Comment by 11thEarlOfMar | Hacker News Reader

Comment by 11thEarlOfMar | Hacker News Reader

The fleecing affects millennials in that they cannot save and invest their income. Once they've paid their health care and education [1] payments, they have nothing left to save.

Per capita, in 2017 dollars, 1970 Americans spent $1,797 on health care. In 2017, $10,739 [0]. In return on that $9,000 annual investment: Life expectancy rose from 74.7 to 78.6, adding 3.9 years.

In 1993, the annual cost for tuition & fees to attending a UC as an in-state was $5,000. Today, it's $15,000 [2]. That's a 3x increase during a period when inflation was 1.7x. A Gen Y-er would have paid $20,000 in tuition for a 4-year degree. A millenial, $60,000. That $40,000 is money that could otherwise have been saved.

Since those costs were lower as a percentage of income for boomers, Gen X and Gen Y, those prior generations had a better chance to save. Today, they also have highest incomes, and again, can save if that's how they prioritize their finances.

Millennials, not so much. For sure, health care and education affects earlier generations, but they were better able to save in 401(k) plans because the portion of their income that went to health and education was substantially less than for millennials.

[0] https://www.healthsystemtracker.org/chart-collection/u-s-spe...

[1] https://www.savingforcollege.com/article/growth-in-student-l...

[2] https://www.kqed.org/news/70585/csu-and-uc-tuition-hikes-ove...

I think it's worth pointing out here that the terms Gen Y and Millenial both refer to the same generation (see https://en.wikipedia.org/wiki/Millennials)

You're correct. None of the parent's argument makes any sense in light of this error. I don't understand why the post is being upvoted--the data is outright wrong!

I sense that people may blindly upvote posts reporting figures, especially if they come with sources.

Generation X and Millennial isn't really a sharp transition. No generation is, but it is even more diffuse this time since there wasn't necessarily one or multiple "big events" at a fixed date. I don't know if parent's argument is correct, but what is being said is essentially early Millennial, ~1985 and late Millennial, ~1995. Huge difference in many e.g. housing markets. Once people born around the actual millennial gets old enough we might start talking about Generation Z instead.

Most people born in 1985 had their income affected too much by the Great Recession to really take advantage of the lower housing prices then.

Could be the case for many people. I think the commonality between generations might even be declining in favor of other divides. It is in some ways assumed that many people are starting at the bottom and mostly share paths based on development. But I am not sure that is the case anymore, if it ever really were.

This was really odd for me to learn only a couple weeks ago. I had always assumed I was a Gen Yer and that Millenials were just getting out of college now.

I made the cutoff for Gen-X by a year, but still benefitted from the generally referenced figures in the comment. It's staggering how much more it costs now. My wife is a mere 5 years younger than I and her tuition cost her 3x my own.

Housing and childcare are also outpacing inflation and wages. It’s crazy how much more things cost as a percentage of income than in the ‘90s. We’re going to have an inevitable retirement crisis when most millennials are forced to work until they die since they won’t have anything left to put into savings. 70% of Americans can’t even put together $400 in an emergency. I see things getting even worse unless something significant changes.

Part of that is the structure of the economy, like you say. A significant proportion of it, as a millennial myself, is people having a terrible understanding of personal finance.

If you spend all your money on things to impress people or because "you deserve them", then you end up with an empty pot.

There have always been people with bad personal finance. The difference is that the necessities that you cannot avoid all cost orders of magnitude more—-healthcare, housing, college, childcare. This means people how a smaller margin for mistakes and even one hospital trip can put them in debt for years/decades or bankruptcy.

The rules have changed and people are still trying to live like their parents did.

Healthcare is expensive. If you are on Obamacare, it is subsidized.

Housing is expensive if you want to live in a "good" neighborhood. There are a lot of "okay" neighborhoods that people can afford just fine.

College is expensive, but it really depends on which university you go to. As much as anything, the college issue is intentional misdirection by the people who are steering parents and kids into those choices. There are very economical options, but the price tags and ramifications of those choices are usually not spelled out very well to the people making those decisions.

Edit: Childcare is absolutely expensive, to the point that I really expect having a parent stay at home to swing back around to being more normal. We have three kids and if my wife worked, it would cost more to have them in daycare than she would make while they were there.

One parent not working has massive negative externalities for everyone. For society the labour force shrinks and the economy follows. Your wife's career is effectively over after 5-10 years off for childcare. If you lose your job your family will be in trouble. If you get divorced you will not enjoy the results.

Two parents working has negative externalities as well. Costs adjust to what families can bear. Double incomes means increased prices and reduced purchasing power for everyone.

My wife's career never started. Her degree was worthless so she was working as a barista before we had kids. She does some work on the side, but she was never going to generate the kind of income I do solely based on our respective career choices.

If I lose my job, we can live off savings for several years. If I am unable to find work, the economy has bigger problems that are independent of my wife working or not. If I die or become disabled, that's what insurance is for.

No one enjoys divorce. In some cases it is a necessary evil, but I don't think anyone would ever characterize it as pleasant.

Instead of just going "welp, this is how things are now", there is always the option to change the rules back. How about we go back to 90% taxes on the top brackets and see how millennials fare then?

The rich don't make their money off of taxable income. They make their money off of appreciating assets. You can tax them all you want and it won't change a thing. You could try to create a wealth tax, but basically anyone with any assets would fight it tooth and nail and it would never go through without something akin to a communist revolution.

>basically anyone with any assets would fight it tooth and nail and it would never go through without something akin to a communist revolution.

Now you're getting it.

Also, the "wealth tax" exists, it's called the capital gains tax, and it only goes up to 20%. It should be 100%.

The majority of my net worth is tied up in appreciating assets. I would be on the side of those fighting to keep that from happening.

But how does the level of that appreciation compare to your income? What level of wealth tax would you accept if it meant that you no longer have to pay income tax?

Obviously I don't expect an answer to that - just something to consider.

Thanks to current tax policies, and how my family fits into them, I pay very little in income tax.

Asset appreciation is exponential. Income is linear. The only way to get ahead financially is to use leftover income to build a portfolio of appreciating assets.

Even a 100% capital gains tax would be regressive relative to a true wealth tax, since it never touches the starting asset base. Also, a wealth tax incentivizes productive investments, while a capital gains tax disincentivizes them.

Replying to you again because I addressed your latter point, but not the first.

I absolutely agree there are things that could be changed to make life better for many people.

However, you live in the present, under the rules as they are. And from there you gain leverage to change the future.

Living as if the rules were different when they aren't just sets you up for failure.

It's the whole idea of "be so good they can't ignore you".

The likelihood of a crisis isn't just propagating out current trends. Once enough boomers die off, how will policy change? In 5-15 years, universal single-payer healthcare and tuition debt forgiveness are conceivable.

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