The Stagnant Millenial Generation?

People are starting to wake up to what economists have described for at least the last 160 years if not more. That wealth is inevitably accumulated up over, and in times of relative recession (low growth or negative growth) wages stagnate and are eroded by inflation.

It is not the big nasty, top hat wearing, cigar toting capitalists who are really to blame for this in the UK and many other countries. It is those darned post war baby boomers.

This recent BBC article is one of many you can find on the internet from both sides of the atlantic and as far away as Australia and NZ, and if you cared to look at this in other EU languages I dare say you would find the same phenomenon. The older generation currently in ‘peri-retiral’ have run off with all the goodies and aren’t giving them up any time soon.


Very many of them have worked their way up in to management now, or have successful businesses which can lever out new whipper snappers with credibility or a plain old price war they can survive. Many are in fact enjoying work so much that they are postponing any ideas of early retirement, so common in the previous generation reaching retirement in the 80s and 90s, and are even staying in jobs beyond 67! As demands are place upon companies to increase productivity, down size and out source to cheaper labour, they are aiding and abetting this which affects young and unskilled workers the hardest. The baby boomers are keen to keep their positions of power and will go with the flow of downsizing, something they have good experience with too from the slash abd burn during privatisation of utilities etc in the late 20th C.

So they have accumulated an ounce of power or two in the work place and are able to survive effectivisation by being the managers who pull it off. However they are not just ‘epistatic’ , standing upon the younger generations in terms of the work place and stiflign promotion prospects while encouraging out-sourcing to the hard and bitter end of the labour market. They own all the property.


Not only does this generation of post war luckies own their own houses, and have a capital proportion often outright, they are remortgaging for the lucrative buy-to-rent, which puts more pressure on the market for first time buyers in smaller properties, and even semi detached houses where multi occupier rental is accepted by the banks for a second mortgage based on equity release.

Also they are not down sizing any time soon. They are used to a high material standard of living and are likely to keep those grand houses with extra bedrooms such that their children can visit or move home when they are made redundant of course. On one side in fact housing is not such a big pay off relative to pensions when you spread out the equity which is released, while on the other those desirable area, smaller properties are in that lucrative buy-to-rent market which erodes their potential equity release more.

We have an imbalance between inflation in not just the cost of real estate, brown or green. Yes we could and are freeing up greenbelt and legislating affordable homes, key worker appartments and even some place owner-occupier covenants, but the cost of building has escalated. The average new build in the UK in materials and labour is well in excess of £120,000 and that is before the ground is paid for or estate agents marketing fees are put on, and the profit the developer expects is around 20%.  Flats are just as bad, where the cost of build is relatively high per sqaure meter due to the larger scale required in site equipment costs and foundations, supporting walls, stair wells and roofing. Often flats are built in urban areas or along suburban transport routes, so they are subject to high land prices, especially when local councils are (ahem) a bit careful with planning applications , that is to ask, are there meetings at the masonic hall to discuss how much land and what type of building is desirable to hold prices up?

Wages have in no way kept up with house price inflation, and what has happened is that a far greater proportion of disposable income goes to the basics of living than it did in the 1970s when the baby boomers had free reign to buy those two-ups’ on even below average wages. The fundamental disconnect has happened because the baby boomers have built their own quasi pyramid selling scheme, based on capital in their houses and leverage from loans when they release equity and upsize or gentrify new urban areas.

You can forsee that there is a ticking time bomb for the economy which kind of solves itself by market mechanisms. The baby boomers are not as healthy a generation than their war time parents and are likely to both live shorter lives (mortality) while also not enjoying as good health (morbidity) according to several studies. They are the group of working age now, most likely to be life long smokers and to have given up regular exercise. So from about the magical 2028 onward, when a large proportion of baby boomers come over 75 years old, we are going to see more sudden deaths possibly and more nursing home hospitalisation, plus the need to move out of two up-two downs into single level accomodation and sheltered housing.

This natural senility could mean a flood of established property onto the market. However since buy-to-rent is so popular and unrestricted, it could be that a new predatory investor comes in, as has happened in Austalia. The chinese global property investor has so much cash that if they see that capital value can be upheld and loans paid off from rents, then they may invest en masse in UK two up two downs and bigger villas and bungalows. Perhaps there needs to be owner-occupier legislation to hinder that global investors reap this harvest rather than the natural, national succession to the collective ancesterol pile.

Back to jobs though, and in the shorter term we do then see a crash very likely as the wave of new retirees hits the beach in 2020 when a large proportion will retire of those born 1950-1955, the baby boomers. Also we can see changes in the methodology and mechanics of work pushing older employees out to pasture as more modern IT savvy management swings into the board room and seeks to sweep away old empires built on pushing paper. So we have a very big shift in front of us in many western countries as those people who have ‘hogged’ jobs for up to 20 years in many cases, especially in the public sector.

This isn’t just a trickle down in the job market, it is a sea-change. It is quite an abrupt exit stage left of hundreds of thousands of managers, gaffers, techocrats and semi skilled folk too. For millenials this bodes perhaps well, with their numbers being lower than school leavers and graduates of yor. However the baby boom actually is strung out if you look at the figures, and can be said to have lasted into the late 1970s when suddenly thereafter, we see a decline in the older fashioned family life, with a disrputive economy and more women seeking careers.  Millenials are babies to parents who were born themselves of that last homely period with 2.4 kids in the 1970s. The average now is decling from 1.7 at last national census btw. Now they are my generation, and we have often struggled in the face of the baby boomers going along with all the down sizing and privatisations reducing wages for us, and even worse for millenials today relative to the real costs of living.

Our generation are next in line for senior management, and unfortunately for millenials, all the mechanisms of countering corporate inflation will accelerate because my generation is IT literate.  We are under threat from an even more IT literate Generation X, who have that lovely coding experience on those web sites, ERP systems and laterly apps, which millenials lack solid and CV credibility from despite being on average, more IT savvy. Millenials often have patchy and weak CVs where the highest quality experience comes from work placements rather than jobs they actually secured, which are themselves part time in low level service like retail and catering. We the 60s and 70s babies on the tail of the boom, will take up all those cushy college and university lecturer positions, professorships, senior civil servants, senior partner, planner, gaffer and general boss positions.

Generation X had it in my opinion, a lot better despite there being a pretty mediocre promotion market in the 1990s as companies by in large down sized middle management out of the picture. Gen X had a different, experiential and self confident approach to life than my generation’s rather formulaic following in our parents footstepts or taking their advice on getting a degree for gods sake. Many Xers shunned traditional routes to employment, and found their wander lust, super self confident, happy go lucky attitueds made them fit in in new service companies, or seek out practical job experiences thoruhg their social network. They became the now time Hipster with the small craft beer and sandwich business, they became the lucky under qualified managers in the internet and app companies, they took up skills in building and other areas where a good buck is to be made as self employed punters.

Millenials were under the cosh from their late baby boomer, older, and more cynical parents at the time when they were born to parents of the 1960s and 70s generation. Society placed even more pressure for academic performance, while delivering even fewer jobs for graduates now. They have three generations of adults above them who are looking to oursource and hire in the cheapest labour possible so as to take a bigger cut in their part of the supply chain, and they have a super ready supply of willing and easily disposable youngsters. They are vicitms of margin maximisation imposed by older, cycnical generations.

Trump and Brexit are symptoms of the end of the Neo Liberal, “let them eat cake ” epoch which has delivered such inequality across class and now generations. The generation sitting in power now are on the one hand desperate to hold on to power, while on the other they want to avoid the dreaded signs of inflation which wage demands could impose on the economy in their eyes. They are blind to the true level of inflation for younger generations in the real cost of living. Also blind to the threat in the housing market in particular that this poses with an ageing generation.

Trump and Brexit voters are not who some people think they are. In fact they are working class, whom are disatisfied with globalisation because it is has eroded their standard of living and job security. Unlike subsequent generations, they remember the super inflationary 1970s so see keynsian solutions as leading to that grizzly end, and have by in large bought into many of the concepts of the ‘free market being good, labour laws and unions are bad’. Millenials and gen Xers have no such relationship to the more left wing past, and stand only to learn from the last three decades of erosion of wages for the majority of younger workers. Expect some politicisation old timers!