Millennials: Read this
by Simon Black
Every year the Swiss banking giant Credit Suisse publishes a detailed report about Global Wealth.
And while drawing conclusions about ‘wealth’ (i.e. ‘net worth’) for the world’s 7.6 billion people is far from an exact science, the report routinely offers some interesting insights and trends.
This year’s report was just released this morning.
As an interesting finding, researchers noted that at the early part of this millennium, between 2000 and 2008, the wealth of the POOREST 50% of people in the world actually climbed at a HIGHER rate than everyone else.
And over that same period, the share of global wealth owned by the top 1% actually declined.
Then the financial crisis broke out in 2008. And in the subsequent recovery from 2009 through today, wealth of the top 1% soared, leaving the bottom 50% in the dust.
Now, don’t get me wrong– there’s absolutely nothing wrong with wealthy people becoming wealthier. It makes sense.
Think about it: Warren Buffett clearly has a greater level of financial sophistication than the Average Joe… so it stands to reason that Warren’s wealth will increase at a faster rate.
The issue (as we discussed in last week’s podcast on Class Warfare), is that the asset booms bubbles around the world that have driven stock prices higher over the last several years have disproportionately benefited people who were already wealthy.
So folks in the bottom 50% certainly have good reason to feel like the system is rigged against them. They feel stuck… with limited prospects for future growth.
I remember reading a recent article in the New York Times telling the tale of two janitors: one, who is currently a contract janitor for today’s most celebrated company– Apple.
The other was a janitor back in the early 1980s for one of that era’s most celebrated companies– Kodak.
The Kodak janitor in the 80s had access to opportunities and education that helped her rise through the ranks; within a decade, she was the company’s Chief Technology Officer.
Today’s Apple janitor sees her only possibility for advancement as becoming a supervisor of other janitors, a job that pays 50 cents per hour more.
Again- this is not a problem of wealth inequality. It’s a problem of mobility: people at the bottom don’t see any way of getting out.
From a generational basis, the issue is intensified for Millennials.
The Credit Suisse report has an entire chapter devoted to “the unlucky Millennials” who have been hit by rising debt and poorer job prospects.
And it’s true. Recent reports from the Treasury Department show that the US government owns nearly $1.5 trillion in student loans.
That’s pretty sad when you think about it: the US government’s #1 financial asset is debt owed by tens of millions of its young people for university education that didn’t even necessarily qualify them for a real career.
Millennials are the most educated generation in history. Yet there are record numbers of them working off student debts as waiters and bartenders, and supplementing their income on the side with ‘gigs’ (like being an Uber driver).
These are all perfectly good ways to generate some extra cash and pay the rent.
But they’re hardly long-term career prospects which afford opportunities to learn valuable skills and move up.
For Millennials who do have careers, they’re earning less (when adjusted for inflation) than Generation X or Boomers did at their age.
On top of all that, young people will spend their entire working lives paying into a pension system that likely won’t be there for them when it comes time to collect.
The Board of Trustees of Social Security tells us that the program is going to completely run out of money within the next 15 years. Millennials’ retirement horizon is far beyond that.
Overall the report paints a grim picture for the future prospects of young people.
But I have a far more upbeat view.
Young people have an incredible gift that previous generations never had.
Despite the ever-increasing cost of university tuition, access to extremely valuable information is incredibly cheap… in many cases free.
This means that learning important skills to help you build wealth and get ahead is easier and cheaper than ever before.
So is starting a business.
It’s possible to register a company online in minutes. To purchase and build a website in a few hours. To reach a worldwide network of suppliers without leaving your living room. To setup a store with the world’s largest online marketplaces with ease. To reach millions of targeted prospective customers in an instant.
None of this was ever possible before.
And while I know that starting a business is a scary, uncertain prospect for a lot of people, entrepreneurship remains the most consistent way to generate substantial wealth… while at the same time providing a lot of value to the world.
It starts with a simple commitment to your own business education: there are countless, free resources to get started learning those skills.
The system is undoubtedly rigged, and as the report shows, leaving a lot of people behind.
But especially for younger people who have the luxury of time, starting a business is a great way to take control of your future… and at a minimum, obtain valuable skills and experiences that will be highly beneficial in the future.