We win

Here is a list of generous men
Whose good works have not been forgotten
In their descendants there remains
A rich inheritance born of them


Where is the rich inheritance we leave our children? We, the ‘baby boom’ generation – how generous have we been? Who will sing our praises?

The news reports tell us that for the last 20 years, only we – and people older and richer than we are – have made financial progress. In 1984, the median net worth of households 35 and younger was $11,500. Households of people 65 and older had over ten times as much: $120,000.

As of 2009, the net worth of the median household under 35 had been divided in three. It was only $3,600. But the net worth of older households went up – to $170,000 – 50 times as much.

According to a chart from the Economic Policy Institute, it looks as though households of people between 35 and 55 years old also lost ground, with the 50-ish households dropping from a net worth of around $150,000 in 1989 to about $110,000 today.

Hmmm – 20 years is a long time. We’re not sure whether the ages apply to the people today or 20 years ago. But don’t worry about it. You get the idea.

Economists explain that young people got caught in two big downdraughts. First, the dotcom bust shook out their meagre investments. We older people avoided it. Probably because we couldn’t understand what they were talking about.

Then came the housing bubble. Younger people were unlucky. They were trading up at the wrong time, with little equity in their houses. We, on the other hand, already had our houses, often with large unrealised capital gains and little or no mortgages left.

Many of the younger people are still – five years after the crack-up in subprime – underwater. Some say they are drowning.

While their assets got whacked twice, the earnings of the young and not-so-young have been hit hard too. Right after WWII, wages shot up. In the year your writer was born (1948) people were earning about 80% more – in real terms – than they had ten years before. By the 70s these wage gains had declined sharply. But in the Carter years our parents were still earning 50% more than they had during the Kennedy/Johnson era. In the 80s, wage gains dropped. They bounced a bit from 95 to 05, but now they’re close to zero.

What’s worse, young people often can’t get jobs. We saw an article recently about newly graduated lawyers and MBAs who couldn’t find work. These professional groups have a bad tendency towards zombiedom. Still, it’s a bad sign when some of the best educated young people in the country still find it hard to locate gainful employment.

If the young find jobs at all they are more likely than before to be low-wage jobs. Since 2001, the number of mid-wage jobs has fallen by more than 7%. Low wage jobs are up more than 8%.

And incomes are down for practically everyone. Overall, real median incomes for American households have fallen by 8%, from nearly $56,000 to barely over $51,000.

Remember what it was like in the 50s? A man could go out and earn a decent living at an ordinary job. He didn’t have to be a genius. He didn’t have to work 80 hours a week. He could manage a store. Or he could be a carpenter. Or a factory worker. And with his earnings alone he could afford a modest house, a normal car, and an annual vacation. Healthcare? He paid for it as he went along. Education? State universities were still cheap. In 1969/70, we were able to go to for a year to the University of Maryland on money we earned during a summer vacation.

Childcare? Household help? The lady of the house stayed home and did it. When dad got home from work she had a cold beer in her hand, waiting for him.

We make no claim that this was the height of civilisation. People were oafish then too. Houses were small. TV reception was limited. Automobiles were gas guzzlers (but at 25 cents a gallon, who cared?) Restaurant menus were dull. And wine came in bottles with straw wrapped around them.

But remember the advertising from National Bohemian, a beer “brewed on the shores of the Chesapeake Bay”? It claimed to be “from the land of pleasant living”.

Economically, it was pleasant. Wages went up. Jobs were plentiful. Debt was low. Gasoline and housing were cheap.

Since then, it seems like the young have to work harder to get started in life, and then have to work harder to keep up. The typical household works two jobs – if it can find them – racing from work to childcare. And healthcare, which used to be occasional and reasonable, has become a major burden. The annual cost of family healthcare insurance has risen to over $15,000. Childcare, too, used to be a negligible expense to the typical family. Now it is a major one.

Was all this a matter of luck? Good luck for us? Bad luck for them? Not exactly. The young have been ripped off. We’ll explain how next time.

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  • Michael

    It’s time to complain again about Bill Bonner’s first person plural. So unnecessary. Please stop it.

  • SteveH

    We (sorry I) don’t believe for a moment that the average wealth of young people was reduced because they had made bad investments in the dotcom boom.
    1 Young people generally didn’t invest in equities, still don’t and who would given a net wealth of just $11K? And then to lose on average over 80% in the dotcom bust is ridiculous, the DJIA/FTSE didn’t show anything like the same drop.


    The younger generation has never had it so bad …? The West is in decline versus the East because of ageism. The West values image whilst the East still values experience, maturity and wisdom. As Napoleon once said, ‘Quand la Chine s’eveillera, le monde tremblera’. If they can learn from our mistakes, there is no stopping them…… unless we can learn from ours !

  • Jack

    Born in 1948 were you, Bill?

    That’s why you had good times. You came in at the start of the baby boom. After low birth rates in the depression, and a generation of young people killed in a world war, promotion was easy, there was no waiting for dead men’s shoes to become empty.

    Your generation were the first to get the pill, so women went out to work and you got two income families before two income families bid the price of everything up.
    It you’d have been born ten years later your experience would have been different.

  • Boris MacDonut

    I guess the main inheritance we leave is life expectancy at 80 instead of 68,coupled with an infinitessimally low risk of World War.
    You are not comparing like with like Bill. The 35 year olds in 1984 had been at work since 15 or 16, half of those today only left University at 22. With longer lifespans (up17%) you need to look at 41 year olds and 75 year olds to find medians and folk at the same stage of life/wealth cycle.

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