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Ideas | Bernhard Warner

Millennials are the misfits of modern capitalism. Here’s why it’s not their fault


Just in time for the holidays, toymaker Hasbro has released Monopoly for Millennials, and there’s more than a tinge of defeatism in it. The board game that introduced us all to capitalism as a competition, inequality, and buying your way out of jail is, in this latest edition, more kumbaya than cutthroat. The winner is the one to collect the most experience points — crash on your friend’s couch, attend a meditation retreat — not the one who loads up on houses and hotels. On the box, Rich Uncle Pennybags sports a participation medal, and the tagline reads: “Forget real estate. You can’t afford it anyway.”

On social media, many commentators roasted Hasbro for its “condescending” diss of American millennials, but its creators clearly did their homework. Inspiration for the game could have easily sprung from the pages of a December 2016 research paper entitled “The Fading American Dream,” in which a group of economists found that these are the worst of times for America’s 20- and 30-somethings. Today, even in a period of record-low unemployment, young adults struggle for financial independence.

Policymakers haven’t yet come to see millennials as an entire generation under siege. Yet today’s young adults have become misfits of modern capitalism, increasingly poorer and more vulnerable to the ups and downs of the economy. “It’s a scary issue,” says Harvard economist Nathaniel Hendren, a co-author of the 2016 report. In this age of massive income inequality, it’s easy to take shots at the legitimacy of the American Dream, the credo that as long as you work hard and stay out of trouble you’ll do just fine. Even still, Hendren and his fellow researchers revealed something few had spotted: That a significant rich/poor gap is emerging across generational lines, too.

In their work, the researchers chose to examine a metric called “absolute income mobility” — the percentage of young people who earn more than their parents did at that same age. Tracking census data over the decades, the researchers hoped to shed light on the question: are you financially better off than your parents?


The answer: a big fat no.

Moreover, the researchers found, there’s been a steady generational decline in absolute income mobility. Of those born in 1940, for instance, about 90 percent earned more at 30 than their parents did at the same age; only 50 percent of Americans born in the 1980s can say the same. On average, people born in the 1980s earn about half of what their boomer parents did at 30.


The erosion of economic power wasn’t quite as bad in Massachusetts, where rates of upward mobility haven’t dropped as quickly as in, say, the Rust Belt Midwest. Still, the numbers were so consistently poor across the country that the researchers considered tweaking the model. According to Hendren, they asked themselves, “What if we choose a different age cut-off? Rather than 30-year-olds. Let’s look at 40-year-olds.”

No matter how they sliced the data, though, they found the same thing. Young people “born more recently have less of a chance of growing up and reaching incomes levels greater than their parents,” Hendren says. “I think it’s related to this idea that a good fraction of kids just don’t quote, unquote get a good start.” By that, he means teenagers are finding it more difficult to land summer jobs or those part-time gigs that, while hardly fulfilling, at least put some cash in their pockets and instill a semblance of a work ethic. Even those garbage jobs are disappearing for the young.

It might be tempting for older generations to blame millennials themselves for their economic troubles. Since the dawn of human history, older adults have chided younger ones for their life choices and work habits. Even as the oldest millennials approach age 40, the image of a pampered generation wallowing in an endless adolescence has become entrenched in popular culture. “Adulting is hard,” declares the Monopoly for Millennials box. “You deserve a break from the rat race.”


But what if it’s not the millennials’ fault they’re in this predicament? The emergence of a generation with severely diminished workplace bargaining power and a heightened sense of existential uncertainty — a class that sociologists sometimes call a “precariat” — marks a tectonic shift without recent precedent in American history. What happens when a society accustomed to prosperity can no longer guarantee a brighter future to each succeeding generation? We are living through a real-time experiment remaking not just the Monopoly board, but also family structures, housing and labor markets, and political alignments throughout the Western world.

* * *

Across the world’s richest countries, there are millions of young adults, well into their 20s and 30s, who still live at home with Mom and Dad. To the Brits, they are the “failed fledglings.” The Japanese call them “parasite singles.” In the United States, their situation is politely described as a “failure to launch.” (Demographers, it seems, have a soft spot for the Matthew McConaughey rom-com years.)

No matter the label du jour, there’s never been more of them. As of 2014, residing at home with the parents was the most common living arrangement for Americans ages 18 to 34, a first in the modern era. For many Americans the issue came crashing home last spring when we first heard about 30-year-old Michael Rotondo. The shaggy-haired Rotondo became the poster adult child of this phenomenon after his parents sued to remove him from their upstate New York home. While Rotondo’s bizarre legal saga generated plenty of cracks from late-night comics, economists winced, knowing that society as a whole will suffer if large numbers of young adults cannot find their way out of the house and into the working world.

A crucial data point to watch is the youth unemployment rate. High youth unemployment is a perversely enduring feature of capitalism. Our youngest, fittest, and cheapest-to-employ paradoxically find it more difficult to compete for jobs. The skills gap indisputably is the primary culprit, and automation will exacerbate the problem even further. Over the past 60 years, the youth unemployment rate — the percentage of 15- to 24-year-olds who are looking for work but cannot find it (young people in school, not looking for a job, are excluded from this figure) — has lagged well behind the overall rate, pivoting from awful to merely crappy from decade to decade. In the United States, the youth unemployment rate hit an all-time high of 19.5 percent in April 2010, at the lousiest stretch of the Great Recession. Today, it stands at 9.2 percent. And while that’s the best we’ve seen in 52 years, it’s more than twice an overall unemployment rate firmly below 4 percent.


Despite the chronically sapped jobs market for young adults, lawmakers have yet to enact meaningful reforms targeted specifically at them. Bailouts for millennials just aren’t a vote-getter.

In Europe, it’s a different matter. Over the past decade, the European Union has rolled out stimulus packages worth billions to boost skills training for youngsters or offer tax breaks to employers willing to give them a shot. Perhaps that’s because the multinational bloc’s youth unemployment problem now risks feeding an all-enveloping political crisis. According to the Organization for Economic Cooperation and Development, the EU-wide youth unemployment rate is a gaudy 17 percent, with Italy and Spain topping 30 percent, and Greece above 40 percent. Not surprisingly, the youth in these three countries are the most frustrated with the politicians governing their countries, and are the most eager to vote for radical change, polls find.


The success of Europe’s get-the-kids-a-job initiatives is mixed. But left unaddressed, an out-of-work, stay-at-home youth precariat poses big socioeconomic risks for young and old. The downward spiral can look something like this: Young adults who find themselves with weak job prospects will put off marriage. This group won’t buy homes. They don’t raise families, and the birth rate will totter, and fall. A demographic time bomb begins to tick. A high youth unemployment rate is both cause and effect of an aging, low-growth, highly indebted economy.

Because they’re short of work, young people contribute relatively little to economic growth and do not pay into the national pension scheme. Social security programs vary from country to country, but there’s a universal constant: The pact falls apart if there are too few young workers to support all those retirees. All of this is certainly true of old, slow-growth Europe, particularly southern Europe, where long-term youth unemployment puts the greatest strain on the political system.

In the United States, youth turnout surged during the recent midterm election, largely to the Democrats’ benefit — though, at 31 percent, it still appeared to lag behind that of older voters. Young, disillusioned Europeans vote more regularly than their American counterparts, and increasingly are sending the message: throw the bums out of power! In that way at least, Europe’s young, highly educated polyglots have something in common with Trump voters. Not coincidentally, young people across the continent have turned increasingly to populist and far-right parties.

* * *

In Italy, a decades-long spell of anemic growth has given rise to a dismal labor market where “temporary contract” jobs are the norm and wages are stingy (The going rate for recent grads with advanced degrees is about $1,700 a month). In the bel paese, the typical young Italians live under their parents’ roof until 30. The median age of first-time parents is 31. In the more impoverished south, leaving the roost and starting a family are even further delayed.

This spring, an anti-immigration, anti-establishment government came to power, backed overwhelmingly by Italy’s youth, and egged on by former White House chief strategist Steve Bannon. In Bannon’s view, it was a political “earthquake.” It completely silenced the old-timer political parties on the left and right. Bannon is bent on seeing it grow beyond Italy, across Europe, and the developed world.

Letizia Mencarini, a professor of demography at Bocconi University, in Milan, could see the early shoots of revolution. A few years prior, the subject of politics came up in one of her classes. “In a class of 25, something like 20 voted for the Cinque Stelle,” she said, referring to the populist Five Star Movement political party that this last spring won the most votes. During the campaign, Five Star promised a guaranteed monthly stipend of about $900 for out-of-work Italians, a big deal for the lost generation. For Italy, one of the most indebted countries on the planet, the question of how to pay for such an allowance is intentionally left murky, and that’s been roiling global markets lately.

Mencarini is not alone in thinking a handout is a bad idea. What would be better, she says, is to help college grads find jobs in their field of study. “I mean, you don’t give a salary only to keep people at home,” she says. “This is terrible. What are we doing? Making pensioners at age 25?”

* * *

Nobody is proposing to put young Americans on the dole. Their malaise is of more recent origin, and it’s defined by two bugs. The first, as in Europe, is low wages. According to Pew Research Center, wage growth has been on a downward trajectory since the 1970s, and it’s really sputtered since 2000. “As wages have fallen, the share of young men living in their parents’ home has gone up,” says Richard Fry, a senior researcher at Pew.

Secondly, young Americans are more indebted than their peers anywhere else on the planet. A typical new graduate with a job has student loan obligations equal to roughly 75 percent of her annual wages, up from 30 percent in 1990. Tens of thousands of Americans in the prime of their lives default on their student loans every year, a statistic unheard of in other developed countries. And where do many end up? Back home with the parents, or stuck in a cheap rental. As a 2017 Federal Reserve study glumly calculated, even a small amount of debt can price young grads out of the housing market. “We find that a $1,000 increase in student loan debt causes a 1 to 2 percentage point drop in the homeownership rate of student loan borrowers during their mid-twenties,” the study found. To throw a lifeline to this generation and ultimately prop up the housing market, the authors suggest two remedies — cap tuition and promote student loan forgiveness. Good luck trying to convince the anti-regulatory minded Education Secretary Betsy DeVos of the merits of that.

Both Fry and Hendren warn the problem runs far deeper than excessive student debt. “That gets a lot of attention, but it’s not the whole story,” says Fry. Even within America’s youth precariat, there are deep divides, the contours of which run along racial and class lines. For example, young adults with only a high school degree or less are far worse off economically, and are more likely to live at home with their parents. That may sound like a given, but the numbers are still jarring. Fry notes that among 25- to 35-year-olds in the United States, 15 percent live at home with their parents. But of the young marooned under their parents’ roof, the number climbs to 21 percent for those without a secondary education. “To live independently, you need good earnings, the economic wherewithal. College-educated young adults are paid more than less-educated adults,” Fry says. “It makes sense.”

Mind you, Fry isn’t saying there’s an up-by-the-bootstraps silver lining in the data. The numbers are historically bad for the highly educated and for the unskilled. It’s just that, within the youth precariat, the most precarious are the latter. For them, upward mobility is virtually unattainable.

Economists have predicted the demise of the American Dream before. In 1976, Richard Freeman, an economist and co-director of the Labor and Worklife Program at Harvard Law School, published the book “The Overeducated American.” In it, he foresaw a looming employment crisis for young college grads, calculating the supply of skilled jobs would fail to keep pace with the boom in college degrees. That failed to materialize, of course. “I missed the technological shift that favors the more educated,” Freeman recalled via e-mail recently.

But that doesn’t mean he’s counting on some benignly disruptive force coming in to save America’s youth precariat this time around. Instead, we can bank on young Americans putting off the big adult-life decisions — moving out, buying a home, marrying, and having children — until later and later in life. This “is more likely to be a new normal,” Freeman says.

At some point, our expectations of success as a society will begin to shift. In regular Monopoly, building a real estate empire is the goal; in Monopoly for Millennials, players strive for trips to vegan bistros and meditation retreats.

For real-life millennials, there are perks to living at home with the parents: free Wifi, home-cooked meals, and roommates willing to help out with the cleaning and laundry duties. To sociologists and housing economists, the renaissance of intergenerational living isn’t categorically bad. Rich Uncle Pennybags has already adapted to Freeman’s “new normal.” The question is whether everyone else can, too.

Bernhard Warner is an American journalist based in Rome. Follow him on Twitter @bernhardwarner.