Secondary Research/Alisha Lee

Thesis: Since millennials came of age at the start of recession, they don’t spend as freely as earlier generations, seeing how their parents struggled. In addition, they often don’t have as much money to begin with, since they have large amounts of student debt and incomes haven’t increased.
  • 7 out of 10 students graduate with student loan debt.
  • The average amount of debt that students graduate with is $30,000, which does not include those who take out loans and don’t graduate.
  • Around 1/3 of millennials don’t have money in their savings accounts
Thesis: The Millennial generation is more likely to spend their (limited) funds on experiences, which means that traditional higher-priced physical markets are struggling.
  • 75% of millennials feel the political and economic state of the world impacted them heavily
  • 71% of millennials cite that experiences are the most important thing in their lives
  • Vacations – 43% of millennials are ‘work martyrs’ where they feel guilty for taking time off, also don’t have funds to go on vacation
  • marriage- millennials marry less and later-more debt, living with parents or roommates longer, pushing marriage until financial stability
  • homeownership-can’t afford down payments, stagnant wages and rising home prices
  • diamonds-companies cutting prices, millennials prefer experiences rather than expensive, exploitive goods
Thesis: Millennials and their high student debt are affecting society due to its far-reaching consequences.
  • Americans owe more than a trillion dollars in student loans, millennials carry most of it
  • 41% of millennials are putting off buying a house
  • 31% are putting off buying a car
  • 17% are putting off marriage
  • 31% putting off having kids
  • Average bachelors degree holder takes 21 years to pay off student debt

Secondary Research | Millennials and the New Economy / Mauricio Berrizbeitia

A College Degree Isn’t The Only Path Left To A Good Job

Fast Company (7.31.17)

Automation and offshoring have made it harder to get a “good job” in America without a BA, but it’s not impossible. As tech replaces old manufacturing jobs, new ones pop up in service industries.

A Georgetown University report shows which fields have  “good jobs”–defined as full-time with pay of at least $55,000 on average–and where they might be found. The report was funded by JPMorgan.

  • There are 30 million positions that don’t require a BA in the U.S.
  • 36 million positions pay the same money for people with college qualifications.
  • By income, the bottom quarter of BA holders earn no more than median workers with only high school completion.
  • Since 1991, 2.5 million “good jobs” have disappeared from manufacturing plants
  • Since 1992, about 4 million jobs have been created (net) in service industries.

Side hustles are the new norm. Here’s how much they really pay.

Washington Post (7.3.2017)

Despite growing in popularity as a way to let workers make money on their own terms, the majority of gig-workers face difficult financial conditions. Earnest a San Francisco-based loan provider found after analyzing tens of thousands of loan applications to study the impact of gig-economy jobs.

  • Nearly 1 in 4 Americans now earns money through a side-gig like Uber, Lyft or Airbnb. (Pew Research)
  • 85 percent  of gig workers make less than $500 a month, on average, through those services.
  • Twenty percent of Americans feel that gig-economy jobs place “too much financial burden” on workers. (Pew)
  • 23 percent said such jobs allow companies to take advantage of workers, who are often left to shoulder many of the risks and costs associated with part-time gigs.
  • About one-third of gig workers said there had been instances where they had not been paid for their work.
  • Workers who describe the income they earn from these platforms as ‘essential’ or ‘important’ are more likely to come from low-income households, to be non-white and to have not attended college.

The biggest stereotype about the professional lives of millennials in the US is wrong

Quartz (4.18.2017)

Contrary to the stereotype of being entitled job-hoppers, millennials do not change jobs more often than previous generation, according to data from the US Bureau of Labor Statistics.

  • The median length of job tenures for “Generation X,” when they were young, was actually slightly shorter than that of millennials.
  • For more than two decades, the relative length of job tenure between older and younger workers has been remarkably stable.
  • College degree-holding 25 to 34 year olds have almost the exact same median years of tenure at jobs in 2016 as they did in 1996
  • The number of 25 to 34 year olds who have been in their job for two years or more actually grew from 59.7% in 1996 to 61.8% in 2016. Yet at the same time, the proportion who have been in their jobs for more than five years did drop.

Synthesis

Millennials entering the job market face unfair stereotypes stemming from generational divides, as well as alternative options to the traditional college-then career model. Not all of these choices pay as much as the former, some may even pay a lot less, but they’re a reality for many working young people.

Reading Response 1 / Mauricio Berrizbeitia

The US Senate subcommittee report states that the financial crisis of 2008 was caused by the four interconnected factors of:

  • banks lending high-risk mortgage loans to increase their profits.
  • The failure of the OTS to regulate banks under its supervision and to impede other agencies from doing so.
  • inflation of credit ratings for high-risk mortgage-backed financial products by rating agencies.
  • Investment banks selling these financial products without disclosing their high risk to buyers with the intent of benefitting from their loss.

The second article states that the financial crisis was caused by high-risk, predatory loaning and lack of government regulation.

It seems to me both documents are fairly aligned in their thesis, focusing on high-risk lending and wide ranging industry malpractice as the primary source of the crash.

However, where the committee acknowledges a government’s agency failure to do its job, the Center for American Progress defends the “record of success” of other government agencies and acts, while quickly shoehorning those agencies adopted the same practices as Wall Street near the end of its report. It also claims that 36 percent of subprime mortgages originated from the CRA as if that were a low number. Thirty six percent is over one third of all subprime mortgage loans. While the private market lent more than the government, I highly doubt any one private company was solely responsible for more than a third of all subprime loans.

The latter document seems to me as clear propaganda designed to generate headlines for the 2018 mid-term elections. It consistently references “conservative attacks” while never referencing or quoting said convervatives, only adding footnotes no one will read. This kind of divisive rhetoric is appalling and shameful in my honest opinion.

I’m linking an interactive visualization about the economic and political ramifications of automation. In contrast to the financial crisis which was caused by human greed, automation will be caused by scientific progress and productivity. What’s really interesting is that this piece brings different “chapters” together to tell a whole story such as:

  • the likelihood of certain jobs being replaced
  • voter’s tendencies

This is very similar to our touchpoints such as the Dispossession of Wealth and Race & Re-Segregation among others.

https://pudding.cool/2017/07/jobs/

–Revisions–

Because I couldn’t stop thinking about this, I decided to read some of the footnotes I think no one will read. Part of what makes this issue so complicated is that people are still arguing of when high-risk loans began to proliferate.

Some of the conservative critics the CAP is referencing include the GOP party platform of 2016, the Heritage Foundation and the American Enterprise Institute. The basis of their argument is that the Housing and Community Development Act of 1992 encouraged GSE’s such as Fannie and Freddie towards higher and higher quotas of subprime loans.

The CAP explains that the goal of this legislation was to make affordable housing more accessible to low-income Americans, which traditional loan services might not (or did not) cover because they represented a higher risk. This gets into another discussion which is  the role of government in society, which I will not get into.

After reading the 2016 GOP platform, it is clear why the CAP might imply these criticisms are racist. It essentially states that local banks and financial services are better suited to determine who they can loan to than a one-size fits all government mandate. This leaves the door open to the people running those financials institutions to deny loans to people simply because of their background and keep them away from a community.

The AEI offers a much more sophisticated argument against government regulation, one that relies on economics rather than race and thus doesn’t feel icky. Because GSE’s are tax-funded, they have a funding advantage over the private sector and thus they can under-price the competition and gain so much market share they become a monopoly.

Essentially, what this is implying is that the only way for the private sector (banks and Wall Street) to compete with GSE’s is to engage in reckless high-risk loans. Thus it now seems to me that the root of the Crisis was the competition between the government and the private sector.

It is pretty clear that my original response was very emotional and hopefully this revision addresses some of my blindspots.