Hacker News Reader

Comment by notyourwork | Hacker News Reader

Cost of tuition continually grows, most graduates are not falling into extremely lucrative salaries and average salaries are not keeping up with inflation. This is far from surprising but is very concerning.

Another avenue to pursue this discussion from is the % of income allocated to retirement savings. I have a sneaky suspicious most of my peers are saving less for retirement than the same demographic 10, 20, 30 years ago.

What happens in a few decades when all these adults who lived with their parents and hardly saved for retirement due to lower salaries and student loans are too old to work? It seems our tax dollars will be supporting them and this looks like a big problem. Curious what others think or if I am looking at this problem from the wrong perspective.

View on HN

Your sneaking suspicion is correct for baby boomers and gen X: http://www.pewtrusts.org/en/about/news-room/press-releases/2.... "Gen Xers have less wealth and six times more debt than their parents did at the same age," despite having higher salaries.

I think you're right to be concerned. Not being able to strike out on your own delays family formation, which leads to some attrition of people who never have children for financial reasons. This decreases the birthrate and then on top of the working generation supporting members within its own cohort, they also have to support an older generation of retirees with an ever rising dependency ratio. It's a negative feedback loop that countries like Japan, Germany, and Italy are stuck in.

Both the education and housing problems can be solved. Education can be automated and amateurized using technology, and more housing can be built. Both of these would do a lot to decrease youth debt loads. Medical price inflation is the tougher problem but is less pressing for young people. Eventually we will be old though and then it will hit like a ton of bricks for those unlucky enough to have not accumulated wealth.

This was surprising:

"Among Gen Xers who have exceeded their parents’ income, those with college degrees are less likely to surpass their parents’ wealth, mostly due to student loan debt."

Gen X here, just turned 40. If you compare how I'm doing with how my parents (who were solidly middle class) were doing, it's not even close. At 40, they had multiple homes, were secure in their savings and retirement through generous pensions, and practically debt free. This was on school teachers' salaries!

Me? Student loan debt set me back years, crippling housing costs, and a crappy 401(k) that is probably worth around what I put into it due to multiple deep recessions during my prime working years. I can't even begin to imagine how bad it is for you under-30s!

This is not sustainable. All the value captured through productivity increases is being captured by shareholders and asset owners now rather than the working class.

If you put your money into an S&P 500 index fund in 2006 and reinvested dividends every distribution, you would have 6.89% annual return even taking into account recent recessions. In other words, if you had $10,000 in your 401(k) in 2006 and stopped adding any payroll to it, it would be worth over $19,000 now. If your 401(k) isn't in an index fund, it might be worth switching it into one rather than keeping it in a managed fund that charges higher expense ratios, but has worse returns.

Student loans are stupid unless taken for CS or Medicine. Otherwise the military or community college is just fine. Don't follow your passion unless you have a trustfund with >1mm and can pay for college.

It's not that hard, you put 23k/yr total in the roth IRA & Roth 401k in VFIAX. I do not work in the tech industry anymore and am still doing this, just stop eating out, live cheap.

Compound this over 40-45 years and you and I are multimillionares.

The military is fine until you're sent to Afghanistan and you're assigned to missions where you end up killing people. They're dead, and you're messed up for a long, long time. Happened to a couple friends of mine. One of them is de facto permanently disabled (though refuses help from the system itself), bounces from one job to the next, spends every waking moment high, because of the things he did over there.

As for the rest, asking someone to live cheap until they're 65, as a way to compensate for systemic malfunction, ehh...nope, let's get political and fix the system.

Many of my friends and some relatives joined the armed forces in the early 90s. The world seemed relatively safe then, trending upwards, and it seemed like a stable path to a middle class life.

Then the never-ending wars came. And, many of these people now have serious injuries and most have PTSD. They came back changed.

Now, I would never let a relative join the armed forces. Maybe it was a heroic thing to do at one point; I don't know. But, nowadays they're exploited and used carelessly for missions of dubious purpose.

1990 child here. To avoid a lengthy block of text I've deleted it all and decided on a short sum.

While I can only speak from my own experience, many of my friends and colleagues (EE) have left the country already. There are lots of good arguments on both sides and plenty of stories to each end. That said, it comes to this, the people in my generation with real skill are leaving. Not all of them, but enough that it's becoming noticeable. Maybe it's always been this way, maybe not, needless to say my sample size is low so draw conclusions at your own risk. That's just my two cents on it (in reference to what it is like for under-30's).

Where are your friends and colleagues going, if I may ask?

People I knew when I was younger later went on to get a good education and moved to the U.S.A. for work.

They still have student debt, but with practically no interest adjusted for inflation, and they didn't have to pay for university. They won't be spending their future worrying about their loans.

Grow up in a country with ~30% income tax and ~25% VAT, get universal healthcare and free education, then emigrate and take a job and pay (less) taxes in another country where working actually makes you money.

I'm going to leave my country too, it's full of people with opinions I cannot relate to.

Which country are they leaving and where are they going?

My father was an employee of a series of banks. Nothing hugely special - earning the equivalent of about £100k today at that point - but the lifestyle they had by my age is astounding.

By 34 they owned a huge house in the country, several large holiday homes abroad, three cars, private education for the kids, first class flights (for them - I always flew alone to school, economy), motorbikes, you name it.

At the same age, I've done very well for myself compared to my cohort - I own a basement flat and a one bedroom cottage with no roof up a mountain, and have savings - this was from being a director and founder of a 50-ish person business with £MM turnover. I am incredibly concerned for the rest of this generation - if I feel insecure - how does someone renting on a zero-hour contract feel?!?

Part of the myriad resasons I quit my business to wander the world is that I'm done paying for the lavish lifestyles our ancestors enjoyed. Bluntly, it isn't fair, and I'm fed up, and I'm not taking it any more.

Be careful about generalizing from your own experience. Only 0.4% of Brits own a second house, let several large holiday homes. While there were certainly some years of rapidly increasing consumer welfare, most of their gains were in stuff we take for granted today, not luxuries.

I'm not generalising - as I say in my comment I know I'm exceptionally fortunate.

No, I'm talking about the lavish lifestyles of our ancestors.

It is quite fair when you take into account the change in the wealth of people all around the world, not only first world countries.

That's the issue with this thread: it's only first world perspective, about the time when the difference in income between countries around the globe was completely radical. With globalisation, it jist evens out.

If you've been investing in index funds for the past 20 years, your 401k is certainly worth more than what you put in. Hell, even if you invested two lump sums right before the dot-com bust and the 07/08 recession, you're still net positive. The markets are currently at all-time highs.

Just in time for people's 401k/retirement contributions. Where to invest that cash when markets are frothy?

Same index funds as always. Don't try to time the market, especially a quarter century before you retire and start withdrawing.

Which funds do you buy?

Unfortunately, you don't always get that choice. my 401(k) doesn't offer a US stock market index fund option.

> All the value captured through productivity increases is being captured by shareholders and asset owners now rather than the working class.

That's how living in a poor country feels. You still have good enough institutions and human capital to turn things around, but if you wait for too long, those will be gone.

Its called loan consolidation, take a set of loans that total say 70k and get talked into consolidation before you develop math skills and with deferments to deal with the regular boom bust cycle of layoffs over 20 years and that blows up into 400k easily, I've seen it first hand. Mine are paid off but if I had free education or skipped it, I'd be wealthy. Instead I'm broke but my loans are paid off. But it took an insane effort over 20 years to do it, that could have gone into starting a successful company instead of feeding the federal government for a service that costs $0 in other countries.

My dad didn't have my education or skills, but he got a job working for the federal government and was shielded from the up and down of the economy. His education was paid for, his home loan was 12k. But he had things too easy and now he has dementia lol.

The problem already goes beyond millennials.

Increasing automation is going to make unskilled labor a huge liability for countries. This is one reason I don't think some of the anti-immigrant position of many Americans (and Europeans) is unwarranted. Every country should want highly skilled labor to help improve their current account, but unskilled labor is huge future liability. There is already a huge surplus of domestic unskilled labor in developed countries. Allowing unskilled labor to increase through immigration is only going to exacerbate the problem.

If there's literally no work to do, you can meet the material demands of the problem by turning more machines on.

(meanwhile lots of the US runs on cheap labor)

There is work to do, though. Doctors, lawyers, engineering, etc. Lots of work for skilled labor. You can't just "turn on more machines" to placate unemployed unskilled labor.

What if the majority of people can't afford doctors or lawyers?

Then many of the doctors/lawyers burdened with extreme student debt and unable to find work will put pressure on the insurance companies and ultimately charge lower prices. That's likely decades out though.

The machines have owners. How do you make them give away whatever they produce?

through legislation, i.e. the recent push toward universal basic income.

personally i think in today's world in which 0.1% owns pretty much everything or at least controls ownership of everything, it's an unavoidable eventuality, but it's not going to be an easy process of getting there.

They may have to. If there is no money to buy these things, then they'll be back living at home, too.

Don't be naive. Governments and corporations will just devise laws that you HAVE TO buy these goods. How do you muster the money is, and always will be, your problem.

They'll find a way to make money, don't you worry about that at all. They'll sooner make you owe money by the mere fact you're born than to give up.

This will become a global problem about as quickly as it becomes a national problem.

Immigrants, boomers and technology are convenient scapegoats for declining wealth. Technology is particularly favored in the media because it sounds vaguely plausible if you don't look too closely and being anti-technology makes you look ridiculous.

The 0.1% and their media naturally aren't going to blame themselves, or their trade agreements, or their lobbyists, or their wall street.

I wonder what the math is on the 0.1%'s money. If the 0.1% became significantly more generous with their money, how much would that actually benefit everyone else?

https://www.scientificamerican.com/article/economic-inequali...

When that article laid out that it was talking about a survey I sat down and thought about what kind of distribution there likely is. My first guess was:

  f(x) = 500 / (1-x)

where x is 0..1 (excl. 1), 0 being the poorest person and the one right before 1 the richest.

This yields 88.8% being owned by the richest 20% when using 1mio slices (the only reason I'm not trying to integrate symbolically is that I'm too lazy to try to revive my college math skills).

This is strikingly close to the 84% that the article claims is reality.

So, what's wrong with this then now?

The journalist writes that it "should" be different but doesn't provide for an explanation that says why the distribution should be following a different mathematical formula (and which).

Who is being stupid here, me or the journalist?

>So, what's wrong with this then now?

If you think that having wealth should be rewarded more than creating wealth then nothing I guess.

Geometrically increasing wealth is caused by the "compound interest effect" where wealth begets wealth.

In other words, it's a signal that creating wealth is steadily diminishing in importance while owning it is increasing in importance.

Thanks for your reply. You're giving me some food for thought.

To be clear, I'm poor, i.e. I've failed both at wealth creation and ownership so far. I'll think about how (much) wealth creation can 'distort' the geometric formula.

Sorry, but I am not sure I understand. Automation is in things like factories, back offices.. Those things are not entirely unskilled. While you still have plenty of unskilled labour jobs in services/food/entertainment and they haven't yet invented robots to pick strawberries - which in the UK is something we use season immigrants for.

In a bizarre recent trend, people are starting to call anyone without college education 'unskilled'. A decent toolroom machinist required more training and did more mentally challenging work than many office workers with 'soft' college degrees.

These are indeed the kind of jobs that were lost to automation. Truly unskilled labor was replaced not by robots but by cheaper unskilled labor of other people.

That's only because of the welfare system. Otherwise there is no harm to others because a person with unskilled labour gets paid less over time (they're coming to America and Europe because the wages are better). And it is still probably better for that person than staying in their previous country.

There is potentially giant market for unskilled labour. From an economic perspective it makes no sense to have an engineer clean his own toilet, wash his own windows or cook her own dinner.

That does require us to overhaul the tax system so that income isn't taxed twice when it is paid directly from one person to another.

> What happens in a few decades when all these adults who lived with their parents and hardly saved for retirement due to lower salaries and student loans are too old to work?

Simple - they die early... barring a massive electoral shift in governance priorities.

I'm curious why anyone thinks it's a big problem.

SSI and SNAP have really high velocity. For one thing, velocity is a good thing on its own. For another, they're both composed of everybody's favorite convenient social fiction - money. The both run around 5% of GDP. So say that doubles.

People not working is only actually a problem if the overall economy experiences something akin to opportunity loss from them not doing anything. The map is not the territory and the books are not the company.

I am listening to this book now called "The Dictator's Handbook". One of the arguments is that as more people become economically productive, the level of autocracy in a society decreases because it is in governments' interest to liberate productive people to generate wealth. So a society in which many people are unproductive is also a society more liable to become a dictatorship.

By the time the young adults of today are too old to work, they will have long since inherited their parent's house. I would bet in 25 years when 10,000 baby boomers are dying every day, housing prices will be in free fall. So many of today's young adults will pay little, if anything, for the house they retire in.

Thanks to reverse mortgages, I doubt there will be a massive housing transfer when the boomers die out. Boomers in general will outlive their retirement savings and all that will be left is their home equity. We'll see tons of bank-owned homes but today's young adults still won't be able to afford them.

And I wonder if they will be sold by banks or merely rented out and packaged as collateralized investments.

They will probably be sold to rental management companies (of which there will be a whole bunch) or like liquid-property-investment startups like https://bricklane.com/

This will be a bigger problem in the near future. I keep seeing advertisements for property investments along the lines of the company you linked. Everyone thinks that housing is an investment and a way to make money. This has and will continue to drive up prices.

Why would it drive up rents? If people invest in properties to then let/rent them out, then there will be more homes on the rental market. The thing that will prevent this is if there are laws preventing new construction?

The thing that prevents new construction in many areas is laws designed to "preserve the character of the neighborhood". Homeowners/investors have an incentive to push for these laws to keep housing prices high. However, if they actually own a diversified asset that can grow with new construction by adding new properties, then that incentive is reduced.

Speaking as a younger person, I have and will have no interest in living in a rural suburb with no jobs. I'll have to sell, and when that time comes it won't be for much. The reverse white flight into cities is going to wreak havoc on this country.

Out of curiosity — how would you feel about a rural suburb if you could work remotely from it and make the same money that you could make in a big city? What other things would you need the rural suburb to provide if employment wasn't an issue?

For me, it would need to not be rural or a suburb to provide what I desire out of life. I want to be near things. There is a life to urban communities that does not exist in rural or suburban places (and I grew up in both) that I don't think I would want to live without. Being in places where it's a half-mile walk to things I want to do is an unmitigated good for me and there is nothing a suburb or rural area can do to replace that.

Remote work from home, where you are ensconced in your isolation box, is gross, too; as a consultant, I have a home office and I spend most of my time out of it.

(Mind, I have considered buying something in a rural area--but that's effectively a retreat, not a home. Homes are a by-and-large a pipe dream for people who are under 30 right now unless they want crushing commutes or nothingvilles.)

I have the opposite dream right now: I've spent almost my entire life in large cities and now that I'm in my thirties, finally have a career going, and am no longer obsessed with my sex life, I'm longing to move out of the city and somewhere a bit more suburban. I don't want kids or a wife — I just want space to be able to walk around half naked if I want to, sing at 4 in the morning if I feel like it, and indulge my own weird rhythms. I'm a software developer, and my company actually allows me to work remotely, so I'm seriously considering making the move. I seem to become more productive when I have more space, so even from a productivity standpoint the idea probably makes sense.

I actually love going on long walks, so the thought of walking a half hour to buy groceries if I don't buy a car seems ok.

I've spent the last decade or so in San Francisco, and none of the local scenes really attract me. There used to be some cool artists around, but a lot of them got priced out. Maybe some other city has a more thriving cultural life, but San Francisco's isn't doing anything for me. I just have to figure out where to move.

Well, I hope that we both manage to figure out a way of life that is good for us.

> I just want space to be able to walk around half naked if I want to, sing at 4 in the morning if I feel like it, and indulge my own weird rhythms.

What you're describing in terms of collapsibility, zero space, and cultural lifelessness is why I have avoided San Francisco like the plague, but San Francisco isn't like most urban areas--when asked why I refused a job with a startup out there I responded with something very similar to what you're saying here. =) I live in the Boston area; the city I live in is on the subway line, but isn't Boston proper.

I live on the top floor of an apartment building; my place is about 1200 square feet. I regularly sleep an off-kilter schedule. My neighbors like me, and me being up at 3AM doesn't seem to bother the downstairs neighbors seeing as how we hang out once a week or so.

Rural areas are fine if that's your thing, don't get me wrong. But there's a lot that you can't get in those areas (and I've spent plenty of time in them) at all.

Three weeks ago I moved from a suburb-ish type neighborhood (not much walkable) to a urban-ish type neighborhood (nice grocery store 10 minutes walk away, bars 2, 5, 15 minutes away, pet store one block away).

I too work from home, and the difference is so stark, I can't imagine ever living in a less dense neighborhood again. I haven't gotten in my car in a week. Not going back.

Speaking as someone in their early 30s, I heard the same story from many of my peers... peers who are now living in the suburbs with their spouse and 2.5 kids. Youth seeking out the cities for opportunities and entertainment is hardly a new phenomenon. But, it certainly seems that for many people either age or the desire to have a family makes city life a lot less appealing.

Perhaps for a single kid whose parents live in a reasonably sized city. Multiple siblings / rural house / rented city apartment? Not so much.

Reply on news.ycombinator.com