Despite 'Recovery', Millennials Face Future Of Less Wealth, More Work, Worse Health

While many baby boomers and those of older generations have experienced rising "wealth and prosperity" as a result of this most recent "recovery" that has taken place over the last decade, there has been an age group that has not reaped such benefits, but will yet be stuck with the residual damage that comes with a Keynesian recovery in the years to come: millenials. Bloomberg recently reported as such:

Just two years ago, the median American born in the 1980s—the cradle of millennials—had family wealth that was 34 percent below what earlier generations held at the same age, the Federal Reserve Bank of St. Louis reported last month. And all the data show it’s probably going to get worse.

As affluent baby boomers thank years of soaring markets for their paid-off mortgages and plump portfolios, millennials and the next cohort, Generation Z, are weighed down by student debt and stagnant wages. They can only contribute the bare minimum to their retirement plans and struggle to find affordable homes within commuting distance of their jobs.

Of course, it’s perfectly normal for people just starting out to have less in the bank. However, the St. Louis Fed warned that, even when taking that into account, young Americans are slipping dangerously behind. For a time, Generation X was also losing out, thanks to the 2008 financial crisis. But its members managed to make up most of the shortfall in the years since, tapping into the longest economic expansion in decades.

For some reason that period of tremendous growth barely helped millennials. The St. Louis Fed called this anomaly “a missed opportunity because asset appreciation is unlikely to be as rapid in the near future.” That’s pretty bad news for twenty and thirtysomethings who may have been hoping to catch up. But it gets worse.

Of course it should come as no surprise to anybody who’s been paying attention that the engineered "recovery" of the last 10 years will ultimately be doing more harm than good in the years to come. A whole new set of bubbles has popped up, debt levels across the board are at or exceeding levels they were at in 2008 and once again, it is almost time to pay the piper. Except the piper will not be paid by baby boomers and older generations this time, but rather by millennials who were unable to take advantage of the recent economic expansion - but yet will have to deal with its after effects in coming years.

This already comes on top of a slew of problems that millennials will have to deal with because of their age. The first of which is the fact that the Social Security program will be insolvent in less than two decades and that any solutions to fix this program will likely result in higher taxes and less benefits paid. Despite this, millennials have been paying into this program.

Bloomberg recently highlighted the social security issue - and its proposed resultant solution - as well:

By 2034, Social Security won’t be able to pay out full benefits, the program’s trustees estimated this month. Any solution that would rectify its finances will probably require more taxes and more benefit cuts—all coming out of the pockets of younger workers. Boomers, who are exiting the workforce in droves, will already be comfortably seated when the music stops, or out of the picture.

Fixing Social Security is hardly the only issue where younger Americans have different priorities than their elders. U.S. President Donald Trump was elected on the votes of older Americans favoring tax cuts and less government, while young voters flocked to Senator Bernie Sanders, who supports rebuilding social programs and establishing national healthcare.  

Alicia Munnell, the director of Boston College’s Center for Retirement Research, recently lamented that government inaction on Social Security means “that most baby boomers have escaped completely from contributing to a solution.” This month, she offered some depressing advice to younger Americans about what they can do to make up the difference: Work longer.


Ouch. But Munnell assured young people that they don’t need to cancel their retirements entirely. “In fact, my research shows that the vast majority of millennials will be fine if they work to age 70,” she wrote for Politico. (Small solace given that life expectancy for Americans recently took a turn for the worse.)

Also, one of the variables that has had to give way as a result of the economic crunch being put on the middle class is the average retirement age. People are now working longer and retiring later on in life. This metric can only be pushed so far and will also eventually have to give away. Bloomberg reported on this:

Retirement-age Americans are already working in record numbers. Whether by choice or necessity, because of boredom or fear, a full third of those between 65 and 69 were in the workforce in May, according to the Bureau of Labor Statistics, along with 19 percent of those aged 70 to 74—together almost double the number 30 years ago. 

Nevertheless, the retirement advice of “just work longer” can sound pretty tone deaf to younger ears, especially when the old American promises—of advancement, financial security and home ownership for everyone who works hard—have faded into myth. 

What about the booming economy of 2018? Won’t that help smooth the path for young savers? Perhaps, but Goldman Sachs Group Inc. economists recently said the current pace of the U.S. economy is “probably as good as it gets.” That can only make young Americans more furious about the “missed opportunity” mentioned by the St. Louis Fed.

But, as Bloomberg states, you have to live longer in order to be able to manipulate this variable to keep things status quo. And this isn't necessarily a guarantee. Bloomberg wrote:

Wide swaths of the country are getting sicker and dying younger than just a few years ago, with a widening health gap between educated, affluent Americans and everyone else. Alcohol abuse and obesity, upticks in suicide and an epidemic of drug overdoses have all played a role in an ominous milestone: Year-over-year declines in American life expectancy while the rest of the world lives ever-longer.

The article also pointed out the disturbing lack of cash access that younger generations have and the "inability to save any money at all":

Paychecks aren’t reflecting the improving economy. Hourly wages were unchanged in May from a year earlier. And according to a Fed survey, four in 10 Americans said it would be tough to come up with $400 for an emergency expense. The same 2017 survey found 27 percent skipping medical treatments because they can’t afford them. Another poll this month reaffirmed the inability of many Americans to save any money at all.

The only solution for millenials, it seems, is to hit the polls and vote in numbers, where they have their only advantage:

It’s no secret the widening gap in financial security is shadowed by a similar gap in politics, setting up the potential for generational warfare at the ballot box in coming elections.

The outcome of the 2018 midterms may largely come down to whether left-leaning millennials and Gen-Xers, who make up a majority of eligible U.S. voters, show up. In recent elections, these two demographics voted at much lower rates than previous generations at the same ages, according to the Pew Research Center. Unless that changes, wealthier, right-leaning baby boomers and the remaining members of the so-called Silent Generation will once again swamp them at the polls.

What will it take for us to learn that when you engineer a recovery and game the system in order to give the illusion of wealth and prosperity, it should come as no surprise that not just millennials, but everybody, will lose in the long run. If this is how dire things have become now, in the middle of this “recovery", how bad things get in the years to come?