Sunday, September 19, 2010

My Generation and Younger is Screwed

Forgetting all the doom and gloom regarding dwindling oil supplies and climate change, this country has an enormous problem on the horizon, and it's mostly affecting my age group and younger.

How many people my age or younger will ever pay off a house? Most of my friends, despite working 50 to 60 hours per week, can't even afford to live by themselves. How will they ever afford a home? Even if they did some how scrape together enough money to pay a mortgage, how will they have families? How will they support children? How will they put those children through college?

Back 50 or 60 years ago, if you had a job, any job just about, you were OK. It didn't matter what you did. If you worked on an assembly line somewhere, chances are you made enough money to buy a home and pay the mortgage. You could put food on the table and pay the bills. You could raise kids. Your wife could work if she wanted, but you could get by without her income. You would have very little debt, and when you retired, chances are you'd be able to live off a company pension plan.

Back then, being employed meant being able to live. You might not be rich. You might not have the fanciest car or the best furniture, but you'd have a home. You wouldn't starve.

Fast forward to today...

I have a friend who is a manager at a restaurant chain. By all accounts, he does a pretty good job, and he's really energetic and enthusiastic about it, probably more than the job deserves. He makes less than $40,000 per year in a part of the country where the average home price is upwards of $250,000. He's tried to move out of his parents' house 3 times now. Each time, he only made it 4 or 5 months before running out of money. The last time, he rented an apartment with a roommate, and even with the roommates' contribution to the rent and bills, he couldn't afford to stay in the apartment.

Therefore, it was back to his parents' house for him. He's 28 years old, a manager, and he can't afford to live on his own. The kicker is that it could be even worse. He doesn't have any college loan debt because he went into the NAVY after high school. A lot of people my age are in the exact same position as him, except they also have over $60,000 in student loans.

When you start crunching the numbers, it doesn't seem possible that these people will ever get out of debt. They'll go to their graves owing money all over the place, or they'll file for bankruptcy, which of course doesn't eliminate the student loan debt.

This is the outlook for my generation though, and it's not pretty. I'm fortunate enough right now to have a job that makes well over $100,000 per year. That sounds like a lot, but even with my salary, and even just by myself, I can't have as comfortable a life as my parents did, and they were raising 2 kids! When I was growing up, we went on vacations just about every year. We had nice things. I pretty much had everything I could ever ask for. I can't afford the things my parents were able to afford for me, and I make more compared to my peers than they ever did.

My girlfriend has a job in a city. She has a 4-year college degree, and she makes just over $30,000 per year working in that city. As I wrote about before, she's trying to find an apartment in or near the city she works, but it's nearly impossible for her. She can't afford anything. She really wants to live without a roommate, but any decent apartment is well out of her price range. She has student loans and a car payment, so the only apartments she can really afford are 400 square foot efficiencies with long outdated appliances.

In order to find a decent apartment that she could afford, she'd have to look 40 or 50 miles outside of the city. How messed up is that? She works in the city, but she gets paid so little that she has to move 50 miles away in order to keep her job.

It's getting increasingly difficult for anyone my age or younger to live on their own. We're encouraged to go to college because "education is the key to our future success," or so we're told. However, most of us come out with huge student loan debt and degrees that get us jobs that pay a starting salary barely above minimum wage. It's no wonder people my age seem to me maturing more slowly, moving out on their own and starting families later than the previous generations. We simply cannot afford it. It takes a $100,000+ annual income to be able to do the things that the average American citizen of previous generations did.

It was a huge talking point during the previous Presidential election, and it drew a lot of ire from everyone on the right and a lot of people on the left. However, Barack Obama was 100% correct when he asserted that he have to redistribute the wealth in this country. It IS a problem! This isn't imaginary. It's not something crazy liberals are making up.

As of 2001, the top 1% of the wealthiest Americans owned 38% of the wealth in the country. The bottom 40% owned less than 1% of the nation's wealth.

Think about that for a second. Even though we hadn't quite reached 300 million citizens in 2001, we were pretty close, so lets use that as our nice round number. The top 3 million Americans OWNED 38 TIMES MORE WEALTH than the bottom 120 million Americans.

Again... 3 million people owned 38 times more wealth than 120 million people, and most sources say the disparity has only grown larger since 2001.

The top of society has everything, and the average American is working harder and harder to just get by. How is that right? How is that just?

From 1932 to 1981, the lowest tax rate for the top tax bracket was never below 63%. For most of the 1950's, the golden years of The United States, the top tax rate was over 90%. Despite this, the rich still managed to do just fine, but more importantly, the average American was far better off than he is today.

I don't know if taxing the richest Americans more is necessarily the ultimate solution. I don't think it's a bad thing though. The government has to work to help the people. That's it's role. It doesn't serve Wall Street. It doesn't cater to the top 1% of society. It's supposed to represent the masses and the collective good of the people.

All I know is that if the current trend continues, the economy will completely collapse because the other 297 million Americans won't be able to afford to own anything. When the majority of Americans work 50 to 60 hour work weeks and still struggle to make ends meet, it's definitely a sign that something is wrong.


Anonymous said...

Perhaps we need to stop worrying about what the top 1% are doing and start worrying about what the other 99% are doing. You think the previous generations had it so much easier, I say you are wrong, they simply had a different culture. My grandmother saved foil and ketchup bottles, she jarred her own fruits and vegetables and knitted her own clothes. My grandfather worked 50 hours a week on the railroad breaking his back every single one of them. All this so that they could give my father a slightly better life where he could go to college (paid for completely by himself) while working 40 hours a week. He knew how to limit how much time people took showering, he used cloth diapers on me and we ate hamburger and boxed mac n' cheese most nights just so I could have a better life. As for me, my college education was paid for completely and I only worked 20 hours a week during school. By the time I was sixteen I owned a small rental property paid for just by the small amount of money I got for working and previous birthday/xmas gifts. I am now 26, own 4 rental properties totaling 12 units, bought my first personal home which will be completely paid off in 4 years while socking away more than 30% of my salary into retirement savings. I don't watch tv because I don't want to pay for cable, I sweat in the summer and freeze in the winter because I pay the utilities.

Now...let's contrast my family with that of the average American family today. Currently, the average citizen eats out between 7 and 10 times per week, watches 2-3 hours of tv a night and has $10,000 of credit card debt. People use throw away plates, cups, razors, diapers anything to give them more time so they don't have to miss a single second of American Idol. Work ethic? please, as you have previously stated you have techs that call out constantly for a sniffle, and I have more than my fair share. I have techs that turn up their noses to overtime while I worked 70 hours a week during the summers in high school and was grateful for the opportunity.

Before you look to the top 1% and whine about how much they have, perhaps you should think about how for the last 20 years Americans have been spending the bank accounts filled with the sweat and blood of our grandparents and previous generations, and frankly, have squandered the funds. If a country has some of the fattest, laziest and stupidest people on the planet, you would expect a good portion of that country to not be financially well off, yes? If you want to change the distribution of wealth in this country, change the culture.

Pharmacy Mike said...

That's always the problem, right? Those bottom dwellers are just lazy. If only they worked harder. If only they were more frugal. If only they were smarter with their money they wouldn't be in such an unfortunate position.

You're telling me that my girlfriend who works 50 hours per week at her job just isn't working hard enough to afford to live? She doesn't even have cable at her current apartment that she lives in with a roommate who also works 50 hours per week just so they can BARELY make the rent payments. If only they weren't so damn wasteful, right?

Her laziness must be the reason she gets paid $34,000 per year, and despite working 2 jobs while she was in college, she still has student loans to pay off and a car payment. If only she wasn't so damn lazy, perhaps there would be no problem with making $34,000 per year and having to pay $900 to $1,000 per month in rent just to live in a shitty apartment.

And my friend who's a manager working over 60 hours per week and has been working since he was 16 years old wouldn't have to live at home if he was just more frugal.

It's the average American citizen's laziness that accounts for the fact that when adjusted for inflation, the average income has barely increased in 30 years while the average cost of a home has sky rocketed.

And it's MY laziness and wastefulness that despite making $120,000 per year, I still have $600 per month in student loans that I'm trying like crazy to pay off as quickly as possible. It's MY FAULT that even though my parents, who made less than me compared to their peers were able to take my brother and I on vacations to Disney World 7 times, Hawaii twice, Cancun once, and several other places while staying at luxury hotels, whereas I can barely afford to spend 5 days at a Best Western in the middle of nowhere.

Somehow my parents were able to afford all of this while paying off a house, raising 2 kids, and having slightly better than average jobs. They paid for my first 4 years of school, my brother's entire college education including his Master's degree, and they still have enough money in the bank that they're thinking about building a new house somewhere.

Pharmacy Mike said...


But you're right... It's just our laziness that's the problem. It has nothing to do with education prices and home prices rising far quicker than average income.

In your world, those actual statistics that you can look up in various sources don't exist. The fact that the distribution of wealth has shifted dramatically towards the top compared to how it was in the 1950s and '60s is just a result of lazy workers.

I guess the top 10% of American citizens just work so much harder in 2010 compared to the other 90% than they did in 1950. I'm sure that hard work has everything to do with the current distribution. If only 90% of Americans worked harder, they'd be OK.

Nevermind the fact that Americans are working longer hours for less pay than any time in the last 3 decades. It's the laziness, stupidity, and wastefulness that's the problem.

And about your parents and grandparents... They were frugal, but they still were able to afford a home. They still had food on the table. Working 50 hours per week at a railroad might have been difficult, but they had something to show for it at the end of the day. And I bet your grandmother didn't work. I bet your grandfather supported the entire household on just his salary alone. How many guys laying railroad tracks these days can afford to raise a family on one salary? How about today's assembly line workers? Do you think he's supporting a wife, 2 kids, and putting away money for retirement now? Oh yeah... that's right. He's just not working hard enough. That's why he gets paid shit.

My advice to you... Next time you come with an opinion, get educated first. Simply because you've done well for yourself doesn't mean that the problem does not exist. Examine the world outside your own little bubble, and maybe you'll learn a little something.

Meghan said...

Yes examine the world outside your bubble. Looking at the new census data, it appears that families are not doing worse than ten years ago. Your figures are based upon generalizations and anecdotes of your friends.

On that note, I have friends whom live in NYC and make 30K a year; they are in the black.

Pharmacy Mike said...

I don't make things up. When I make an argument, you better believe I have the facts and statistic to back it up.

I don't bullshit.

That's one source. I could go around siting a ton of other sources for this stuff, but that one site contains a good summary of the existing data out there, and since I'm not writing a thesis in the comments section of my own blog, it's good enough.

The indisputable facts of the subject:

- In the past 3 or 4 decades, wealth has shifted greatly towards to the top, leaving the bottom with less and less.

- The ratio of CEO salary compared to the average worker in the company has sky rocketed. CEOs' salaries have gone way up, whereas, adjusted for inflation, the average workers' salaries have remained pretty much the same.

- There recently was a study that came out saying that Americans are the most productive workers in the world, which means they produce more GDP per capita than employees of any other nation. This sounds awesome, and it's not really a bad thing... except that despite there being a boom in worker productivity, salaries haven't really gone up. Basically, Americans are working harder for less.

I just don't see why people defend the disparity between the rich and the poor. Why are people OK with CEOs making 400 times more money than the average worker in the company despite not actually producing as much as the average worker in the company?

The rich own this country. They own everything in it. They own the best land. They own the best homes. They own all the buildings. Hell, they even own your house and car if you have a car payment. They buy politicians. They manipulate elections and their lobbyists swing votes on important issues.

This isn't a conspiracy theory. We all know it happens. We've seen it firsthand with all the financial bailouts given to investment banks and giant corporations like GM. It's always the rich we're bailing out. No one bails out the middle class. If an average American defaults on his mortgage, the fed doesn't step in and cut him a deal to allow him to stay in his house and pay the money back at a later time. However, if Goldman Sachs has a problem, it's a fucking national crisis.

We've seen how they buy politicians. Anyone who has a chance at being elected into any important position in this country will get very generous campaign contributions from the largest corporations in the country.

It's wrong, and someday you'll all see that. I'm not saying the average American is perfect and infallible. I'm not saying he doesn't sometimes compound his situation with poor decisions. However, saying that changing values among the average American is the sole reason they're in $10,000 in credit card debt and struggling to get by is wrong.

Someday, you'll understand. I promise you.

Anonymous said...

It is interesting Mike in that you make fairly major logical fallacies one after another. Let's start with the story of your girlfriend. I will first say that from what you have told me, I respect her, I respect her effort and drive and because of it she will eventually get a good living situation. Yes, sometimes it is hard to look at the people who are born to rich families and don't have to work for it, but this is actually very few of the top 1% that you speak of. Most millionaires are self made, granted they come from middle class families, but they made their fortunes with their own brainpower and labors.

Now let's get on to the point you thought you had made with Americans producing more GDP per ca pita than anywhere else in the world. Have you ever stepped back to examine why that is? America is the most highly capitalized country in the world, which means that those "rich" people you seem to scorn have invested trillions of dollars in machinery and infrastructure. This means that when it comes to digging a foundation for a house, it is cheaper for us to use our backhoes and have one skilled person operating it than in Asia where it is cheaper for companies to hire fifty workers to dig it out with hand shovels.

Now on to CEO's and their supposedly outrageous salaries. When you did your fact-checking, did you compare the average company size today to those of fifty years ago? Let's take a company like CVS who now owns more than 6,000 retail pharmacies across the US and one of the biggest PBMs in the country. A company that has in its employment over 20,000 of the most highly skilled professionals in existence (pharmacists) and some 100,000 other employees. The current CEO of CVS, Tom Ryan, makes about sixty million a year which seems like a high number, but how many people do you know that could even come close to doing as good of a job as he does? (please don't mistake these statements for me saying that CVS is not a company without its share of major problems).


Anonymous said...

Here's another thing you fail to realize about today's working life vs those of 50 years ago. It may be true that people spend more hours on the clock now, but it is also a fact that they have more leisure time than ever before. How can we account for this? Well let's look at the home life of our past generations. People prepared their own food, fixed their own cars and many even built their own homes. How many people in our generation do you know that can even change their own oil? You attest that my grandmother probably didn't work, she did actually, but to be fair for argument most women of that era did not. Does that not mean they brought added value into the home? Women of that generation made their own clothes, watched and educated their own children and prepared their own food. When you think about what we pay for these things today, those chores were of tremendous value.

Finally, I will confess that something needs to change in this country. Not all the blame lies with the poor, the rich and middle class have their share also. We all know that our once great nation is falling faster than 9.8 m/s^2 but what exactly are we going to do about it? Do we follow the typical left solution to every problem and tax/regulate the rich more? Well at a certain point the greatest producers in our society, the atlases, will tell the rest of us to *F* off and buy their own island and form their own sovereign nation. I do not profess to know what to do to fix this country, but I would say that there are two main places to start. The first is education, education investments have some of the greatest returns of any vector and it is the area where we are falling behind. We have too many people that still cling to ridiculous desert nomad myths and fairy tales, and who don't have any ability to conduct complex social interactions. We also need to eliminate waste. My grandparents wasted nothing, my generation wastes everything. Now if you are wasting something to free up time to produce something of greater value, that is smart, but most of what we waste is of much greater value than our time is worth.

My final thought, when exactly did "I earned" become "I deserve"?

Pharmacy Mike said...

"Money is power."

We've all heard of the statement, and few can deny its truth. Those who have the money tend to be the ones in the positions to make policies and enact laws.

If our country is falling faster than the acceleration of gravity, whose fault is it then? You want to put blame on the bottom (although you did admit you believe some of the blame also needs to go to the middle and upper class). However, the people at the bottom aren't the ones changing this country. They aren't enacting policies. They aren't changing laws.

The people at the bottom are along for the ride because they're powerless to do anything else. No one is fighting for the poor (or even the middle class) to have a better lifestyle. The only talks I hear every day in Washington are about fucking Wall Street. Let's make sure Goldman Sachs' stock isn't falling so those executives can give each other million dollar bonuses.

The nation's GDP has increased in the last 30 years, but the middle class isn't really seeing the benefits from it. While CEOs and other high ranking executives' salaries have exponentially increased, the average workers salary has only seen a moderate increase that in many cases hasn't kept up with inflation.

You're concerned that the rich will one day say "fuck you all" and go away. They won't. Not a chance in hell. The rich need their peasants. The CEO of CVS doesn't work the cash register in the store. The CEO of CVS doesn't fill 500 prescriptions per shift. It's those average workers that, according to you, produce so much less than the upper echelon of society that carry the business. Without those average workers, CVS is nothing. It doesn't exist.

Therefore, instead of the average people worried that these ultra special, god-like rich people abandon us, the rich should worry that the people that work very hard for very little actual wealth will eventually realize they're being screwed and stop doing their masters' bidding.

It's been demonstrated time and time again that the rich aren't working to make everyone else's lives better. They're goal is to make their own lives better. The rich want to get richer. That's all there is to it. Greed is human nature. It's actually the driving force behind capitalism.

I ask the most basic question: Why is it bad for the government to be too large and have too much power, but it's OK for Goldman Sachs, Bank of America, and Citigroup to be so large and so powerful that they control just about everything?

At least when the government gets out of control, we have elections every 4 years and can boot people out of there if needed. If Goldman Sachs gets out of control, what can we do about it? Nothing. Suddenly Goldman Sachs or GM or Bank of America or Citigroup or any of these all-powerful corporations are too big to fail, and we need to assist them or fear everyone being out of work and destitute.

That's not capitalism. I don't even know if there's a name for it actually. It's monopolistic. Capitalism is supposed to represent economic competition, but these giant companies eliminate competition. They buy up their smaller competitors. They eliminate choice. This is why it's imperative to regulate them. If we keep letting them go unchecked, they will take and take and take until there's nothing left for anyone else. It's happening right now, right before our eyes, but people stand up and support it in the name of the "free market." Well, the market becomes less and less free when it's being totally controlled by a shrinking pool of companies. The fewer choices we have, the less free we are.

Pharmacy Mike said...

One more thing... Here's an example of how the ultra rich view the rest of us.

If you read the report, you will clearly see how Citigroup says the best way to invest money in our current economy is to invest in toys for the rich because the rich dominate spending. Doesn't sound like anyone's looking to make things easier on the non-rich, as Citigroup refers to them.

Clearly, the best thing for the majority of the country is to let the rich get richer and everyone else get poorer, right?

I'm not wrong. Nor am I ill-informed.

Anonymous said...

I think it more likely that the poor will revolt than the rich will abandon this country. Someone has been having Ayn Rand fantasies.

Anonymous said...

i don't think there are any self-made millionaires anymore. there seems to only be the rich getting richer by inheritance or luck. there are so many ways that a decent hard-working person can lose everything, even going about their daily lives working to supply basic necessities.

my folks could only supply us kids with ambition, and instill self-confidence, along with the basic necessities growing up, and their own self-care so that we did not need to support them in the nursing home.

Anonymous said...

What were your parents' jobs? When I was a kid (I'm 25 now), I only went on one vacation. You may have been lucky, but some of us weren't as lucky and today isn't so different from back then.

Anonymous said...

I am new to your blog but it seems as thought you're not proud of your girlfriend. Do you see yourself proposing or are you just keeping her as a safety net? (This is a serious question I'm not trying to be rude)