.
Not to worry...however.
The NRA will always ensure an active part with that.
Funny how all this is kinda "linked" together in a weird perverted sort of way. No?

lol wow..

 

[LegendKiller]

I totally agree. It's particularly infuriating because the solutions are relatively straightforward compared to something like healthcare. We need to let markets properly price risk and allocate capital and increase the transparency of employment outcomes so both borrowers and lenders can make better decisions.

The fucked up financing system creates the shitty education system. In an ideal world borrowers would be smart enough to make good decisions for themselves but one of the takeaways from the housing crisis is that we need lenders to be the grown ups in the room. Things like the student loan forgiveness programs make things worse because they basically turn student loans into a call option for the borrower on the value of their education.

The really shitty thing is that a person who wants an education can see all of this, but still has to pay the inflated prices because they are simply a price taker. They can take a scholarship at a lower ranked school but that has an opportunity cost and by definition not everyone in the system can do that.

At least under the old model, where FFELP loans were originated and sold to banks, they took at least some modicum of risk, especially with the B-class tranches which were covering the ~3% of non-gov't guaranteed risk. Crappy originators were somewhat punished by higher prices and lower guarantee repayments if they had higher defaults. Thus they concentrated a slight bit more on underwriting.

Now the gov't doesn't do any underwriting at all. There is no such thing as "servicer reject rate" or worrying about guarantors defaulting (even though they were always backstopped by the DoE).

Personally I think that there should be risk-based pricing based upon majors, along with dischargeability after 5 or so years for low-paying majors. I wouldn't care about lawyers or doctors, but a sociology major with $100k in loans needs to have the loans at least partially discharged.

Private lenders try to put lipstick on the pig by saying they sign up co-signers but those can be dropped at ~12-24 payments.

If the market won't discipline themselves then they need to be disciplined. However, the government won't discipline themselves and politicians won't admit they f'd up.

When I say that every person I talk to about this, I'm not talking about some student or a local banker, the blinders extend *very* far up the chain of command. This is just like the housing bubble, nobody cared until they all lost their shirts, then it was "OMG, HOW DID WE SCREW THIS UP, IT'S THE BANKS FAULT!!! YEAH, THOSE EVIL BANKERS!!!" when, in reality, it was everybody. From the parents, to the students, to the lenders, regulators, congress and the president.

I agree that the industry needs to lead but they won't. SLM doesn't give a shit, their SmartOption and Co-signer BS just proves it.

 

[OverVolt]

lol wow..

Yeeeaaahh..........


I suppose that is a typical Gen Y. ACA in reality is pretty bad. Mandated coverage is dropping peoples plans and/or raising their rates. I have a feeling once you sign up for Obamacare in the next few years they are going to yank the price up as they aren't getting the risk pool they wanted. The quote this year was assuming alot of young subsidizing the old. The young subsidizing the old isn't how you price insurance risk its yet another suck wealth from the young scheme. They shouldn't have been expecting a certain age pool they should have been accurately pricing peoples plans to begin with.

Apparently he really wants his wealth sucked up one way or another. Its like college loans did him in and he has no choice but to let ACA put the nail in the coffin. Some of us are still surviving on our own bud. :/

Once you are on subsidies I really think there is no going back. Now you are motivated to never make more than $60k/year... thats not good.

 

[the DRIZZLE]

Personally I think that there should be risk-based pricing based upon majors, along with dischargeability after 5 or so years for low-paying majors. I wouldn't care about lawyers or doctors, but a sociology major with $100k in loans needs to have the loans at least partially discharged.

But we can't have one without the other. Easing dischargeability without risk-based pricing for new loans is doubling down on stupid. No one wants to fix it because the loan forgiveness programs have eased the pain just enough to placate borrowers.

It's also not exactly popular for a politician to say it's too easy for students to finance their education. With the housing crisis, they created the "predatory lending" trope to put the blame on the lenders.
(I do place a lot of blame on the originators, ibankers, and ultimate buyers of MBS but find the term ridiculous. I always think of the Monopoly man jumping out out of a bush and forcing bags of money at people).

No one is willing to do that to SLM.

 

[Londo_Jowo]

Now you are motivated to never make more than $60k/year... thats not good.

I believe the $60k/year is for a couple and $45k/year for an individual.

 

[berzerker60]

I'll say it again, as I stand firm on this point and that is "Income inequality" takes a back seat to Income Mobility. Income mobility in the sense of how is it easy to attain a job, move from that first job to a new higher paying job, etc is what is important for the average person.

A person comparing themselves with the likes of Bill Gates and lamenting the gulf and disparity in relative wealth is a pointless endeavor when the real issue is whether or not that person is able to easily move up the next rung on the ladder of success or not in their own life and what artificial barriers exist which block their ascent or weigh them down.

They're closely related issues. Income inequality isn't just a bad thing by itself, it's bad because 1) a strong economy needs strong demand, and the 1% with the vast majority of the country's wealth simply can't generate that demand themselves, which means a smaller economy; 2) when that wealth sits in bank accounts untaxed, it can't be invested in infrastructure and things like education that have huge long-term economic and social benefits, making everything harder.

Boomers just don't seem to get the enormous gifts their parents gave them in terms of infrastructure and a tax scheme that always encouraged hard work and success, but kept income inequality in a reasonable realm and funded said infrastructure (including 90%+ top marginal rates during the 1940s and 1950s). Then, assuming their success was due to their own efforts alone, they absolutely refused to reinvest in keeping that infrastructure in place and gutted the tax code. Now the younger generation gets to take over with roads and bridges collapsing and an older generation that absolutely refuses to invest in the future. Then have the unbelievable gall to call today's youth selfish.

 

[Texashiker]

lol wow..

It's obvious you do not have a disabled child.

 

[waggy]

It's obvious you do not have a disabled child.

no.

but i grew up having health issues. I know the fear of changing insurance. NOT ONCE was i denied care or a policy. I have changed jobs and again not once had a issue.