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Comment by rjbwork | Hacker News Reader

High inflation and decades of disparity in productivity gains vs compensation combined with massive cost of living increases has led much of the younger generations to completely give up on building wealth. They don't think they'll ever own a house or retire, so why would they attempt to save?

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young adult here (23m) with a normal salary (not FAANG, definitely underpaid but still above the american average). sometimes, i'll find that i'm willing to save costs at the expense of sacrificing my health. among other doubts, i've reconciled with the idea that i'll likely never own property of my own. there's too much debt to take care of and over time, things continue to get more expensive.

i grew up in a modest home. when my parents bought it, it was worth ~100k. not much has changed, we added some stone to the porch and an outdoor kitchen. it's worth nearly a million now. anecdotal? possibly, but certainly not a rare case. on average, how am i supposed to afford a home if the trajectory for a normal suburban life is that prices more than 2x every 20 years? [0]

even so, i find that year after year, i'm losing trust in the future of this country. 23 and entirely jaded. i cannot find it in myself to invest any energy in building a future here. mostly, i'm cynical and scared. i find that most of my friends are the same. was it always like this? is losing faith in your country a rite of passage into adulthood? does it get better over time? will i ever make enough to feel safe? etc.

[0] https://fred.stlouisfed.org/series/ASPUS

https://www.youtube.com/watch?v=thLgkQBFTPw

It's the era, it's not you.

How do you know you're underpaid? I've literally never heard anyone say they are overpaid.

Is it just ego?

It's not your imagination. Anyone who owned a house before the 2000s and held it simply won the lottery.

1950 Median home value (inflation-adjusted to 2020 dollars): $79,063

1960 Median home price (inflation-adjusted to 2020 dollars): $104,166

1970 Median home price (inflation-adjusted to 2020 dollars): $112,941

1980 Median home price (inflation-adjusted to 2020 dollars): $147,879

1990 Median home price (inflation-adjusted to 2020 dollars): $157,169

2000 Median home price (inflation-adjusted to 2020 dollars): $179,331

2010 Median home price (inflation-adjusted to 2020 dollars): $263,604

2020 Median home price (inflation-adjusted to 2020 dollars): $336,900

[0] https://better.com/content/how-much-home-prices-have-risen-s...

Is it true though? It's probably the case that the wealth gap inside generations is much larger than any wealth gap between generations.

https://qz.com/millennials-are-just-as-wealthy-as-their-pare...

So of course there are young people that are not doing well financially, just like there are people of other ages that are not doing well financially.

Lack of stable work is also an issue. I have the income to be building wealth, but every time I have to find a new job, it takes 5~6 months. I lose a lot of money in that time. Insurance costs two to three times my mortgage. On top of that, I'm not contributing to any retirement accounts while I'm out of work.

I'm single with no children living in a cheap house in Ohio. I also don't have any debt beyond my mortgage. My 401k is maxed out. Roughly 25% of my net income goes into my savings, which I only touch for things like a new roof. And I still can't manage to secure my future retirement.

I'd love to save and build wealth, and I'm doing just that, it's just the amount I have left over to save is very small. I won't be able to buy a house until I'm in my 40's or 50's, but it's better than never being able to afford a house, I guess. At least my kids can inherit it and start from a more prosperous place.

> At least my kids can inherit it and start from a more prosperous place.

How does that work, timing-wise?

Like my partner and I are in our mid-30s and both have parents who own houses, and with good luck with their health there won't be anything to inherit for several more decades.

I might just retire to a humble shack in the backyard once my firstborn is ready to start a family. Early inheritance.

The end of life care industry will take every single cent you have, and state paid end of life care doesn't kick in until you are destitute. Middle class people passing stuff down to their kids isn't a thing anymore.

You can transfer $12 million with no gift tax, so if you want to pass something down instead of reserving it for end of life care, it's no problem.

https://www.schwab.com/learn/story/estate-tax-and-lifetime-g...

Obviously that's more beneficial to people with a lot of assets than to someone with less, but for instance, a parent might choose to gift the house they live in to their children well prior to end of life care being a consideration (of course that will be very situational; do they want to stay in that house, do they have a good relationship, etc., etc.).

Medicaid won't consider the primary residence when examining assets to pay for care, but it may try to capture some of the estate after death.

In most states you have to transfer any asset or cash many years before you need state paid end of life care, otherwise they will charge you a "penalty" for basically the value of whatever you transferred, or deny you outright. So you basically have to accurately predict when you will need a few months of state paid end of life care (more like a room to die in for $6000 a month) years in advance.

Serious suggestion: Make sure you buy it somewhere climate-resilient. There are a lot of places in the US that have some really awful projections for even 100 years from now, let alone later than that.

> I won't be able to buy a house until I'm in my 40's or 50's, but it's better than never being able to afford a house, I guess. At least my kids can inherit it and start from a more prosperous place.

Buy a house outright or just afford the down-payment? Those are 2 very different things.

You would save so things don't get worse. At least so that if you get laid off or your boss gets replaced with someone terrible, you can live off your savings until you find a new job.

exactly

why produce surplus value if you capture none of it?

In China, this started as “lie flat” and turned into “let it rot.” It’s also a contributing factor in driving down the fertility rate.

https://www.scmp.com/yp/discover/lifestyle/article/3194858/l...

https://www.theguardian.com/world/2023/jan/20/the-last-gener...

Can't help but think this is a consequence of social media. People have dramatically unrealistic expectations on what life should be like.

interesting hypothesis, but my subjective rebuttal is that nearly all of my friends would readily admit that they'd be perfectly content with building a life similar to that of their parents. most kids just don't think it's possible.

i asked in the parent comment if this is a normal thing? my parents were immigrants, so they don't have the experience of growing up here. it's always been an uphill battle. perhaps i've inherited that mentality but i wonder if americans of previous generations were also 23 and cynical, never thinking it possible to afford building a comfortable life?

That may be a component, but I think another thing that contributes is that unlike Gen X which still somewhat bought into the "American dream", many Millennials and Gen Z watched their parents struggle and ultimately burn out growing up and decided they don't want their lives to be like that. Why constantly stress and sacrifice enjoying today for the sake of an almost entirely fictional tomorrow?

I think the FOMO and enhanced hyper consumerism it enables contributes, but the actual macroeconomic factors around wage growth, etc. are the real problem.

Ah yes, dramatically unrealistic, like functioning public transport, or affordable healthcare, or OWNING A PLACE TO LIVE

Growth in productivity is driven by technology, not quality of labor.

Productivity of what?

The productivity of labor. Which is simply revenue per hour of labor. When people talk about the increase in worker productivity, that measurement is simply GDP divided by number of hours worked in the economy.

That number has gone up recently, and many people who don’t know what productivity is actually measuring like to comment on the fact that the increase is productivity hasn’t been met with an increase in wages. But that increase has been driven by technology, and the people who are responsible for that increase in productivity capture the value. The people who sell the technology, not the people who sell the labor.

Skilled labor isn't more productive than unskilled?

Skilled labor isn’t new, and it’s not what’s driven the increase in productivity. I can implement useful computer programs today far faster than Dennis Ritchie could in the 70s, even though he’s far more skilled than I am. That difference in productivity is entirely due to advancements in technology.

True in general, but you'll be surprised how quickly things can fall apart when labor stops laboring.

> They don't think they'll ever own a house or retire, so why would they attempt to save?

That’s exactly what the winners of our class war want you to think. War of attrition. They want everyone to give up and stop trying. Spend all your money, stay dependent on their crumbs, perfection.

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