Paraphrasing the classics. It is the housing market stupid.
Really, Even living in a place with very low population density(Rural Mass/NH). Rents are high (and scarce), you need at least 250K to buy a small house. Houses are old, Lot's are big, big distances, very few new houses are built every year. I can't even image how blue collar families do it. If you think about it, it even makes local companies less competitive, since they need to pay more so people can barely survive.
Our keystone national housing policy focuses on appreciating prices.
A sensible national housing policy would focus on improving the characteristics of the housing stock (improving energy efficiency, removing lead, etc). Of course the building code moves forward over time and new housing generally beats older housing on metrics like that, and there are occasionally tax incentives for making improvements. but none of that comes close to the mortgage interest deduction in scope.
It would also focus on affordability. It's clear enough that with 40 or 50 years for the policy to work and ~1/2 of the nation not having much of any wealth that home equity is not the path to universal prosperity.
I'm not sure the northeast, particularly any part of Massachusetts, is the best place to talk about the housing market. You will still have basically all the upward pressure on prices that you do in Boston et al with the exception of the large population.
If you look at a place without the statewide tax climate of a MA/NY/CA it's easy if not trivial to find ~$100k houses that are practically mansions.
Read the comments in this article which is linked to in the Medium article. You'll see some very in-depth and (correctly) critical analysis of the theory that housing is the root cause of inequality.
Houston is one of the most economically segregated cities and they are always building new cheap houses and apartments there, especially in the exurban developments where they build tract homes endlessly and sell them for $150k.
>Millennials have spent almost their entire working lives in a labor market that is loose—with too many job seekers and too few jobs—and where private-sector labor unions are almost entirely absent. Certainly, monetary policy that promotes employment while making it easier for workers to form unions would help Millennials make up lost ground.
The issue I have with this is it promotes a certain ideology—that job-seekers have the right to hold jobs even when there are too few. This article completely ignores the other paradigm, that if you don't have a job, it's up to you to make yourself valuable to employers.
I'm not trying to argue for one ideology or the other, I just think it's absurd to ignore the existence of one or the other.
I always take issue with the idea that people should just make themselves more "valuable" to get a job.
While it sounds like a good idea in principle, it ignores the fact that without a job many people simply won't have the resources to make themselves more valuable.
It creates a catch 22 situation, and the people it effects the most also happen to be the people who will struggle the most to break out of that situation.
If there are too few jobs, it's just a game of musical chairs. The number of jobs is not a natural phenomena, but a varying outcome of the parameters of our economic system of managed market capitalism. It's very natural for citizens demand better management of the economy to create more jobs when there are too few.
Indeed the right to work is a part of the universal declaration of human rights[1].
(Whether we should continue the system of unemployment post-material-scarcity is a whole another question, but a replacement system doesn't seem quick to arrive).
...that if you don't have a job, it's up to you to make yourself valuable to employers.
Most people do not have the opportunity to make themselves valuable.
It's generally understood that at this point in history most people shouldn't really have to work at all. The whole point of technology is to make living easier for everyone. The root of this problem, as far as I can understand it, is misallocation of capital, not of "jobs". The efficiency of the free market is telling the labor market, "hey, you don't need to do this job anymore." So why are we still forcing these people to work? They should be allocated the capital gains reaped from market efficiencies that are a result of technological innovations.
You've came from a point of view that is basically orthogonal to the way almost everybody (I've talked about, obviously) talks about the issue.
I hold the ideology that society should organize itself in a way that makes it easier to both create things that will demand new jobs, and make yourself suitable for work to some of those things.
Everywhere I look, it seems society is going the other way, making both of those activities harder.
This only tells one half of the story. Because rent extraction is so high in modern western economies usually people have next to no savings and are always two pay checks from ruin.
If people had more financial independence they would be able to choose to enter the labour market or not. For example now due to high land costs both parents must work. Some may like this, but many do not, yet they have no choice. This puts pressure on the labour market.
The current system sees rent rise to extract all productivity gains. Until this ends we will always see unemployment no matter how productive we become even if it's very clear that most people need not work full time to meet the needs of the country as a whole.
Millenials have spent their whole lives in a system with very efficient rent extraction.
If productivity jumps land prices will follow and back again we go to the bread line.
"This article completely ignores the other paradigm, that if you don't have a job, it's up to you to make yourself valuable to employers."
This paradigm totally ignores basic economics. If there is a greater supply of people looking for work, wages will go down for all employees across the board.
Now of course, wages vary from person to person based on skills, connections, and industry. So it's possible to improve your position relative to other potential employees. But across the population, overall wages will stay flat or go down.
That's an important point. Further, isn't it odd how we (Americans? The media? People in general?) talk about "jobs" in such a weird way. As if they exist in nature and just need to be dug up and distributed. Getting to a more accurate way of talking about 'jobs' could help so much from wage inequity, to labor negotiation, to post-scarcity problem solving.
The article is certainly not being even-handed between the human perspective and the business perspective, but can you blame it? It was written by a human, not a business, after all.
It focuses on the circumstances for young Americans now and in the past, and tries to understand why -- it notes workers have no power which is why they are worse off than how they were in the past, and suggests giving them more, which by necessity takes power away from their opponents, companies. But I don't think it's necessary that they explicitly state that, it's clear enough. In fact, the article states that it is a brief designed to make that particular argument and outline that position. It's okay for an article to present a position without trying to be "fair and balanced" or consider all points of view, in fact it's generally more insidious and dishonest when they make that attempt; let the opposition make their own, strong case. If you try to make it for them you'll inevitably make a weaker one than they deserve.
There has always been an ideology, always believable but never supported, that justifies the few damaging the many or their society as a whole for their own benefit.
You enumerated one that matches today's world view. Previous eras would justify it with some eugenics hand waving and before that would be an invocation of divine will. And just as they did, todays adherents will say that past justifications were nonsense but today's are correct.
But the result is the same; general harm done for the benefit of a few and nice story of facile ideology that justifies it.
I'd be interested in seeing the change in wage distribution by profession. In the 70's it was still possible to exit high school and move into manufacturing jobs that paid 2-4x minimum wage. Those jobs are largely gone now, and the opportunities for 30-year-olds with high school only are more often (I speculate) Walmart or Starbucks or Chipotle type jobs. There is a higher percentage of college educated that may balance that out, but we need to see the distribution to understand it.
People I know that skipped college and began working and saving right after high school (all as waiters), were able to purchase a home, or a two-family, or three units for investment purposes with the rock bottom prices/foreclosures during the housing crisis.
They have been able to accumulate some wealth on service industry salaries.
They don't make much less than many of their counterparts with liberal arts degrees, who without the head start graduated into the recession with nothing.
For many the opportunity cost of college was high.
It's no surprise that the Center For American Progress pins the blame for this on lack of labor participation among Millennials, but I don't buy it. We're talking about a sub-2% drop compared to Gen X.
Also, if people don't participate and you actually have use for labor, that would drive the cost of labor up, not down.
As it is, the vast majority of labor skirts the minimum wage because nobody wants people to do anything anymore. The utility of a fleshy meatbag is at all time lows, and will only continue to decline as we carve chunks out of the labor market through automation.
It is also unreasonable to expect an entire generation to work in the very limited purview of STEM. Enough people just do not have the mindset for it and it is already hurting the overall quality of engineering how market forces are pushing people ill suited for such professions into them for survivals sake.
The only reasonable answer is the recognition that, for most of our population, we have nothing productive for them to do, but they should not be punished for being unemployable when it is through no fault of their own. It is our job to raise and educate and mold them better to get a higher yield of analytic minds, but those who do not acquire the skills at the early ages when they form cannot be condemned to a life of poverty for something out of their adult control.
Another issue worth noting is getting past the set requirements to be evaluated by a human. I'm 30, without a college education, and worked for Apple retail as a 'Genius' for 5 years. That meant enough at the time to get me a job at Hulu with the expectation of upward mobility. Unfortunately, Hulu's executives made poor decisions and the type of work I was doing was unbearable. After leaving, I've been unable to find a job due to my application submissions missing a key component to even be considered; a college degree. Now, no one cares I worked for Apple like they used to.
The whole college degree as a filter thing is the laziest thing a company could do to quickly get through a stack of applications. On the other hand the market is apparently in their favor enough that they can afford to use lazy filters like these that might lead to missing out on an awesome employee.
Are you a developer? In my experience probably 75% of places I've interviewed at do not care or ask about my lack of degree, just if I have the skills experience and personality to do well at what they are looking for.
Huh? That chart in figure 3 tells it all; on the assumption that an employer in the 80s valued a college degree as much as a company in the 2010s, then as more people attain a college degree, it's value (i.e wages) won't move up. In fact you'd expect it to go down but that increase in "productivity" probably offset the downward pressure.
If you asked me, the problem facing workers in their 20s and 30s is that people are having longer careers, either by choice or by necessity. This is coupled with a job market which has never really recovered from the mid 2000s peaks. Until the Baby Boomer generation really begins to retire, the job market will remain tricky to navigate. Compound it all with an ever increasing cost of living (basically, the cost of housing) in pretty much every market and you get the bleak landscape we have now.
They state the causes of lower Millennial average pay is an incomplete recovery causing lower participation in the labor market, and lack of unions to force higher wages.
They then go on to say that the Fed should continue depressing interest rates, and that employers should start providing significant parenthood benefits.
I'm not sure with the last two -- continuing to depress capital for businesses and increasing the costs of an employee -- will encourage greater hiring or higher wages.
If it's not profitable to make loans, banks won't provide the capital many businesses need to grow their staff since profits instead have to be more conservatively retained to protect against cash flow fluctuations.
I thought that recent economic research was demonstrating that, when controlled for position and employment type, male and female salaries weren't significantly different. I'm not sure this one makes complete sense as a solution to the problem of employers not hiring people, but I'd definitely be interested to see more analysis on the hypothesis that greater gap coverage for maternity leave could help keep women on track and such, that's particularly cool.
Graduates are increasingly less prepared for the working world and burdened with large student loans. It should come as no surprise that higher levels of education have not improved Millennials' standing.
There are more distractions and diversions than ever that prevent youth from otherwise doing something constructive with their time. And universities have been dumbing down curriculum to bring in more (less qualified) students that are buoyed up by federal loans.
My empiric opinion is that it's very common among millennials to 'follow their passion'. 'Weakness' that is exploited by business people when negotiating salaries. Mix it with post-scarcity economics and globalization and the phenomenon is explained.
"By all rights, Millennials—people born between 1981 and 1997—should be the highest-paid generation in American history. They are, after all, the most likely to hold a college degree and are working in a period of unsurpassed productivity"
This syllogism is not only unfounded, but basic economics suggests the opposite is true.
Great example of first-order thinking that animates so much seemingly progressive policy. College graduates earn more == produce hordes more college graduates!
>By all rights, Millennials—people born between 1981 and 1997—should be the highest-paid generation in American history. They are, after all, the most likely to hold a college degree and are working in a period of unsurpassed productivity.
"By rights"? This article goes off the rails right there in the first sentence. It's hard to know where to start with how wrong this is.
If the demand for your skill doesn't change and twice as many people have it, in aggregate the people with that skill are going to make less money. The idea that we're going to educate ourselves into prosperity as a society is daft - if we could all do brain surgery it would be a minimum wage job.
The over-schooling of the millennials is a massive misallocation of resources, fueled by debt, cynical college administrators, weak politicians, credulous bureaucrats, and parents doing the wrong thing for the right reasons. That's not the kind of thing that makes you wealthier. Quite the opposite.
Unemployment ,I graduated in 1981 , newly minted , state certified in welding 1750 cr. hrs. With a lot of hope went for a welding job in Toledo , the line was 100 yds. long . I got up there, the guy shook his head at the guy next to him and said this is the guy we need ; looked at me and said son look behind you all of those guys have families to feed ! Unemployment I could tell you all about unemployment !
The problem is that spending $10 on capital to make the existing work force more productive is often a better investment than spending $10 on some more labor. It's difficult for labor to argue its importance in such an environment.
There's no need to bowdlerize swear words on HN, but there is a need not to post things like "Are you fucking kidding me". Civility has to do with how you treat your fellow users. Please eliminate incivility from your comments here.
[+] [-] huherto|10 years ago|reply
Really, Even living in a place with very low population density(Rural Mass/NH). Rents are high (and scarce), you need at least 250K to buy a small house. Houses are old, Lot's are big, big distances, very few new houses are built every year. I can't even image how blue collar families do it. If you think about it, it even makes local companies less competitive, since they need to pay more so people can barely survive.
This resonated a lot with me. https://medium.com/the-ferenstein-wire/a-26-year-old-mit-gra...
[+] [-] maxerickson|10 years ago|reply
A sensible national housing policy would focus on improving the characteristics of the housing stock (improving energy efficiency, removing lead, etc). Of course the building code moves forward over time and new housing generally beats older housing on metrics like that, and there are occasionally tax incentives for making improvements. but none of that comes close to the mortgage interest deduction in scope.
It would also focus on affordability. It's clear enough that with 40 or 50 years for the policy to work and ~1/2 of the nation not having much of any wealth that home equity is not the path to universal prosperity.
[+] [-] pc86|10 years ago|reply
If you look at a place without the statewide tax climate of a MA/NY/CA it's easy if not trivial to find ~$100k houses that are practically mansions.
[+] [-] knightofmars|10 years ago|reply
http://www.economist.com/blogs/freeexchange/2015/03/wealth-i...
[+] [-] cylinder|10 years ago|reply
[+] [-] branchless|10 years ago|reply
And if productivity goes up then disposable income goes up and guess what? You qualify to borrow more my friend.
Up go land prices and all that gain flows to the rentier.
It's not about houses built it's about loose credit BTW, primarily.
[+] [-] gragas|10 years ago|reply
The issue I have with this is it promotes a certain ideology—that job-seekers have the right to hold jobs even when there are too few. This article completely ignores the other paradigm, that if you don't have a job, it's up to you to make yourself valuable to employers.
I'm not trying to argue for one ideology or the other, I just think it's absurd to ignore the existence of one or the other.
[+] [-] thomaspurchas|10 years ago|reply
While it sounds like a good idea in principle, it ignores the fact that without a job many people simply won't have the resources to make themselves more valuable.
It creates a catch 22 situation, and the people it effects the most also happen to be the people who will struggle the most to break out of that situation.
[+] [-] zurn|10 years ago|reply
Indeed the right to work is a part of the universal declaration of human rights[1].
(Whether we should continue the system of unemployment post-material-scarcity is a whole another question, but a replacement system doesn't seem quick to arrive).
[1] https://en.wikipedia.org/wiki/Right_to_work
[+] [-] dev1n|10 years ago|reply
Most people do not have the opportunity to make themselves valuable.
It's generally understood that at this point in history most people shouldn't really have to work at all. The whole point of technology is to make living easier for everyone. The root of this problem, as far as I can understand it, is misallocation of capital, not of "jobs". The efficiency of the free market is telling the labor market, "hey, you don't need to do this job anymore." So why are we still forcing these people to work? They should be allocated the capital gains reaped from market efficiencies that are a result of technological innovations.
[+] [-] geogra4|10 years ago|reply
There are going to be too few jobs for people going forward. There's no point in makework. Just give each person a basic income.
[+] [-] marcosdumay|10 years ago|reply
I hold the ideology that society should organize itself in a way that makes it easier to both create things that will demand new jobs, and make yourself suitable for work to some of those things.
Everywhere I look, it seems society is going the other way, making both of those activities harder.
[+] [-] branchless|10 years ago|reply
If people had more financial independence they would be able to choose to enter the labour market or not. For example now due to high land costs both parents must work. Some may like this, but many do not, yet they have no choice. This puts pressure on the labour market.
The current system sees rent rise to extract all productivity gains. Until this ends we will always see unemployment no matter how productive we become even if it's very clear that most people need not work full time to meet the needs of the country as a whole.
Millenials have spent their whole lives in a system with very efficient rent extraction.
If productivity jumps land prices will follow and back again we go to the bread line.
[+] [-] jimbokun|10 years ago|reply
This paradigm totally ignores basic economics. If there is a greater supply of people looking for work, wages will go down for all employees across the board.
Now of course, wages vary from person to person based on skills, connections, and industry. So it's possible to improve your position relative to other potential employees. But across the population, overall wages will stay flat or go down.
[+] [-] aklemm|10 years ago|reply
[+] [-] wfo|10 years ago|reply
It focuses on the circumstances for young Americans now and in the past, and tries to understand why -- it notes workers have no power which is why they are worse off than how they were in the past, and suggests giving them more, which by necessity takes power away from their opponents, companies. But I don't think it's necessary that they explicitly state that, it's clear enough. In fact, the article states that it is a brief designed to make that particular argument and outline that position. It's okay for an article to present a position without trying to be "fair and balanced" or consider all points of view, in fact it's generally more insidious and dishonest when they make that attempt; let the opposition make their own, strong case. If you try to make it for them you'll inevitably make a weaker one than they deserve.
[+] [-] whybroke|10 years ago|reply
You enumerated one that matches today's world view. Previous eras would justify it with some eugenics hand waving and before that would be an invocation of divine will. And just as they did, todays adherents will say that past justifications were nonsense but today's are correct.
But the result is the same; general harm done for the benefit of a few and nice story of facile ideology that justifies it.
[+] [-] coldtea|10 years ago|reply
A job is something people need to live and have shelter. It's not only the most "valuable" people that should have that.
[+] [-] pasquinelli|10 years ago|reply
[deleted]
[+] [-] 11thEarlOfMar|10 years ago|reply
[+] [-] willholloway|10 years ago|reply
They have been able to accumulate some wealth on service industry salaries.
They don't make much less than many of their counterparts with liberal arts degrees, who without the head start graduated into the recession with nothing.
For many the opportunity cost of college was high.
[+] [-] pc86|10 years ago|reply
[+] [-] zanny|10 years ago|reply
As it is, the vast majority of labor skirts the minimum wage because nobody wants people to do anything anymore. The utility of a fleshy meatbag is at all time lows, and will only continue to decline as we carve chunks out of the labor market through automation.
It is also unreasonable to expect an entire generation to work in the very limited purview of STEM. Enough people just do not have the mindset for it and it is already hurting the overall quality of engineering how market forces are pushing people ill suited for such professions into them for survivals sake.
The only reasonable answer is the recognition that, for most of our population, we have nothing productive for them to do, but they should not be punished for being unemployable when it is through no fault of their own. It is our job to raise and educate and mold them better to get a higher yield of analytic minds, but those who do not acquire the skills at the early ages when they form cannot be condemned to a life of poverty for something out of their adult control.
[+] [-] cmdrfred|10 years ago|reply
[+] [-] two2two|10 years ago|reply
[+] [-] ajmurmann|10 years ago|reply
[+] [-] cozuya|10 years ago|reply
[+] [-] snake_plissken|10 years ago|reply
If you asked me, the problem facing workers in their 20s and 30s is that people are having longer careers, either by choice or by necessity. This is coupled with a job market which has never really recovered from the mid 2000s peaks. Until the Baby Boomer generation really begins to retire, the job market will remain tricky to navigate. Compound it all with an ever increasing cost of living (basically, the cost of housing) in pretty much every market and you get the bleak landscape we have now.
[+] [-] mattlutze|10 years ago|reply
They then go on to say that the Fed should continue depressing interest rates, and that employers should start providing significant parenthood benefits.
I'm not sure with the last two -- continuing to depress capital for businesses and increasing the costs of an employee -- will encourage greater hiring or higher wages.
If it's not profitable to make loans, banks won't provide the capital many businesses need to grow their staff since profits instead have to be more conservatively retained to protect against cash flow fluctuations.
I thought that recent economic research was demonstrating that, when controlled for position and employment type, male and female salaries weren't significantly different. I'm not sure this one makes complete sense as a solution to the problem of employers not hiring people, but I'd definitely be interested to see more analysis on the hypothesis that greater gap coverage for maternity leave could help keep women on track and such, that's particularly cool.
[+] [-] jcuga|10 years ago|reply
There are more distractions and diversions than ever that prevent youth from otherwise doing something constructive with their time. And universities have been dumbing down curriculum to bring in more (less qualified) students that are buoyed up by federal loans.
[+] [-] galfarragem|10 years ago|reply
[+] [-] ZanyProgrammer|10 years ago|reply
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] lr4444lr|10 years ago|reply
This syllogism is not only unfounded, but basic economics suggests the opposite is true.
[+] [-] CPLX|10 years ago|reply
There should be a positive correlation between productivity and compensation. How does "basic economics" suggest the opposite?
[+] [-] malchow|10 years ago|reply
[+] [-] CaptSpify|10 years ago|reply
[+] [-] gozur88|10 years ago|reply
"By rights"? This article goes off the rails right there in the first sentence. It's hard to know where to start with how wrong this is.
If the demand for your skill doesn't change and twice as many people have it, in aggregate the people with that skill are going to make less money. The idea that we're going to educate ourselves into prosperity as a society is daft - if we could all do brain surgery it would be a minimum wage job.
The over-schooling of the millennials is a massive misallocation of resources, fueled by debt, cynical college administrators, weak politicians, credulous bureaucrats, and parents doing the wrong thing for the right reasons. That's not the kind of thing that makes you wealthier. Quite the opposite.
[+] [-] cheath|10 years ago|reply
[+] [-] taivare|10 years ago|reply
[+] [-] z3t4|10 years ago|reply
[+] [-] maxerickson|10 years ago|reply
The problem is that spending $10 on capital to make the existing work force more productive is often a better investment than spending $10 on some more labor. It's difficult for labor to argue its importance in such an environment.
[+] [-] marcosdumay|10 years ago|reply
That makes it hard to create new applications for that extra workforce, because most people have little money to spend on it.
[+] [-] jschwartzi|10 years ago|reply
[+] [-] lintiness|10 years ago|reply
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] dang|10 years ago|reply
There's no need to bowdlerize swear words on HN, but there is a need not to post things like "Are you fucking kidding me". Civility has to do with how you treat your fellow users. Please eliminate incivility from your comments here.
We detached this subthread from https://news.ycombinator.com/item?id=11224796 and marked it off-topic.
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] timsco|10 years ago|reply