Josh Hoxie: The U.S. economy is stacked against young people




The mechanics of wealth building are fairly simple. Save more than you spend, invest those savings to generate more money. Lather, rinse, repeat.

There’s one big problem for younger people trying to do this: The rules are rigged against them. Here are five facts showing the unfair burden millennials carry.

1. Wages are stagnant.

Today’s rising generation earns 20 percent less, on an inflation-adjusted basis, than their parents did at their age, despite being better educated and more productive. In fact, Millennials are on track to become the first generation in modern American history to make less money than their parents did.

The federal minimum wage, $7.25 an hour, is lower than the cost of living in every city in the country — and hasn’t gone up in 10 years. It’s hard to save when the money coming in doesn’t come close to covering the basics.

2. Student debt is out of control.

The cost of attaining a college degree leaps annually, with aggregate student debt now topping $1.5 trillion. Savings that could’ve gone to a down payment on a house, starting a business, or saving for retirement are eaten up by monthly student debt obligations.

This is largely the result of state governments disinvesting in public colleges and universities, shifting the costs onto families. Since student debt is the only form of debt not discharged in bankruptcy, you either pay it off or die trying.

3. Everything else costs more too.

Millennial wealth problems aren’t due to avocado toast, lattes, or any other consumer spending habits. Millennials spend less than previous generations on food, alcohol, shelter, utilities, transportation and entertainment.

A few of these things are cheaper today than a few decades ago. But these are far outpaced by the skyrocketing cost of buying a house, rent, health care, college, child care, cars and insurance — and wages aren’t keeping up at all.

4. Buying a house is out of reach.

Starter home prices have increased by nearly 60 percent over the last five years, while inventory has dropped by over 20 percent, according to Zillow. Buying a house has become a punchline for many millennials who don’t have the privilege of family members who can help with a down payment.

Homeownership has historically been the greatest generator of middle class wealth, but millennials are buying houses at a lower rate than previous generations. The top reason they cite isn’t lack of interest or lust for living in a converted van. It’s inability to save for a down payment.

5. Traditional money advice is laughably out of touch.

The standard personal finance advice doled out these days is to save at least three months of expenses, save for retirement, and spend less than a third of your income on housing.

But when you don’t have enough to cover rent, student loans, and insurance, not to mention groceries, where’s all this saving going to come from? What’s the advice for the 40 million of us earning under $15 an hour, whose jobs don’t cover the cost of living?

The good news? Last year, for the first time ever, young voters outpaced Boomers at the ballot box, with millennial turnout nearly doubling from 2014. This year, they overcame baby boomers as the biggest voting bloc.

Bold solutions to un-rig the economy are on the table, like Medicare for All, college for all, student debt forgiveness, first time home buyer programs, and a Green New Deal. Millennials are in a position to benefit the most from these programs — and to contribute the most to ensuring they become law.

Josh Hoxie is a Boston-based associate fellow at the Institute for Policy Studies.

The kids will keep Greater Boston cooking

Population growth is slowing in Greater Boston, and expensive housing is said to be at least partly to blame. Housing analysts say that a big factor is the relatively low number of houses for sale in Boston’s inner suburbs. The fear is that this will send too many Millennials out the region, hurting economic growth.

I think that’s an exaggerated fear.  Greater Boston’s huge and  internationally prestigious higher-education complex and its  quality of life will keep these younger adults coming.  A bigger threat to the region’s prosperity may be President Trump’s anti-immigrant policies. Immigrants, most of them legal, have played a big role in eastern Massachusetts’s boom. Many of these immigrants are very well-educated and do a disproportionate percentage of the work in the Greater Boston’s powerful technology, engineering andhealth-care sectors.



Robert Whitcomb: Mr. Brooks finally discovers that the natives are restless


In an April 29 column by The New York Times’s David Brooks headlined “If Not Trump, What?’’ he writes that to understand Donald Trump’s GOP popularity (and by implication Bernie Sanders’s among Millennials):

“{I]t’s necessary to go out into the pain. I was surprised by Trump’s success because I’ve slipped into a bad pattern, spending large chunks of my life in the bourgeois strata — in professional circles with people with similar status and demographics to my own. It takes an act of will to rip yourself out of that and go where you feel least comfortable….’’

“….Up until now, America’s story has been some version of the rags-to-riches story, the lone individual who rises from the bottom through pluck and work. But that story isn’t working for people anymore, especially for people who think the system is rigged.’’

How little effort  much of the elite have made  to know the plus-90 percent of the nation who aren’t. You’d think that big-time journalists would try to talk more to “everyday Americans,’ at least for show. But media celebs such as Mr. Brooks are addicted to the money, privilege and ego-gratification that go with spending most of their time with the rich and/or powerful.  Meanwhile, many business/economics journalists have been fired to help maintain media outlets’ profit margins. So rigorous, data-driven coverage of socio-economic changes has declined in the media that American most look at in favor of, well, nonstop coverage of Mr. Trump’s latest insults. (I’m a former business editor.)

Mr. Brooks, et al., now seem to fear that massive social unrest is coming unless members ofthe “middle class’’ think that they will get a better deal.  (Of course, many low- and middle-income people could help their situations by, for example, avoiding having kids out of wedlock and other disorderly behavior linked to poverty. They could also vote.)

The nub of the problem:

Government data show that American economic productivity  in 1945 -1973 rose 96 percent and inflation-adjusted pay 94 percent; in 1973-2014 productivity grew 72.2 percent and inflation-adjusted pay 9.2 percent, with almost all of the growth in 1995-2002. 

This suggests that the folks owning and/or running companies have become  much less willing to share. At the same time, tax laws remain very skewed in favor of investment income over earned income. This keeps reinforcing a plutocracy based on inherited capital and privilege. The Sunday New York Times weddings section displays this crowd in all its glory.

Meanwhile, the elite’s  disinclination to share has slowed economic growth by constraining most Americans’ purchasing power.

The very rich have increasingly sequestered themselves from the poor and the middle class through, among other things, jet travel, globalization,  the Internet and gated communities. Thus they’re less likely to  see and be embarrassed by extreme divergences of wealth. Ever more large local enterprises are owned by far-away companies and/or individuals rather than by people in the communities where the companies operate. The local employees are mere numbers on a screen rather than people whom senior executives and major shareholders might awkwardly encounter on the street.

In some of the burgs where my family have lived over the past century, such as Brockton, Mass., when it was a shoe-making capital, and Duluth, Minn., an iron-ore and grain shipping port, my relatives  who were executives, factory managers and the like would encounter a wide range of the population daily, from rich to poor. Now, the descendants of these folks who have not yet drunk away the old money made in these places tend to spend six months and a day enjoying tax avoidance in Florida , and those who own and/or run largeenterprises with operations in places like Duluth and Brockton may never visit them at all.

Out of sight, out of mind.

But now there’s the glint of pitchforks in the sun. It’s too bad that the leading spokesmen for the new “populism’’ are con man Donald Trump (see: and a naïf like Bernie Sanders, who doesn’t understand the need to always encourage entrepreneurialism  to raise living standards.  As for the Clintons, all too often they act like establishment grifters.

Anyway, we need capitalism, but adjustments are long overdue.

Robert Whitcomb (, a former Providence Journal editorial page editor, a former International Herald Tribune finance editor and a former Wall Street Journal editor, oversees New England Diary and is a partner at Cambridge Management Group and president of Guard Dog Media, based in Boston.