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The Cheapest Generation

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Re: The Cheapest Generation

#141

Post by bunderbunder »

hnal943 wrote: post #58
brudgers wrote: post #14

In the age of smart phones, the car has ceased being a vital communication tool for young people. There's no need to drive to the mall to see if Paul is there hanging out. A text will let me know that he's at Joel's party instead. Another text and Steve will swing by in his car. The housing situation is another matter. There's a glut. Credit is tight. Jobs are scarce. And housing prices are going down. Millenials are…

You're right about smart phones, but I'm not so sure about housing. Credit is ridiculously cheap, and housing everywhere is on sale. If you have a job, why wouldn't you buy as much house as you can afford?

Because by renting as little apartment as I can get away with, I:

- Leave more money in the bank.

- Get to maintain a positive net worth.

- Am much more free to move if I need to.

- Don't have to worry about sudden, large, unpredictable repair costs.

- Can demonstrate that I have learned something from watching the preceding generation recently get taught a very brutal lesson about the dangers of habitually buying as much as you can afford.

Re: The Cheapest Generation

#142

Post by [deleted] »

api wrote: post #77
yummyfajitas wrote: post #74

Earlier quoted context omitted.

Minimum wage is a silly thing to look at. In 1980, 10% of men and 22% of women earned min wage. In 2010, this fell to 5% and 7%. http://www.statista.com/statistics/185536/share-of-workers-p... Further, a look at hard data (for both the bottom 20% and the middle 20%) shows that people today are more likely to own a car than in 1981, and have more house per person than in 1989 (no data on square footage exists in 1981)…

Earth to Planet Trust Fund: it is the economy. http://livingwage.mit.edu Also look at the ratio of median income to real estate value. We are still in a housing bubble. My household earns about 40% more than the national average, we do not live extravagantly, we budget well, and we feel barely middle class. This is ridiculous. I'm surprised there aren't riots.

[deleted]

Re: The Cheapest Generation

#143

Post by will_work4tears »

trhtrsh wrote: post #134
tatsuke95 wrote: post #120

Earlier quoted context omitted.

> "We didn't make our goals this quarter, and many in our industry also showed reduced sales numbers. It is clear that we need to reduce our expectations. Next quarter's numbers will be lower, and shareholders are just going to have to take a loss." Uh, they do say that all the time . I tend to agree with the other poster: our expectations are too high. It's a product of having witnessed one of the greatest runups in…

I make high middle class money and I don't know anyone in my peer group who has "A 2500 sqft house, two (or three) cars, regular vacations to Europe or the warm south, maybe a summer house, boats, motorcycles AND other toys". You are describing the upper echelon of lawyers and execs.

Yeah, our household income is ~30-40% higher than the median for our state (WA) and with two modest cars, a 1300 SqFt home(in an "up and coming" neighborhood, lol), student loans, a new baby, and very, very few electronic devices (our phones are our most expensive computing device - and we only have a small 26" LCD TV), we barely squeeze by, or so it feels. We don't vacation at all, at least in terms of going to Europe - we might road trip to Vancouver, BC for a weekend once a year.

Also, no other Toys - I have a weight set (power rack, olympic weights, heavyweight bench, etc) that ran me 1300 brand new, other than the car and the house that is our most expensive purchase... ever. I could have sworn once we reached a six figure income we'd be "well off." I guess that is a dream.

Re: The Cheapest Generation

#144

Post by apendleton »

thaumaturgy wrote: post #48

I'm sure it has nothing to do with the fact that 78 hours of minimum wage work could pay the rent in 1980, compared to 109 hours in 2010 [1], along with the other associated cost-of-living increases over the last three decades that have come without comparable increases in wages. I doubt that most people who felt financially secure and could afford a new car wouldn't want to own a new car. Nobody really enjoys drivin…

> I doubt that most people who felt financially secure and could afford a new car wouldn't want to own a new car.

Not that this is anything more than anecdata, but in my peer group, this isn't true. I get around by bike and don't own a car, but could afford a new car if I wanted one, and this is true of many of my friends. Ideas stemming from New Urbanism are a pretty big deal in at least a certain sector of our generation; we're much more likely to consciously decide to prioritize proximity to things over cars, and even if we can afford cars, we're (I'd like to think) more mindful of the sustainability consequences of the modes of transportation that we choose than our parents' generation was; further, I have a fifteen-minute commute and don't have to worry about traffic or parking, and it would take a lot for me to be willing to give that up. This is in Washington, DC, but I know people in similar situations in New York, San Francisco, Portland, and Seattle.

Re: The Cheapest Generation

#145

Post by yummyfajitas »

thaumaturgy wrote: post #124
yummyfajitas wrote: post #74

Earlier quoted context omitted.

Minimum wage is a silly thing to look at. In 1980, 10% of men and 22% of women earned min wage. In 2010, this fell to 5% and 7%. http://www.statista.com/statistics/185536/share-of-workers-p... Further, a look at hard data (for both the bottom 20% and the middle 20%) shows that people today are more likely to own a car than in 1981, and have more house per person than in 1989 (no data on square footage exists in 1981)…

Upvoted you for being the only response with numbers so far, even though I disagree with your conclusion. The average price of a new car in 1980 was $7,200 [1]. In 2010, it's $28,400 [2]. That's an almost 300% increase. Federal minimum wage in 1980 was $3.10 [3]. In 2010, it's $7.25, a 130% increase. That's lagging pretty far behind new car prices. You point out that fewer people are earning minimum wage now than in…

If car ownership increased, but sales of new cars fell, it implies people are keeping the same car for more time.

The employment to population ratio is the same as it was during the 80's, and was considerably higher until the recent recession. In contrast, the fraction of people earning min wage has fallen.

http://research.stlouisfed.org/fred2/series/EMRATIO

Further, adjusting wages (rather than total comp) for inflation is a gratuitous statistical fallacy. One of the biggest drivers in "inflation" is an average of the price of the expanding basket of goods called "health care" [1]. For most people, this is paid for out of non-wage compensation.

[1] I.e., an MRI + laparoscopic spine surgery today costs more than back pain in 1980.

Re: The Cheapest Generation

#146

Post by anovikov »

JumpCrisscross wrote: post #78
thaumaturgy wrote: post #48

I'm sure it has nothing to do with the fact that 78 hours of minimum wage work could pay the rent in 1980, compared to 109 hours in 2010 [1], along with the other associated cost-of-living increases over the last three decades that have come without comparable increases in wages. I doubt that most people who felt financially secure and could afford a new car wouldn't want to own a new car. Nobody really enjoys drivin…

I'm 21, live in New York City, and let my driver's licence lapse over a year ago. I don't plan on owning a house, preferring to drive my surplus wealth into assets I understand better and which don't restrict my mobility, and don't care to own a car. This is not economically motivated - I have comfortable free cash flow and a healthy balance sheet free of personal debt. I pay for a car service and take taxis more tha…

Same here. I'm not American, but i also mention a drastic lack of desire of my generation (late X or early Y depending on who you ask) to own a house or a car vc. earlier ones. I bought an apartment only when i could save of one in one year and buy in cash, and only recently bought a car (also within a couple months of income) only because of moving to a place with little public transport.

This has nothing to do with economy, this is behavioral change. Freedom in all forms is the thing we value most of all and ready to spend a lot of money for, and houses and cars have negative value in this respect, they bind you.

Re: The Cheapest Generation

#147

Post by tatsuke95 »

JonnieCache wrote: post #129
tatsuke95 wrote: post #120

Earlier quoted context omitted.

> "We didn't make our goals this quarter, and many in our industry also showed reduced sales numbers. It is clear that we need to reduce our expectations. Next quarter's numbers will be lower, and shareholders are just going to have to take a loss." Uh, they do say that all the time . I tend to agree with the other poster: our expectations are too high. It's a product of having witnessed one of the greatest runups in…

What incentive do we have then, to not forcibly extract that wealth from the previous generation? To me it seems that if we need to de-leverage, why on earth should we pay these people their pensions? All the intergenerational trust and good faith is already gone anyway. Note: the views casually related above may or may not represent the actual considered opinions of the management.

>"What incentive do we have then, to not forcibly extract that wealth from the previous generation?"

We do have the incentive. And we will extract that wealth. But it takes time, since "they" currently have the political power.

What you describe is what is happening in the real world. Reform everywhere so they get the pensions and benefits, but nobody after them will. This is happening both publicly and privately. Even unions are stiffing new members.

We'll have the last laugh, though. Eventually the boomers will need to divest. At that point they'll find out we don't have the money to buy their assets.

Re: The Cheapest Generation

#148

Post by brewdad »

CWuestefeld wrote: post #54
ganley wrote: post #12

Earlier quoted context omitted.

> The only real threat from lasting attitude change, is that perhaps millenials will vote for more transit projects and subsidies over more car/road projects and subsidies and thus make it more feasible in more areas to not own cars. We can only hope.

The trend for mass transit is to remove options from travelers, thus making itself less useful to us. As such, it's hardly worth funding. [1] That's not to say that it must be inherently so. Just that, so long as these projects are typical government projects that are expected to go over-budget and over-deadline with no repercussions, they will be used as a tool for political favors and cronyism, at our expense. [1]…

Portland's transit problems stem from the fact that most of the region's job growth over the past 20 years has taken place away from downtown. On a given morning, there are almost as many commuters driving to jobs in the west suburbs as driving to jobs in the city. Of course, the light rail doesn't go to where the jobs are in the suburbs. Not without the need to walk considerable distances or transfer to a bus.

Re: The Cheapest Generation

#149

Post by snowwrestler »

thaumaturgy wrote: post #124
yummyfajitas wrote: post #74

Earlier quoted context omitted.

Minimum wage is a silly thing to look at. In 1980, 10% of men and 22% of women earned min wage. In 2010, this fell to 5% and 7%. http://www.statista.com/statistics/185536/share-of-workers-p... Further, a look at hard data (for both the bottom 20% and the middle 20%) shows that people today are more likely to own a car than in 1981, and have more house per person than in 1989 (no data on square footage exists in 1981)…

Upvoted you for being the only response with numbers so far, even though I disagree with your conclusion. The average price of a new car in 1980 was $7,200 [1]. In 2010, it's $28,400 [2]. That's an almost 300% increase. Federal minimum wage in 1980 was $3.10 [3]. In 2010, it's $7.25, a 130% increase. That's lagging pretty far behind new car prices. You point out that fewer people are earning minimum wage now than in…

I don't think it's useful to compare minimum wage, which is a fixed floor, with the average cost of a new car, which will float upward if rich people buy more expensive cars. I also don't know why you would limit yourself to new cars, since the least expensive cars are typically used--and cars have undoubtedly gotten more reliable since 1980. They last a lot longer.

Unfortunately I don't have the time to do the research and math myself to tease out these relationships.

Re: The Cheapest Generation

#150

Post by CWuestefeld »

thaumaturgy wrote: post #124
yummyfajitas wrote: post #74

Earlier quoted context omitted.

Minimum wage is a silly thing to look at. In 1980, 10% of men and 22% of women earned min wage. In 2010, this fell to 5% and 7%. http://www.statista.com/statistics/185536/share-of-workers-p... Further, a look at hard data (for both the bottom 20% and the middle 20%) shows that people today are more likely to own a car than in 1981, and have more house per person than in 1989 (no data on square footage exists in 1981)…

Upvoted you for being the only response with numbers so far, even though I disagree with your conclusion. The average price of a new car in 1980 was $7,200 [1]. In 2010, it's $28,400 [2]. That's an almost 300% increase. Federal minimum wage in 1980 was $3.10 [3]. In 2010, it's $7.25, a 130% increase. That's lagging pretty far behind new car prices. You point out that fewer people are earning minimum wage now than in…

So, in summary: the price of a new car has gone up a lot but wages have not, especially if you're young. I'm pretty confident that this might be a factor in why young people aren't buying new cars.

You're probably right, but that doesn't lead to a conclusion that the effect is caused by the economy.

In absolute dollars, cars are more expensive than they used to be, but for your dollar, you get much more car. That is, there are more features (stereo, A/C, power everything), more safety (both structurally as well as ABS, better restraints, etc.), more reliability, and much greater life expectancy [1] from a modern car. In short, it's a better investment.

If you've got enough money to meet the minimum threshold for buying a new car, you're going to get more for your money than you did in 1980. But that minimum threshold has definitely been raised. Part of this is from consumer demand; part of it (particularly in areas related to safety or emissions) is government mandated.

So it looks to me like the car market just evolved itself out of the reach of many young people.

[1] We just got a new car for the wife, trading in her old car at 200,000 miles. My car has 128,000 and is still running strong. In this age those numbers are expected; back then, a 200K mile car would be a minor miracle.

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