Millennials Still Need Radical Economic Solutions on Housing and Debt

The desperate rage of an entire generation isn’t going away.

Like most weary Democrats, I would rather engage in various acts of self-harm than keep arguing about the 2016 Democratic primary. That said, the same forces that created such an enormous age gap in Democratic preferences between Sanders and Clinton are still very much at work–even more so than previously realized.

Millennials face enormous economic hurdles greater than any other generation, mostly as a result of debt and the high cost of housing. While every older generation has more or less been the beneficiary of increases in stock values and home prices, Millennials have largely been not only locked out of them but actively harmed by them. Stock market gains redounding to the benefit of boomer and Gen-X 401Ks and mutual funds were built in large part on globalization, automation and other wage-flattening efficiencies that harm young workers. Housing costs in particular are hugely problematic: the same economics that gave older generations triple digit returns on home investments now conspire to make even rents, much less mortgages, unaffordable to young people in the places where most of the jobs are located.

Partly in an effort to assuage guilt over the situation, an entire cottage industry has developed around shaming Millennials for their lifestyle choices, blaming lattes and avocado toast for their inability to afford basic security. But it’s not true: Millennials are not spoiled spendthrifts, but frugal victims of an economy that brutalizes them:

A decade later, though, it appears Millennials are in the much deeper financial hole. In a new study this month, economists from the Federal Reserve Bank of St. Louis examined whether Americans are now wealthier or poorer than previous generations were at their age. It turns out that older households (those headed by someone born before 1960) are a bit better off than those their age had been in the past, while younger households (those headed by someone born after 1960) are generally worse off. And 1980s babies are in the most dire shape of all: As of 2016, the median net worth of those born around the Reagan years was 34 percent lower than what past trends would predict for their age group. Those born in the 1970s, the GenXers, were just 18 percent behind.

Why are younger families so far behind the curve? According to the Fed report, the problem is not what they’re earning, nor their savings habits (the researchers find that, contrary to popular belief, Americans born in the ‘80s actually put away money at higher rates than Boomers or Gen Xers did at their age). Instead, the problem boils down to “houses and debt.” Americans born in the 1960s and ‘70s were up to their necks in mortgage debt when the housing bust hit, and their net worths plummeted with housing prices. But now that home values have recovered, their finances are healing. “Families whose heads were born in the 1980s are different,” the report states. Loaded down with student debt, auto loans, and credit card balances, less than half own homes and relatively few hold assets like stocks, meaning they’ve missed out on the runup in asset prices of the last few years, and it’s possible they’ll never be able to build wealth fast enough to match previous generations.

Technically, ‘80s babies don’t have the heaviest debt burden ever; they’re still behind the standard set by those born in the ‘70s. But the difference, again, is that Gen X levered up to buy actual assets. Millennials are paying for their diplomas. The Fed staffers hold out a sliver of hope that, as the most educated generation yet, those born in the ‘80s will earn enough to dig themselves out of the pit they’re currently in. But otherwise, it’s possible they’ll “become members of a lost generation for wealth accumulation.”

Millennials are acutely aware of the bad hand we’ve been dealt, because we can see the contrast between our average experience and that of our parents and grandparents. It is demoralizing to go into much greater debt than your parents did to get more of an education, find yourself working longer hours at lower pay adjusted for inflation with less job security, only to be unable to afford rent for an apartment in the same city that your parents bought a 3,000 square foot house for the same monthly cost 25 years ago.  The concept of incrementalism becomes a joke, and spending 50 or more hours a week on the career ladder seems less of a good investment than a form of exploitative indentured servitude. When even starting a family seems economically out of reach for most, the notion of saving for retirement is mostly a pipe dream. As the oldest Millennials approach 40 years old, the prospect of trying to raise children while also investing in a 401K and a mortgage and paying $2000/month in health insurance is less a challenge than a sick joke.

In this context patience becomes a dirty word. Socialism isn’t a buzzword but a concrete retirement plan. Revenge on the plutocrats who stole the future from an entire generation is still top of mind. And most other political considerations take a backseat to survival–or even just getting out of mom and dad’s basement.  Which helps explain why even in an election supercharged with racial and gender overtones, a large majority of women and people of color under 35 still voted for an old white socialist guy from Vermont.

It doesn’t really matter whether Sanders runs again in 2020 or not. This issue–and the desperate rage of an entire generation as well as the generation Z just now coming of voting age–isn’t going away. The Democratic Party needs to find real, concrete ways of addressing it not just at a national level, but also a state and local level in terms of housing policy, or it will reap a maelstrom similar to that of 2016 in election after election to come.

David Atkins

David Atkins is a writer, activist and research professional living in Santa Barbara. He is a contributor to the Washington Monthly's Political Animal and president of The Pollux Group, a qualitative research firm.