
Millennials kill industries because they're poor: Fed report - joeyespo
https://www.businessinsider.com/millennials-kill-industries-because-poor-fed-report-2018-11
======
Rjevski
Maybe millennials are just more efficient at spending the little money they
have and don't want to spend more than they need to, which coupled with the
new business models the Internet & recent technologies allow makes some legacy
business models (cable TV, etc) unsustainable?

~~~
tehlike
Most of millenial trouble can be attributed to baby boomers.

~~~
alehul
I hear this incredibly often. Can you explain why this is, or do you have a
link or two that's convinced you on this point?

I understand NIMBY-ism which, to some extent, is responsible for impractical
zoning laws and, in turn, higher rents and home prices.

Beyond that, however, why is this the case? Wasn't America just more
prosperous in previous decades, due to the political/military victories we
enjoyed, and the lack of international competition we faced?

~~~
IggleSniggle
I’m not sure it holds more true now than in times past, but I believe the
argument generally goes that the older, richer generation has exploited the
land and taken on huge amounts of debt, all while jacking up the prices of the
things that gave them their advantages (education and housing brings the
initial arguments in this vein). And, further, that the older generation will
die before needing to address all of these various natural and societal debts,
leaving the younger, poorer generation on the hook for their excesses.

Edit: just want to clarify that I’m only vaguely familiar with the arguments
that I am parroting here

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bauc
Just look at the difference between [https://www.populationpyramid.net/united-
states-of-america/1...](https://www.populationpyramid.net/united-states-of-
america/1978/) and [https://www.populationpyramid.net/united-states-of-
america/2...](https://www.populationpyramid.net/united-states-of-
america/2018/) . Also look at world population change in the same period. I
don't see that discussed much but when the shape of populations change (which
causes how things are funded to change as well and where resources are used)
society has to change too but that is a lot harder and takes a lot longer.

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jammygit
"Average real labor earnings for male household heads working full time were
18% and 27% higher for Gen Xers and baby boomers when they were young compared
with millennials, the study found. For young women, the difference was smaller
— 12% for Gen Xers and 24% for boomers"

12-27% seems like a huge number and I wish the article went into detail about
it. Are they simply in school instead of working? Are salaries lower? Are they
simply not getting jobs?

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stuaxo
Never ending austerity keeps people poor and shrinks markets.

~~~
Tsubasachan
Austerity? America? Ha the US hasn't even TRIED to balance a budget since
Clinton. No every politician has to promise deep tax cuts if he wants to get
elected. Ostensibly the US economy is booming yet the deficit is at $800
million.

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newnewpdro
The millenials I have known (USA) are exceptionally bad at managing their
finances. Anyone poor who thinks it makes sense to pay $20+ to have a Five
Guys lunch delivered often enough to be on a first-name basis with the
delivery guy needs their head examined.

~~~
WWLink
Software engineer here. I don't know ANYONE who would do that! I do know some
people who spend $20 on lunch frighteningly often, though.

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CryptoPunk
Wealth inequality between young and old has reached record high levels:
[https://www.forbes.com/sites/evapereira/2011/11/08/wealth-
in...](https://www.forbes.com/sites/evapereira/2011/11/08/wealth-inequality-
between-young-and-old-generations-reaches-record-high/)

Some possible causes: zoning laws, which benefit existing homeowners at the
expense of future first time home buyers, have been piled on over the last 40
years.

The economy in general has become much more regulated. In the financial
services industry, regulations around existing laws, like the Bank Secrecy
Act, have steadily increased over the last 40 years, and several major new
laws, like the Community Reinvestment Act and Dodd-Frank, have been passed.

The result is regulatory compliance costs making up 10% of expenses for banks
with less than $100 million in assets, versus 5% for banks with between $5
billion and $10 billion in assets:

[https://www.communitybanking.org/~/media/files/compliance%20...](https://www.communitybanking.org/~/media/files/compliance%20costs%20economies%20of%20scale%20and%20compliance%20performance.pdf)

Similar trends are seen in other major industries, like healthcare.

Greater burdens on small businesses means less new business creation, which
we've seen:

[https://money.cnn.com/2016/09/08/news/economy/us-startups-
ne...](https://money.cnn.com/2016/09/08/news/economy/us-startups-near-40-year-
low/index.html)

And more benefits being accrued to incumbents.

The public relations efforts of entrenched parties is totally overwhelming
Millenials' efforts to cope too. Millenials are supporting many of the same
political trends that are locking them out of industries.

For example, the recent astroturfing campaign by the hotel lobby to turn the
public against Airbnb and create public support for more regulatory barriers
to renting one's place on Airbnb was very successful:

[https://www.nytimes.com/2017/04/16/technology/inside-the-
hot...](https://www.nytimes.com/2017/04/16/technology/inside-the-hotel-
industrys-plan-to-combat-airbnb.html)

And Millenials make up a significant percentage of the dupes.

~~~
stochastic_monk
Dodd-Frank is a very good thing. It’s not that regulation is intrinsically
bad, it’s regulation that entrenches existing wealth.

~~~
CryptoPunk
I can't imagine something that destroys small business as much as Dodd-Frank
being a good thing on the balance:

[https://www.mercatus.org/publication/how-are-small-banks-
far...](https://www.mercatus.org/publication/how-are-small-banks-faring-under-
dodd-frank)

Some relevant statistics:

[https://www.americanbanker.com/opinion/no-there-arent-too-
ma...](https://www.americanbanker.com/opinion/no-there-arent-too-many-banks-
in-the-us)

>>Community banks have been instrumental in helping the nation recover from
the financial crisis and economic downturn, yet their numbers continue to
dwindle, declining by roughly 1,500 since 2009.

..

>>A new survey from the Federal Reserve and Conference of State Bank
Supervisors found that community bank compliance costs have increased by
nearly $1 billion in the past two years to roughly $5.4 billion, or 24% of
community bank net income.

~~~
awinder
It is when banks handing out shady mortgages crippled the entire economy and
resulted in taxpayers having to shore things up to the tune of trillions of
dollars. Some people are either too young to remember or too willful to
remember, but 2008 was a dark place, and if it means a marginal impact on
whatever destined-to-be-doomed small business is not getting off the ground
due to increased scrutiny, I say good deal.

Also Mercatus is a part of the Koch-aligned segment of GMU, to save any other
onlookers some time understanding why the specific set of survey questions was
posed the way they were.

EDIT: also a lot of this information is dated because regulations were already
weakened for small banks specifically: [https://www.reuters.com/article/us-
usa-house-banks-lobbying/...](https://www.reuters.com/article/us-usa-house-
banks-lobbying/small-banks-trump-wall-street-on-dodd-frank-rewrite-
idUSKCN1IN328)

~~~
CryptoPunk
>>if it means a marginal impact on whatever destined-to-be-doomed small
business is not getting off the ground due to increased scrutiny, I say good
deal.

It's not a "marginal impact". Regulations like Dodd-Frank impose a massive
structural impediment to smaller business competitiveness that contribute to
growing income inequality, and growing consolidation/centralization of
industries. The Mercatus study shows just how much it increases costs for
smaller banks.

And it's not just "destined-to-be-doomed small business" that's eliminated:

[https://www.politico.com/agenda/story/2016/09/community-
bank...](https://www.politico.com/agenda/story/2016/09/community-banks-dodd-
frank-000197)

>>“Unfortunately, we became a victim of Dodd-Frank,” a northeastern community
bank CEO recently wrote me. “In a few short years, an otherwise healthy
community bank with strong capital and satisfactory earnings could no longer
meet a number of financial benchmarks set by the regulators. These conclusions
forced the bank to sell now when our shareholders and some of our employees
would be less adversely affected.” The result: the bank merged with a larger
bank and half of the employees lost their jobs.

There are government programs like the GSEs and the FDIC that promote
irresponsible mortgage lending. Those should be targeted for
reform/elimination before centralizing and regimenting the industry with
labyrinth laws like Dodd-Frank is considered.

~~~
awinder
What part of FDIC do you find to promote irresponsible mortgage lending? And
that’s another story from before the regulation was re-targeted to lessen the
burden on small banks

~~~
CryptoPunk
The FDIC protects depositors whose banks engage in irresponsible mortgage
lending. It erodes the micro-economic incentives for creditor discipline that
derive from 'skin in the game'.

As for the partial roll-back, it's better than nothing, but we'll see in five
years if it will have much of an impact:

[https://bankdirector.com/issues/regulation/crapo-bill-
only-d...](https://bankdirector.com/issues/regulation/crapo-bill-only-drop-
bucket-deregulation/)

~~~
awinder
And you know the history of what happens when FDIC doesn’t exist I assume,
which was that banks acted the same way and regular people got washed out.

