Are Millennials a Leading Indicator?
You’ve heard the old saying that a chain is only as strong as its weakest link. Our economy has been supposedly white hot in the decade since the housing crash, but how much of that is just on paper and not a reality for some? How much of that economic strength is reaching down to the bottom rungs of the employment ladder – the youngest and newest entrants into the workforce?
The situation of millennials tells another story about the actual health of the economy and may give us some clues about the future. Millennials are having a tough time and it turns out pointing fingers at them for being “lazy” or incompetent is neither fair nor useful.
Older generations couldn’t fathom the idea of living with their parents past their teens but for millennials, it’s the norm. Why? The job market is not making room for them the way it has for past generations. Is that because baby boomers are delaying retirement to make up for losses suffered during the crash? That’s part of it. Another part of it is student loans. Government subsidies of education loans and funding has allowed prices to rise astronomically. You used to be able to work your way through college, but those days are long gone. Purchasing power on a minimum wage is abysmal and tuitions are rising even faster than healthcare costs.
Millennials are forced to economize somewhere. Between crushing student debt and lackluster availability of career-type jobs, living with Mom and Dad is the best option.
Sure, employment numbers look great right now, but superficially. When you drill down, the picture is not as rosy. Everybody’s working, but they are not working at the kinds of jobs that really build an economy. Service jobs, part-time jobs, low-wage, low-skill jobs are not the kinds of jobs that provide stability and really anchor the economy.
The bourgeoning “gig economy” , a labor market characterized by short-term contracts or freelance work, is a symptom of these troubles. Many millennials have to take low pay, part time work just to get by.
More importantly, these are not the kinds of jobs that pay into Social Security and provide payouts to retirees, and that spells trouble. The social security “lockbox” has been raided by politicians in Washington time and time again and is basically a box full of IOUs at this point. Without sufficient inflow from today’s workers, tomorrow’s beneficiaries will be left in the lurch. And with interest rates going up, the government’s debt payments are also going up. Where will the money come from?
Also important to consider is how will today’s generation, which is failing to launch, take care of aging parents when the time comes? Will your retirement account crash and burn when its too late to earn it back? Will your kids be in a position to make up the difference, pick up the slack at the critical moment you desperately need them to? Not to mention the rising costs of healthcare… It’s not pleasant to think about, but at some point, we will all need to consume a LOT more healthcare resources as we age.
How will Washington address the structural missteps of the past? So much of our system is broken and unsustainable. So many Americans are at the mercy of policy makers and central bankers.
But you don’t have to be. If you have a nest egg outside the flawed monetary system, you know you have something solid that can’t be inflated away. True, the value of precious metals ebbs and flows, just like anything else, but the difference is gold has never been worth zero. Gold doesn’t go bankrupt. If you buy and hold gold and silver for the long term, it just might be the soft landing you will need one day, that no one else can provide for you.