CraigM
1928
Which, in many ways, is an entirely rational and justified decision. Think about the work environment in the 60’s, 70’s and 80’s regarding long term employment and job security, compensation and benefits, pensions, etc. back then moving for a job, when the prospect of having a good job you worked for 20,30, 40 years and then retired from? Real in a way that does not exist today.
So if you are going to move like that, move to a large city where there is more job opportunities. It is fundamentally irrational to move to a small community for a job when the odds of being there for even 5 years are low, and there is not alternative employers in the area. So unless a company is targeting you at job fairs when you are a senior, Eli Lilly was one such company that had a big presence at Rose Hulman for this reason, then moving to some rural/ semi rural town for a job just isn’t really on the table.
As for remote work? Yeah that is gaining more traction. There is still a lag and reluctance from employers, and many still require some on site reporting. Maybe you need to come in to the office once a week or one week a month or something. Certainly this does open up more options though, and over time we can see this impact the housing market more. However not all employers allow this, so it still has some need to live in an area with other employers for your field simply because you won’t be at that company forever.
Enidigm
1929
I’d argue that the cost of living, especially rent and housing, is a huge part of that. If I could live in a similar or even less circumstance for, say, $300 a month, i’d be happy to try almost anywhere. I’m in a career transition right now and have been looking.
Instead my eventual decision to stay or to go is going to be driven almost entirely by three decisions 1) debt 2) income offered and 3) cost of housing. And because I bought a home 10 years ago it’s going to be almost impossible to find a situation where the third part of that equation is smaller - any move is likely to double the cost of housing or more - unless I elect a vagabond lifestyle and live in a travel camper or the cheapest, least safe and least reliable housing I can find.
Also the National Realtors index - which i just looked up and glanced at - cares nothing at all about the broader socioeconomic implications of things like lifestyle, urban sprawl, ect. Is a $250,000 house in San Francisco really affordable if you have a 2 hour one-way commute? What are the quality of the schools there, ect? As a NRI i’m sure suburbanization is seen as just opportunity from their relatively narrow point of view. It also assumes a 20% down payment, which is increasingly laughable as housing prices skyrocket.
I guess I’m not sure what the point of all this is. Home ownership rates for millennials are dramatically lower than for other groups, both overall and when at the same age. Millennial wealth accumulation is far weaker than any other group at the same points in time. Boomers lead all those metrics, and the metrics get worse with each successive generation. These are just facts, right? And I think we can rule out everyone else just wanted to be poorer than boomers were as the explanation.
Enidigm
1931
My rather narrow scope is relating mobility to property values and income.
A massive decline in mobility has economic reasons, not cultural reasons, I would argue. Look at how places like Austin or even college towns in the Carolinas have become “tech hubs” despite being in deep red seas. Millennial home ownership and millennial wealth accumulation are almost certainly linked as well. Real Estate, by the Brookings institute, is the majority of non-finance industry wealth for Americans (shockingly 3/4 of all US personal wealth is in the market, which implies if you’re not in the market directly or indirectly, you’re not making it). So if Millennials aren’t investing in the stock market, aren’t accumulating 401ks, or aren’t accumulating principle in property, there’s basically no other forms of wealth out there right now. And without wealth, mobility declines, since savings are so dismal, and fixed-rate mortgages are effectively rent-controlled housing.
Strollen
1932
Here is the thing the world that you described never existed. If falls squarely into category The Way Things Never Were A good but dated book.
Take pensions, a subject I’ve studied for the better part of 20 years. At no point were more than 25-30% American workers ever qualified for a pension. First, the defined benefit pension was almost exclusively offered by two organizations: big companies Fortune 500 and some Fortune 1000 companies and the government. The trend over the last 50 years is that Fortune 500 employees a higher percentage of American worker not lower. You’ll see a higher percentage from pension advocates, but what they are missing is that qualifying for a pension was hard. Most companies require you to work for seven and sometimes ten years to vest (the military requires 20 years) for the pension. It was not uncommon for companies to fire or lay off workers right before they vested, and was considered a smart business practices. The military equivalent is making sure that in years 18-20 you have a truly bad post.
Before IRAs and 401K were invented a popularized in the 80s more than 60% workes had no access to any form of retirement savings. Then, as now little companies didn’t last 20-40 years so you couldn’t work for one employer and retire. The high school kid who went to work Ford or GM and put his two kids through college, and retired with a pension to Florida is a wonderful story. However, it represents no more than 2% of the workers in the country at the peak of the auto industry.
I know it is hard to believe, but companies today are far more paternalistic today than were in 60,70,80, or 90s. Health care, maternity leave, childcare all are far more common now than in the past Even basic things like providing severance pay, or paying for earned vacation time, have required a combination of laws, competitive pressure, and societal norms.
In summary, CEOs have always been ruthless bastards*; they have a harder time getting away with now than in the past.
*Obviously many exceptions apply.
This doesn’t seem accurate. They would have 48K in income, but that is before taxes, and after taxes you’re looking at something like 35K. Then they have $5K a year (or $415 a month) in property taxes which puts their housing costs at +30% of their income, then factor in any HOA fees, lawn care, expenses when roofs, plumbing, or heating goes out, etc. etc. If you have $20K in a year to cover all non-housing expenses for two people, and you need to spend $15K on a new roof… you’re kind of fucked.
People live in expensive housing markets because that is where the well paying jobs are. Millennials aren’t shut out of the housing market because they all want to live on beaches.
You contradict yourself more quickly than usual here. You say that the world CraigM describes did not exist, and then say that it existed for the 25-30% of people who worked for big corps and government. It certainly existed for my step-dad, who spent 30+ years at IBM and retired with the gold watch and pension. And I’ve certainly seen the transition in my own professional life, where the general corporate motto has been:
I am altering the deal , pray I don’t alter it any further.
Each year you go back the benefits get better and better. Old timers remember pensions and profit sharing and ice sculptures. New hires get a matching $500 in their HSA.
Do you just pull numbers out of your ass? What’s the Federal income tax for a couple making 48K with say 1 kid? How about state income taxes? Where in the hell did you get the ridiculous estimate for 5K for property taxes in the state. HOA aren’t big in place like Arkansas, lawn care seriously? You mow your own damn lawn, or maybe pay a neighbor kid to do it. Yes, there is maintenance, which is highly variable, it is certainly cheaper in place like Arkansas than on the coast.
It actually spend a few minutes sanity checking my numbers before posting. After tax income (including, FICA, state and Federal which is small) is 40K and total housing expense are right around $10K a year or 25% of your income. Well below the 35-45% I and my friends were paying back in the 80s and 90s.
Which means that 75% of the population didn’t have a pension and plenty had no health insurance coverage either, and very few had dental and maternity and paternity leave was practically unheard off.
I got a job offer from IBM out of college and my roommate and a very good friend worked there for a number of years. IBM probably was the gold standard for benefits back in 60 to 90s, before the PC started to kill their profits. Let’s compared
80s Today
Medical Care Y Y
Dental Care ? Y
Vision Care N Y
Mental Health Care N Y
HSA N Y
Pension Plan Y N
401K Y Y
1%+6% 401K match N Y
ESOP Y Y
Bonuses Y Y
Maternity Leave N Y
Family Care Leave N Y
Maternity leave N Y
Adoption expense N Y
Sick Leave Y Y
Bereavement ? Y
Volunteer time off N Y
Sabbatical N Y
Tuition assistance Y Y
and there many more on the list I have no idea when they added.
Now obviously not all benefits are created equal and the pension plan is bigger deal than adoption assistance for instance. But the 7% 401K contribution is about equal to 1/2 the pension plan.
But let’s be clear your stepdad was one of the winners. This thread is about equality, and the fact that 80% via 401(k) of Americans now have access to a retirement plan vs. 40% in the “good old days” is a more equal system.
Only if you ignore the difference between defined benefit and defined contribution. And didn’t you just say:
And now you say:
Which is it, 25% or 30% or 40%? Or some other number?
I’ll just leave that right there.
Alstein
1939
In many cases around here, Chinese are buying to get their money out of Chinese control. They then rent the houses out as an investment.
About half my neighboor houses are Chinese-owned, and the renters are majority-minority.
A 401k isn’t a benefit when there’s no match like what I have. That’s just investment with some eventual tax breaks.
Yes, that’s right. Even with some match, many young workers are so poorly paid that they can’t make the kind of investment they need to end up with a reasonable retirement savings balance, and overall comp is still lower than it would have been under a pre-401k defined benefit pension plan.
The 401k scheme was designed to let employers off the hook for the cost of future pension benefits. So of course it amounted to a cost savings for employers, that was the whole point, and the workers ended up with less overall comp. Less overall comp means less savings for retirement.
The fact is, most matches are regressive, and benefit owners and HCEs more, since they are based on salary. And yet, we give the company a tax break for this.
Like healthcare, we should disentangle 401(k) and retirement from employment.
Apparently in 1950, there were 62 million people in the civilian labor force aged 16 or older.
Also apparently, in 1950, roughly 30 million were covered by a private pension or profit-sharing plan (mostly pensions).
So roughly 50% seems more likely. Granted I didn’t make it to the end of each document - I got Givings to Thanks :)
And man, profit-sharing plans. What ever happened to those? I remember working for a major building materials company in the 80s and 90s. They had one of those. It was a nice wad of cash at the end of every year.
Yeah, I just read another source that put private employee pension plan participation close to 50% in 1970, and given that this exclude public employees and virtually all public employees have a pension plan, 50% seems way more likely.
They exist. But mostly in small offices where the disparity between salaries is huge.
Being able to invest pre tax dollars and having them compound tax-free and then withdraw the saving when you are retired and generally in a lower-tax bracket is a big deal. It depends on lots of factors but over 40+ years it can easily be having twice as much money in retirement.
A 401k has some modest benefits over an IRA, but the primary one is the nudge factor. Making the default enrollment 3% in a target retirement fund has been shown to nearly double enrollment rates.
There is a big difference between having access to a pension plan and actually vesting in it, especially in the “good old” days when there were no laws against firing older workers right before they become eligible for qualifying for a pension. The 7-10 year vest period got rid of at least half. The military has an even better pension plan than old school companies like IBM, but only 1/6 of all folks who join the military make it to the 20 year mark to collect.
Yeah, but you said
And just as there’s a big difference between being covered and being vested in a DB/DC plan, there’s a big difference between having a 401(k) and (for example) the economy/market doing well enough you can actually retire and take advantage of it. 2008, for instance, would like to say “Hi!” As supplemental anecdata my retirement continues to be indefinitely postsponed due to that fiasco engineered by the Masters of the Universe.
Not in comparison with a defined-benefit plan totally funded by your employer and just as tax-free to you until you begin drawing on it.
Just as there is a big difference between having access to a 401k, and actually having the necessary surplus income to invest in it and the know-how to make sound investment choices.
