Millennials’ Costly Lifestyles May Not Be a Matter of Choice

(Bloomberg Opinion) -- My favorite reader email in months came in response to my column on a new book that sticks up for millennials. My verdict: They’re having some economic problems that deserve policymakers’ attention, but the author goes too far in arguing that they are suffering because Baby Boomers have stolen from their economic futures.

Into my inbox came the comment: “Stop making excuses for millennials. I have two and they are entitled whiners.”

The libertarian writer David Harsanyi may not share that exact sentiment, but he too thinks that there is a lot of misplaced sympathy for millennials, a view I hear often from conservatives. In a recent column in the Federalist, Harsanyi made a wide-ranging case that millennials don’t have much ground to complain about the economy.

I fully expect the millennials to end their working lives with higher net worths and living standards than their parents, so I agree with Harsanyi that the group’s economic problems should be put in perspective. But I think he’s overcorrected.

The Wall Street Journal recently reported that millennial households “had an average net worth of about $92,000 in 2016, nearly 40% less than Gen X households in 2001, adjusted for inflation, and about 20% less than baby boomer households in 1989.”

Harsanyi comments: 

The driving reason for this disparity is the millennial penchant for delaying traditional adult milestones. As a group, they are prone to choose short-term happiness and independence over long-term wealth accumulation.

I suspect that the real driving reason for the disparity is that 1989 and 2001 followed stronger periods of economic growth than 2016 did. Median family income and per capita income, both adjusted for the PCE deflator, grew more rapidly in the two earlier periods.

Harsanyi then mentions one of the millennial choices he has in mind: the decision to go into debt for college, often in pursuit of degrees that turn out to be worthless. He notes that college is too expensive and that markets have been hampered in this area: “If there were a healthy, properly incentivized economic structure in higher education, banks wouldn’t be handing out loans to students without any thought to their future earning potential.”

But to the extent we have built a system that encourages young people to go to college and fails to use market signals to guide them, isn’t that a reason for them to be discouraged rather than for the rest of us to dismiss their concerns? To the extent millennials enrolled in college in the hope, however misguided, of making future gains, they were displaying the opposite of a short-term orientation.

Another millennial choice, Harsanyi writes, is to live in expensive urban areas with a lot of amenities, “far better iterations of cities than previous generations encountered.” That’s certainly relevant to an assessment of their material welfare.

But to the extent that attractive jobs are increasingly clustered in certain cities and restrictions on land use have made housing there increasingly expensive, the “choice” to live in these places begins to look less and less like a choice.

Harsanyi also objects to what he considers an excessive emphasis on the recession of 2007, now “used as a crutch to explain the alleged unique hardships of an entire generation.” Other generations went through worse, he writes. While conceding that the unemployment rate does not capture everything important about an economy, he notes that it has run lower since 2000 than it did from 1970 to 2000.

Unemployment is often an acute hardship. But since most people at any time are employed, other statistics may offer a better gauge of their welfare. Those other measures suggest the 2007 recession was especially severe.

It lasted longer than any other post-World War II recession. The Minneapolis Fed has a handy tool showing that no post-World War II recession saw as sustained a depression in output: The economy was producing less 45 months after the start of the recession, compared with what it had been producing at the start, than after earlier downturns.

The combination of a decline in the rate of growth during booms and the severe 2007 recession has meant that millennials have spent many years in an economy that did not deliver the gains their elders had experienced. Median family income in 2014, again adjusting for the PCE deflator, was slightly lower than it had been in 2000. There was no other long stretch of decline since the statistic started to be collected in 1953.

So while we shouldn’t exaggerate the millennials’ economic travails, older folks -- in my experience, especially older conservatives dismayed by the voting patterns of younger Americans -- tend to make the opposite mistake. And recognizing the headwinds they have faced is not an excuse for poor decisions that some of them (like some people in every generation) have made.

One thing about those decisions, though: If my letter-writers’ kids really are entitled whiners, what does that say about the people who raised them?

To contact the editor responsible for this story: Katy Roberts at kroberts29@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Ramesh Ponnuru is a Bloomberg Opinion columnist. He is a senior editor at National Review, visiting fellow at the American Enterprise Institute and contributor to CBS News.

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