The Cheapest Generation (2012) | Hacker News Reader

The Cheapest Generation (2012)

theatlantic.com

29 pointsstuff40 comments

It would appear to me, as a 25 year old college grad, that I and my peers are spending just about every dollar that we are able to make just to get by. That doesn't give us much opportunity to make purchases that require substantial down-payments in addition to financing, like vehicles and property.

Prices have inflated so dramatically since our parents' generation, on virtually everything, that saving up enough money to put 10-20% down on a major purchase, like a home, requires 5-10 years of savings. Then there is the job market uncertainty, where one cannot be assured that it will even be possible to remain employed in the same area more than a couple years down the road. Under such unstable conditions, tying oneself down into a home that it may not be possible to sell when circumstances dictate a change is a losing proposition.

Yes, it was an odd article that seemed to imply that "Gen Y" doesn't want new cars, rather than they simply can't afford the luxury of a new car.

The funny thing is that this is a tragedy for car makers; but for the rest of us, even Gen Y, is it really all that bad? Isn't this just a natural way of reducing consumerism, and reducing impact on the planet? What if this article was lamenting a drop in fast food consumption by Gen Y, would that be tragic to anyone other than fast food companies?

> "Gen Y" doesn't want new cars, rather [...] they simply can't afford the luxury of a new car.

The bay area certainly is filled with plenty of 20-somethings who can afford the luxury, and yet people still don't seem to want it. Among people I know, I can think of multiple couples with income in the quarter million a year range who share a 5+ year old beater as their only car, if they have a car at all.

I moved to San Francisco with a car, but it wasn't very useful most of the time, since everything I needed was in walking distance. Also, parking and street cleaning were a giant pain in the ass.

Many of the young people who can afford cars live in cities where cars are not necessarily required. (See car ownership patterns in Europe as compared to the US for a more extreme example.)

There are two separate divides: can afford car vs can't, and do want car vs don't.

5 years is hardly a beater! My daily driver is a 1989 Ford. A 2009 would be a 'new' car to me.

The worst part of this is back when I was younger, I could go out and buy a decent used car for cash. 25 years ago a 6 year old sedan with about 70,000 miles on it was around 3 - 4 grand, or less than 2 months pay. Now you can't get a car that is under 10 years old without taking out a loan, and at that point you might as well buy a new car.

This is because the bay area is a pathological case in every respect. 20-something couples with a ~$250k household income are as rare in the rest of the country as parking spots are in San Francisco.

I think you already answered your question. These limitations are bad for people who want cars, fast food, "comsumerism" etc.

Isn't this just eerily reminiscent of what happened with depression babies?

Widespread, extended, negative macroeconomic event happens. Those experiencing these events at crucial development points in their lives (childhood, early adulthood) adjust their livelihoods to compensate. Even when the negative effects disappear, behavioral patterns have been set in stone.

Sure, there are obvious differences, e.g. we sometimes still fritter away our money on electronics we probably don't really need. Still, I think the similarities are pretty striking. We're a lot more like our grandparents than our parents.

As for the article, I think the car/housing situation is probably a really simple one to explain: millenials know first-hand how crippling debt can be (in the form of student loan debt). Even those lucky enough to escape that can see how awful it's been for our cohort.

Most of us are insanely debt-averse now (wasn't there just an article published recently that people under 40 are the most likely to have their mortgage paid off in full?), and cars and homes are the two items you might typically accrue debt for.

Bingo. My parents are from the Silent Generation, early enough to experience the Great Depression and WWII from the home front. And they're rather miserly with money.

This could be related to the observation that people who enter the workforce during a recession end up earning quite a bit less than those who don't.

>millenials know first-hand how crippling debt

When I tell people their first financial goal should be to eliminate their debt, I get crazy looks. Especially if they are older or are too young to understand college and other debt burdens.

Here's the critical point: "Since World War II, new cars and suburban houses have powered the economy and propelled recoveries."

Emphasis suburban houses, not a loft in a building built in the 19th century in a formerly downtown industrial space.

This because new cars and new houses are a lot about debt money creation. In every recession since 1980, these have mostly led recoveries.

Without debt money creation, we'll likely see more slack. Or something - capacity utilization is actually up.

From the banking-industrial-advertising complex's view ( roughly congruent with the mores of the Silent Generation ), this IS cheapness. My parents were Silent Generation and were extremely cheap by those standards. But at that time, the stock of both existing cars and housing was well under demand.

Maybe the answer to why kids aren't spending money is (a) student loans and (b) there are no freaking jobs anymore.

That, plus perhaps they can see that most of the things one can spend money on do nothing to increase happiness.

Nah, it's a marketing problem. rolls eyes

“I don’t believe that young buyers don’t care about owning a car,” says John McFarland, GM’s 31-year-old manager of global strategic marketing. “We just think nobody truly understands them yet.”

Christ, could these guys' heads be any further up their behinds?

I don't know what this has to do with being cheap: my generation just doesn't care about the same exact purchases that previous generations did.

It seems like this entire article could be explained through increased urbanization. As more Millenials choose to move into (and stay in) cities, one would 100% expect:

* Decreased car ownership (public transport is definitely preferable in an urban environment)

* Decrease home ownership (you're probably living in an apartment)

* Increased communal living (space is more expensive in a city)

None of this has to be attributed to some inherent "cheapness." I myself am choosing to live in NYC and don't plan to buy either a car or a house anytime soon, but that doesn't make me "cheap" (my Christmas spending would definitely beg to differ).

And basing an article on one anecdote about trying to bring a hot hatch to the USA a market where that type of car doesn't work whereas in the uk its massively popular is not actually very useful.

Hot sports cars are cheaper in the usa have you seen how cheap the Mustangs are I mean the full fat v8 ones people who want the equivalent to a GTI in the USA just buy different types of cars.

Gen Y isn't cheap. They just don't want to own a car or a house cause they think of better uses for their money.

Namely paying off their ridiculously expensive student loans. When you have more debt starting out than any generation before you and have trouble finding work, is it any wonder they don't want to also buy big ticket items?

In Europe, most don't have the student loans and still don't want cars. But then, the public transport system has better coverage I guess. It's ridiculous to spend that amount of money on something you want only once or twice a month and then also don't really need it. (Things can change when people have kids.)

I bought a new car. There are two reasons why, if either of them weren't there, I'd have stuck with my old truck. First, I finally found a firm financial footing. I've a job I'm not worried about losing and no desire anymore to jump into Startups-ville.

Second is the 2014 Mazda3. I just don't like any of the other cars, they've all just got really boring styling. I can't see what the value proposition between buying say, a Ford Focus vs. a Hyundai Elantra. If I'm going to spend $X0,000 on something that fills a need I can fill with $X,000, it better offer a lot of added value, and I just wasn't seeing it. The 2014 Mazda3 just looks fantastic and is a lot of fun to drive. I feel good getting into it. People compliment me all the time on it. It's not a Tesla, but I can't afford a Tesla.

When I bought my car, I saved up for 6 months and had the car I wanted picked out before I ever walked in. I'm having a hard time seeing anyone that's in the position to buy a big ticket item coming out from a recession doing it any other way. You have to make something they want to buy and compete for a much smaller pool of buyers, because they can just as easily get by without. Most companies just don't get it, they sell undifferentiated pap.

Wow, while the article mentioned it a few times, they don't seem to actually find the pattern that would come up with a better title.

Gen-Y isn't a cheap generation, they simply have less money to spend or can afford anything. That's not cheap, that's being realistic. However at the same time, they are spending things on a luxurious items such as cell phones, not to mention the high cell bills, and so on. These are the things that are more useful to them than a car if they live in an area where public transportation is available and/or they can work remotely/walk to work.

I am not cheap but I am not getting paid enough to be able to afford car payments, health insurance, mortgage, loans, etc etc all at once. Even health insurance itself can be more expensive than a car payment and insurance is more important to me than a car. Give me free insurance, I'll be gladly to use a car instead.

I want a car, I want a nice house, and I want all of these things that is usually combined into "the American dream" but I'm realistic to know that I don't want to spend the rest of my life and my children's lives paying these things off.

Previous generations can afford to pay these things off by mid-life and pass it on to their children after they pass without causing a burden. We can't anymore.

Why in hell would I want to pay 10-15K a year for an apartment rent and get nothing of value in the end when I can get a nice house? Simply because I cannot afford the down-payment and the high rates and I don't have enough credit. I'm still building it up slowly.

In America a vehicle is a way to display status. If you drive a "shitty" car, it is mostly likely because that is all you can afford.

I spent some time in Europe, and it seems they just do not see cars the same way (in general). Nobody is judged by the ugly car they drive.

In America, good luck showing up on your first date as a an adult in a 1997 Ford Escort. In Europe, at least in France, it just did not seem to be something they cared for.

I noticed in LA and SF, while working in entertainment and start-up space, you are spot-on. I made ~80k and drove a 5 yr used car and while the temptation to compete with other people's toys existed, I never gave in when I would occasionally hear these same people with fancy new cars let it slip about credit card or car loan debt.

The past two years I've been working with established small businesses. I make 160k comfortably, along with many others that make a lot more. Our parking lots are filled with used cars, dents and all, all stock rims, I haven't heard someone talk about a car the entire time I've been here.

Not sure what all that really means, but yah, I liked the article so thanks OP for sharing!

That's mostly true. Of course an expensive car like a Mercedes or BMW will have you make a good impression, but it's not like 90% of the people would care what you drive on your first date with them (or any date).

Especially if we're talking about younger people (still adults, I mean under 30 say), tons of then don't even have a car in the first place, or have some cheapo car.

You spent some time in Europe, or you spent some time in France?

France.

From your experience, is it different in other parts of Europe?

Quite frankly I have a few friends scattered around Europe (immigrants), and while I will not trade my life in the states for another place, I can also say (in comparison) we are a bit materialistic here.

> From your experience, is it different in other parts of Europe?

No. All of Europe is the same.

Is that really your experience? I've actually known people who did exactly the opposite. e.g., a software developer who drove a crappy looking (but running perfectly) 15 year old Chevy pickup because he wanted to avoid women who only cared about how much money he had.

The average age of an American car on the roads today is up to 11 years old. People are driving older vehicles in large part because their reliability is far improved over the ones 25 years ago.

I think your second sentence supports my opinion.

As far as my experience it has been mixed, but I just know people care for this stuff here.

Part of the problem may be that new cars are simply boring. When I travel and rent a car, I sometimes cannot even remember what it looked like, and have to search the parking lot. Different brands all look alike to me. Most are simply ugly, and my mind just tunes them out.

Unsurprisingly, given my age, I like the looks of cars made in the 60's. Those had style, looks, and exciting performance.

"But we know if they have the opportunity to drive Ford, they’re more likely to choose Ford if they buy a car.”

Personally every single Ford I've driven in the last 5 years (at least 4 different models, all rentals) has convinced me never ever ever to buy a Ford.

The impulse is to only speak up when you contradict the story, so here's my evidence: I'm 21, I've been a salaried software engineer since I was 17, I have never owned a car and barely know how to drive (even though I spent two years in Los Angeles). I don't spend all the money I make, but I do spend quite a lot on things I _do_ value. I'm not sure if I am a trend, but I also don't see how that would change any of my decisions, so I guess I don't care?

I wonder how this trend relates to where people live. It seems like not owning a car is only possible if you live in an urban environment. We make it work thanks to good public transportation and ZipCar.

Perhaps people still own cars, but only one to a couple instead of two?

I wonder if housing will follow food into mobile trucks when the real estate gets more and more unreal. It seems like an RV with decent internet, a place to sleep and cook, is about all anybody needs until they decide to settle down?

That doesn't work in northern climates though. What would be great is if there existed RV parks with a large warehouse on site that you can move your trailers into for winter usage.

You can fit trailers for winter usage if you add better insulation for full-time living. The tiny housing community has a lot of info about this. Basically, people build their own small houses on trailers and choose a spot to live. The difference to RVs is the appearance (it actually looks like a house), and that they are fit also for winter climates. (Start here for example: http://thetinylife.com/) You can move them, but people don't do it a lot. It seems to be quite cheap and fun to make them.

I keep wondering, do these trends apply even to places without walkability or public transportation?

Whether Gen Y avoids those places as much as it can, because of those trends, would be another question.

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