Millennials, the oldest of which are in their late 30’s, graduated college in the midst of the Great Recession, launching their careers in one of the worst possible periods of time to be a young and inexperienced employee. The economic effects of graduating college at that time cannot be understated. At the same time, stagnant minimum wages, ballooning student loan debt, an unaffordable housing market, and precarious employment agreements without health insurance leave many millennial workers to put off important life goals such as home ownership and starting families. In short, they’re sort of screwed.
The effect that these delays have on the economy cannot be understated. Joseph C. Sternberg, a writer for the Wall Street Journal, understands this. His new book, The Theft of A Decade: How Baby Boomers Stole The Millennials Economic Future, argues that the baby boomers policies basically screwed millennials out of economic security. While writing it, Sternberg was keenly aware that millennials knew what was happening to their financial prospects. But what he didn’t expect to find out that baby boomers took no blame: the divide in which the young were aware that they were screwed was not ideological, but generational. And it turns out that boomers wrote policies that protected their generation and harmed ours.
Fatherly spoke to Sternberg about harmful baby boomer policies, the rift that exists between generations, and what millennials need to do to protect themselves — and future generations — from the economic challenges ahead.
Why did you start writing this book?
I noticed that we’ve developed this strange conversation about the economy in America. You almost have millennials and baby boomers talking past each other. Millennials will be able to talk very eloquently, and at great length, about all of the economic challenges we’ve faced. All of the problems that we’ve had getting a foot on those lower rungs of the employment ladder so we could start stable careers, all of the problems that we’ve had climbing into home ownership, the burdens that come with all of the student debt that we’ve accumulated along the way. What I realized is that millennials have a clear sense of crisis about all of this.
Boomers look at us and think, “What’s wrong with you kids? You’ve never had it so good.”
Is that true?
Certainly, America is on aggregate a more prosperous place right now than it has ever been before. Millennials enjoy more creature comforts and are living a much safer life than any generation in human history. I was curious to get to the bottom of why it is that we have this disconnect — that millennials have such a keen sense of what’s going wrong, and boomers don’t.
I realized that the economy has changed in a lot of important ways over the past 20 or 30 years, and especially in the decade since the financial crisis and the Great Recession. It really had an effect on millennials that I think is difficult for boomers themselves to understand. That’s the story I’m trying to tell in the book.
Some people might look at the economy right now and think unemployment is very low, and that the economy is growing strongly, and the stock market is up and all of our problems are solved. But that isn’t true. Millennials did lose most of the past decade of their economic lives. It’s going to take them a long time to claw back from that.
So when you talk about the conditions that millennials are facing as they work, try to start families, and look into home ownership — are the recession and the policies that followed the recession responsible for what happened? Or were the conditions already in place for millennials to struggle?
Definitely the latter. There are two stories that I tell in the book: one is a story about long-term transitions that were already underway in the American economy before the crisis, and some instances contributed to the crisis. Boomers aged into a period where they were exercising more political control and they brought with them a particular approach of how to manage the economy.
A lot of those policies contributed to the recession, particularly in the housing market. The housing bubble that burst in the financial crisis was in big part a result of boomer-era policies that trying to boost home ownership much more aggressively than was reasonable. Even at the time, people were asking questions about that.
Now, the second part of the story is the past decade, and the theft of that decade.
And the title of your book.
Yes. The boomer policy response from both Republicans and Democrats, to a surprising degree, was to try to double down on all of the policies that had actually failed before. So, for example, on housing, there was an attempt in the early 2000s to inflate the housing market and boost home ownership. It collapsed spectacularly in the financial crisis. And yet, over the past decade, policy makers — whether it was elected politicians in the White House or officials at the Federal Reserve operating monetary policy — have all been trying to maintain that housing price bubble that they had already created before the crisis, because they were convinced that if they allowed market correction, they would tank the economy even more.
Beyond housing, what other issues have come from boomer policy that have affected millennials?
The Affordable Care Act. I’m a free market conservative myself, but I also think that Millennials on both the left and the right have to have serious conversations about how well it worked in practice, whether those were really the right tools to use at the right time and in the right way to try to provide health insurance for people like millennials who maybe wouldn’t have insurance through their employers. And yet, the boomers managed to get the design of that program wrong in some specific ways I point to in the book that had a particular negative impact on millennials.
What were those specifics? What ways did ACA fail millennials?
People at different ages interact with the economy in different ways. In terms of the size of companies, that’s something that turned out to have a big impact on millennials, because we have a lot of evidence that younger workers typically get their start in smaller companies.
And yet, so many of the economic policies that we had in the wake of the Great Recession disproportionately hurt smaller companies and made it harder for them to hire. So, for example, for much of this period with the ACA, you had companies that were worried if they expanded enough that they had to hire their 50th employee, that person would be their most expensive worker — hiring employee number 50 would trigger mandates that business were afraid were going to come in.
I think that political conservatives do need to understand that the ACA was solving a problem that millennials feel acutely. How do you provide health insurance for yourself or a young family if you don’t have stable, salaried employment? What about if you’re working a bunch of different gigs or if you haven’t been able to find someone to hire you on a salaried basis so you’re still working as an independent contractor for someone? That’s a serious question. The specific set of answers that boomers — in some cases it was Democratic boomers and others, Republicans, came up with ended up not being helpful for millennials.
Right. It seems that these policies, like much of public policy work, came from a good place but in this instance didn’t pan out equally for people across the economy.
Traditionally, there’s been a policy bias in favor of the old. There are a couple of reasons for that — old people vote in higher proportion than younger people tend to. So if you are a politician, all of the incentives are aligned for you to cater to the concern of older voters without necessarily thinking about the concerns and needs of younger voters.
For a long time, it was just possible to assume that the young would naturally be able to take care of themselves. If you were in an environment with a steady growing population and you had large numbers of young people coming online in your economy, if you tended to have a reasonably high birth rates and a lot of young families forming, and a lot of children out there who were eventually going to become workers, that has a certain economic power of its own.
But what’s different this time is the millennial generation, empirically, and the baby boomers, are pretty much evenly matched. It’s not the case that the millennial generation is substantially larger than the boomer generation in the way that there were so many more boomers than members of their parent’s generation. And then you also have this problem — I hint at it at the end of the book — where the boomers and millennials are going to be jostling around right next to each other in the economy and in politics for a very long time, simply because boomers are going to live for a long time.
Going forward, what do you see as one of the biggest challenges for millennials?
Without reforms to the system, we are going to be facing the fiscal and tax demands of funding Social Security and Medicare for our elders right at about the same time that the younger of us will begin having young families that we’ll need to be supporting. Also, at the same time, that retirement security has become more precarious for people. In some ways, the switch to 401ks from pension plans has been good for millennials, because you’re living in an economy where you change jobs more often than boomers did. We’re not going to work at the same company for 40 years, so the ability to actually own our pensions is good for us. But that also means that we see much more acutely if we are running short in terms of our retirement savings.
The big challenge for us is: How do you raise a family? How do you deal with the tax costs associated with these old-age programs? At the same time, we should be concerned about attending to our financial future so that we don’t impose on our children what the boomers have shifted onto us.
That’s certainly a big problem.
Some of the news of the economy is good, particularly for the younger transient millennials. You guys are not going to have the same problems, hopefully, getting established in the labor market that older millennials who were graduating in the depths of the great recession did.
But some of the other news out there is a lot less good. Certainly, the student loan burden is going to be an enormous problem. It’s not clear yet whether the labor market is improving enough that recent graduates would be able to experience earnings that we were all promised we would get from a college degree and be able to repay that astronomical burden that we’ve taken on.
Housing is also an urgent problem. You’re starting to see hints of discussion about solving it. I’ve seen reports in a few cities around the U.S. over the past month that are finally revisiting zoning restrictions that made it impossible to build the houses that young people need. But I think that we’re a long way off from solving the housing affordability problem.
That leads to a whole bunch of other social and psychological issues that I think we’re only just at the very beginning of thinking about. A lot of these trends — the difficulty in having gotten established in the job market over the past decade, the student loan burden, the difficulty of affording a house, all of those things seem to have a bearing on why it is that millennials are now waiting so long to start families. Delaying all of those things — including home ownership — will have serious impacts that are going to echo for a long time.