Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisenthal and I'm Tracy Allaway. Tracy, I always forget.
Speaker 1: Are you a millennial? I knew, I knew this was
Speaker 1: going to be the first question that you asked me
Speaker 1: on this episode. I am, I believe what is known
Speaker 1: as an elder millennial basically sort of on the cusp
Speaker 1: of the millennial generation, depending on where you um define it.
Speaker 1: But you know, if you define it as kids born
Speaker 1: from the eighties onwards, I'm definitely there. And if you
Speaker 1: define it as the children of baby boomers, I'm definitely there.
Speaker 1: You're sorry, you're an older millennial. I'm I was born
Speaker 1: in so I think I missed it by that definition.
Speaker 1: But here's my question. Did you use Facebook when you're
Speaker 1: in college? Yes, but only because only because our college
Speaker 1: got it early. To me, that is the like, in
Speaker 1: my view, that is the crucial dividing line between millennial
Speaker 1: and Gen X because obviously, like so much of the
Speaker 1: modern eras defined by you know, everything that the Internet
Speaker 1: and social media and all that stuff, And I really
Speaker 1: feel like if you didn't have Facebook get in college,
Speaker 1: you're not a millennial. And if you did you are,
Speaker 1: and so I guess you are and I'm not. Look,
Speaker 1: we can go back and forth on the definitions. I
Speaker 1: actually like the way you define it because I think
Speaker 1: the Internet has been clearly so crucial to the experience
Speaker 1: of a lot of millennials, and creating your own online
Speaker 1: identity has been quite important as well. So it makes sense. Yes, Okay,
Speaker 1: I'm a millennial, but I'm an older one. Yeah you're
Speaker 1: still good. But beyond the Internet and beyond like the
Speaker 1: way social media and all that is changing everything. One
Speaker 1: of the sort of like persistent frameworks or tropes, sort
Speaker 1: of themes that happens when people talk about millennials is
Speaker 1: um the economic situation. And you hear a lot about
Speaker 1: millennials being late to foreign families or by homes, that
Speaker 1: their distrust of the stock market. Uh, the millennial generation
Speaker 1: has sort of came of age, at least the sort
Speaker 1: of middle to late millennials, during a period of labor
Speaker 1: market procarity. So in addition to everything that we were
Speaker 1: talking about with Facebook and all that, there really is
Speaker 1: this sort of very big economic dimension to how we
Speaker 1: talk about this generation. Right, so many millennials hit the
Speaker 1: job market precisely at the wrong time, which would have
Speaker 1: been after the two thousand eight financial crisis, and uh
Speaker 1: have sort of had their entire labor market experience defined
Speaker 1: by that. And of course you've seen all this tension
Speaker 1: that's bubbling up between millennials and boomers characterized or crystallized,
Speaker 1: I should say, the Okay, boomer movement now seems to
Speaker 1: be a thing, a thing. You know what I think
Speaker 1: is lame though, how millennials want to side with gen z.
Speaker 1: It's like, come on, Momornials are all too It's like,
Speaker 1: don't pretend your young anymore. Okay, okay, okay. But all
Speaker 1: that being said, um so let's talk about the millennial
Speaker 1: economic situation. But before we do, remember a couple of
Speaker 1: weeks ago, or like maybe a month ago, we talked
Speaker 1: to Karen Ho of the University of Minnesota about her
Speaker 1: anthropological take on Wall Street. Yeah, the anthropologist who worked
Speaker 1: at a at a major bank. Yeah. Well, I'm excited
Speaker 1: because today we are speaking to another Karen Ho, the
Speaker 1: other one. Uh, there's probably several more, but this is
Speaker 1: the other really prominent one if you look online. And
Speaker 1: so we'll odd lots. In a matter of like five
Speaker 1: episodes will have spoken to two Karen Ho's, but this
Speaker 1: time instead of talking about Wall Street, we're going to
Speaker 1: talk about the economic and investing condition of the millennial generation. Yeah,
Speaker 1: you wait for one Karen Home and then to come
Speaker 1: along all at once? Yeah, all right, what's that would
Speaker 1: further ado? Let's bring in uh Karen How she is
Speaker 1: the She's a freelance writer. She's written a lot about
Speaker 1: business cultural thing. She's also the editor of the Significant
Speaker 1: Digits newsletter for five thirty eight. Karen, thank you very
Speaker 1: much for joining us, Thanks for having me. You're aware
Speaker 1: of the other Karen Home before this, right, like how
Speaker 1: much that I get a lot of her emails and
Speaker 1: so I literally have her email address bookmarked and I
Speaker 1: have to remind people constantly are you asking for? You know?
Speaker 1: The people have told me that they're like, I love
Speaker 1: your book, and I was like, I'm not that person.
Speaker 1: And so it was really funny when Laura, your producer,
Speaker 1: reached out to me, I was like, are you sure
Speaker 1: you want to talk to me because there's this other
Speaker 1: Karen Home that's a big expert on wallst. And She's like, yes, yes,
Speaker 1: I want to talk to you. So I was really
Speaker 1: thrilled and I've been friends with Joe for a couple
Speaker 1: of years, so it was a great opportunity to come
Speaker 1: and chat about something that I a topic that I
Speaker 1: hold really near and dear to my heart. Did she
Speaker 1: ever get your emails? I don't think she's ever told
Speaker 1: me that, but um, I think there has been one
Speaker 1: time where I emailed her and I was like, I
Speaker 1: get a lot of your fan mail. I just want
Speaker 1: you to know that. So before we start out, do
Speaker 1: we have our definition of millennials roughly correct? Like? What
Speaker 1: is the group the generational group that aren't that we
Speaker 1: are talking about here? I think both of you are
Speaker 1: correct in that I would say the upper tier of
Speaker 1: the current age of I would say an older millennial
Speaker 1: is around thirty eight. Any older than that I would consider,
Speaker 1: you know what I mean? You know it's like thirty
Speaker 1: eight because under the definition of like you said using
Speaker 1: Facebook in undergrad I would say especially, And then I
Speaker 1: would say the youngest millennials I would say are maybe
Speaker 1: twenty eight, because anything younger than that it's a totally
Speaker 1: different circumstance when it comes to the labor market and
Speaker 1: in terms of the age of their parents. And I say,
Speaker 1: my I have boomer parents, but they had me very
Speaker 1: very lately. You know, my mother was almost forty when
Speaker 1: she had my younger sister, and so like when we
Speaker 1: talk about generations as defined by economics, the older generations
Speaker 1: has much longer spans than the way that we are
Speaker 1: defining Gen Z, and even the generation after gen Z
Speaker 1: it's much much narrower. And I always find that really
Speaker 1: interesting because there's no consistency in terms of the time
Speaker 1: period between these generations. Yeah, it's interesting to think about, Like,
Speaker 1: if you're Gen Z, you've basically, unlike millennials, your entire
Speaker 1: working career has been economic expansion. You have that. If
Speaker 1: you're twenty eight or twenty six or younger, you graduated
Speaker 1: in the last I don't know, four or six years,
Speaker 1: Like it's basically been economic expansion that whole time. Maybe
Speaker 1: not the best labor market, but not terrible. But Millennials
Speaker 1: are really in large part facebook aside by the sort
Speaker 1: of like long stretch of economic procarity. Absolutely, how is
Speaker 1: that to find the generation interview? So having personally graduated
Speaker 1: undergrad in that generation has entirely started in the whole
Speaker 1: everything from your graduating into the market where they're freezes
Speaker 1: there are mass layoffs on Wall Street and in Bays Street.
Speaker 1: And the problem is right now, so you are starting
Speaker 1: at at a place where the compound interest racks up
Speaker 1: in the period where you're supposed to see your career
Speaker 1: rapidly increase. You know, whether it be in terms of earnings,
Speaker 1: whether it be in terms of income potential, UM, you know,
Speaker 1: future investment decisions, even in terms of even the way
Speaker 1: that you date, right the way that you spend money
Speaker 1: while dating, and then you're making long term plans for uh,
Speaker 1: investing in real estate, having a family, or even um.
Speaker 1: If you're in a job that is automatically doesn't include
Speaker 1: a pension, or doesn't include an investment opportunities, or doesn't
Speaker 1: even have benefits, then you can't set aside the money
Speaker 1: that you need in the long term to take care
Speaker 1: of things like your health or for retirement. So can you,
Speaker 1: um give a bit more detail on that statement? So
Speaker 1: what exactly is the job market or the employment benefits
Speaker 1: that most millennials have encountered, and how did they differ
Speaker 1: from generations previously. I think the millennial generation is much
Speaker 1: more hyper aware of the jobs that we've seen a
Speaker 1: lot of economic coverage of the gig economy or or
Speaker 1: you know, you have these really tenuous circumstances where you're
Speaker 1: essentially given full time hours without any benefits or permanancing.
Speaker 1: You know, if you are laid off, there's no such
Speaker 1: thing as severance, or you know, a period where you
Speaker 1: have health benefits for a week or two, and then there's,
Speaker 1: like I said, no defined contributions to pensions or investments,
Speaker 1: and there's no offset for or contribution to health and
Speaker 1: health insurance or other benefits. And so all of those
Speaker 1: costs are put on the millennials themselves, everything from you know,
Speaker 1: basic things like gym memberships all the way to health
Speaker 1: savings plans. They don't get any of those cumulative benefits
Speaker 1: from stable employment and uh financial security. And then on
Speaker 1: top of that, you know, this is the start I
Speaker 1: would say, of a very noticeable year over year increase
Speaker 1: in terms of the cost of education and health, especially
Speaker 1: in the United States, but in other countries as well,
Speaker 1: where you're seeing I think from the period in which
Speaker 1: I graduated, and I checked this right before coming in
Speaker 1: just in Canada, which you know has a much higher
Speaker 1: tax base and is seen as a much more affordable place,
Speaker 1: yet higher education, the cost of tuition at the undergraduate
Speaker 1: level for a domestic tuition has risen anywhere from thirty
Speaker 1: to in ten years. So one of the things that's
Speaker 1: become something of a trope is this notion of millennials
Speaker 1: as entitled, ungrateful workers in the office. Is it possible
Speaker 1: that instead of just being you know, spoiled and entitled,
Speaker 1: that what a lot of them are actually asking for
Speaker 1: are things that the previous generation was given without asking
Speaker 1: for explicitly, I'm always really interested in question those statements
Speaker 1: and the specific of those statements in terms of what
Speaker 1: is entitlement when it comes to circumstances, because I think
Speaker 1: even in terms of the conversation regarding treatment of women
Speaker 1: in the workforce, you know, some of those demands or
Speaker 1: requests in terms of we would like to not be
Speaker 1: sexually harassed at work, we would like equal pay, we
Speaker 1: would like to consider, you know, policies regarding maternity leave.
Speaker 1: The people making those policy decisions and workplace, you know,
Speaker 1: employment decisions can argue that these are entitlements or or
Speaker 1: attitudes of entitlements, but it's also in terms of what
Speaker 1: we know the demands that millennials are asking for in
Speaker 1: terms of things like contracts that are very clear regarding diversity,
Speaker 1: pay gaps. Uh, you know, severance if someone is laid off,
Speaker 1: especially in industries where layoffs are incredibly common and have
Speaker 1: happened in huge waves. I'm really interested in who defines
Speaker 1: these entitlements, like who are the financial writers, who are
Speaker 1: who is saying these statements in the press and saying
Speaker 1: these millennials are entitled. It's usually you know, people who
Speaker 1: feel like they have been mistreated in the workforce, and
Speaker 1: that mistreatment needs to continue to happen. You know that
Speaker 1: they survived that mistreatment to get to where they are. Uh.
Speaker 1: And there's a level of Stockholm syndrome that they survived
Speaker 1: a kind of hazing for for lack of a better term,
Speaker 1: and there's this fear that they didn't survive that mistreatment
Speaker 1: for their own benefit, and you know that there's a
Speaker 1: duty to continue that. Going back to is you point
Speaker 1: out there's all these costs. There's a sort of too
Speaker 1: a couple from an economic standpoint, There's a couple of
Speaker 1: things that, as you put it, have characterized this generation.
Speaker 1: There's the financial procarity, the labor market, and then also
Speaker 1: just all these added costs that have been put onto
Speaker 1: millennials in terms of healthcare, paying for their education and
Speaker 1: so forth. And what I'm curious about, and what I'm
Speaker 1: always trying to wrap my head around, is to what
Speaker 1: degree does this change financial behavior? Is such that even
Speaker 1: if one is in the position where they're able to
Speaker 1: build up savings, even if they're in the position where
Speaker 1: they have a good paying job they could easily cover
Speaker 1: their rent, etcetera, that changes their willingness to say invest
Speaker 1: or they're spending decisions because there's so much uncertainty. If
Speaker 1: they have a health crisis, then that will cause their
Speaker 1: um you know, that will deplete their savings, and it's
Speaker 1: sort of unwillingness to make the same like sort of
Speaker 1: savings and investment choices of someone from a previous generation
Speaker 1: who may have also been in the same economic situation.
Speaker 1: I think you're starting to see a lot of mimicking
Speaker 1: that unfortunately happened on Wall Street and this hyper focus
Speaker 1: on the short term gains. I mean, there's endless jokes
Speaker 1: regarding self care and the millennial spending on self care
Speaker 1: or tourism. You know, all these derogatory statements regarding how
Speaker 1: much millennials spend on eating out or coffees and things
Speaker 1: like that. But I think it's a reflection of what
Speaker 1: has happened on Wall Street for decades, which is this
Speaker 1: hyper focus on the short term gains and in it
Speaker 1: benefits rather than long term sustainability. And so if Wall
Speaker 1: Street is teaching this to everyone that is really about
Speaker 1: quarterly returns, and we're an earning seasons right now, then
Speaker 1: why would the millennial generation be inclined to think anything
Speaker 1: differently when everything is about cost of good sold, right
Speaker 1: And it's the same thing when you think about reducing
Speaker 1: your expenses, you know, on a day to day basis,
Speaker 1: if I'm hyper focused on reducing my expenses, then I'm
Speaker 1: going to think about not necessarily, you know, rather than
Speaker 1: setting aside money because I need that money to reduce
Speaker 1: my expenses right now. So I think that that's one
Speaker 1: of the things that I think has been a big
Speaker 1: picture trend that people really forget these are financial lessons
Speaker 1: because financial literacy is not necessarily a core component and
Speaker 1: say high school and middle school education, especially in the
Speaker 1: United States, you know, where else are you getting these
Speaker 1: financial lessons? And then I also want to remind people
Speaker 1: that for better for worse, like reducing pay inequality, especially
Speaker 1: among women and visible minorities, increases the cost of good sold.
Speaker 1: Like there's no inclination if Wall Street is not inclined
Speaker 1: to reduce these pay gaps and increase you know, say,
Speaker 1: employee satisfaction or with these benefits, because that is not
Speaker 1: what corporate finance teaches in NBA programs, because it increases
Speaker 1: cost of good sold. And that's something like when I
Speaker 1: was really listening to U Karen's episode regarding the ethnography
Speaker 1: of Wall Street, especially prior to the crash, like right now,
Speaker 1: this hyper focus, especially in tech, right especially when you're
Speaker 1: incentivizing paying people in stock rather than in money that
Speaker 1: they can take home right away in their salaries and
Speaker 1: benefits they're going to incentivize, like I said, also these
Speaker 1: short term behaviors that reduce expenses and uh. And also
Speaker 1: they're going to make decisions that are not necessarily in
Speaker 1: the long term interests of both themselves and then the corporation.
Speaker 1: I definitely feel like one of the big I'm not
Speaker 1: sure if it's political per se, but one of the
Speaker 1: big things that we know about sort of younger generations,
Speaker 1: whether it's millennial or maybe gen z as well, is
Speaker 1: a significant focus and concern about climate and climate change
Speaker 1: more than previous generations, and something I've always wondered about
Speaker 1: and I'm curious your take on it is, does the
Speaker 1: sense of impending doom that is a growing, a growing
Speaker 1: sense I think among many people in your view change behaviors,
Speaker 1: and that if someone says, like, Okay, well, you know,
Speaker 1: you invest in this four oh one K and maybe
Speaker 1: your twenty five, and you retire at sixty, so it's like, Okay,
Speaker 1: you're not gonna be able to touch it for forty years.
Speaker 1: Put backs out your four oh one K. I'm curious
Speaker 1: whether this growing sense of climate doom in your view
Speaker 1: changes the calculus about whether even a forty year weight
Speaker 1: on an investment vehicle is makes sense. I think it's
Speaker 1: one of several factors. I think, even before our understanding
Speaker 1: of how climate change will affect the likelihood that this
Speaker 1: generation will be able to retire or or set these
Speaker 1: benchmarks for how much of their income they're supposed to
Speaker 1: set aside for various investments, there's the basic fact that
Speaker 1: there is still the day to day of like credit
Speaker 1: card bills, student loans, your monthly rent, buying basic groceries.
Speaker 1: Those are still day to day concerns or monthly concerns
Speaker 1: long before investments that millennials are trying to stay above
Speaker 1: water for. And unfortunately, like credit card companies do not
Speaker 1: care about the impending climate crisis. They care if you
Speaker 1: are late on your credit card payments or your student
Speaker 1: loan payments, right like Navigant does not care if you
Speaker 1: are anxious through the roof and are trying to pay
Speaker 1: out of pocket for therapy or medications in order to
Speaker 1: deal with, you know, this climate crisis. They care if
Speaker 1: you're making your student loan payments on time for an
Speaker 1: education that is right now very difficult to get a
Speaker 1: job for. I read a report this morning from CNBC
Speaker 1: talking about the inverted deal curve. You know, all these
Speaker 1: economic indicators are saying right now people are girding themselves
Speaker 1: for a recession. So millennials, regardless of even thinking about retirement,
Speaker 1: they're just worried about the fact that if they can
Speaker 1: even get a new job or keep their current job
Speaker 1: right now, Like, the problem is this generation is burdened
Speaker 1: by so many other legitimate concerns in regards to these
Speaker 1: economic factors, and if they'll be able to afford getting married,
Speaker 1: buying a home having children. Right. There was another report
Speaker 1: over the weekend from the New York Times estimating the
Speaker 1: cost of a child at two hundred thousand dollars. You know,
Speaker 1: I'm at the perfect age where I have to consider
Speaker 1: egg freezing or you know, if I'm going to use
Speaker 1: that money for a work visa, like all of these things,
Speaker 1: and so there's that combination. But it's just unfortunately another
Speaker 1: thing on top of the pile in terms of climate change.
Speaker 1: But I think that's a huge concern. It's just like
Speaker 1: I've seen several jokes on Twitter saying, do I really
Speaker 1: have to put aside money for retirement? Like who knows
Speaker 1: if if we're even going to have a planet, if
Speaker 1: everyone's trying to boost up and go to Mars, if
Speaker 1: all the rich people are investing in Mars, one ticket,
Speaker 1: gotta gotta save up for a ticket to mark Um.
Speaker 1: I feel kind of bad asking this question because you
Speaker 1: just laid out a whole host of economic anxieties for millennials.
Speaker 1: But I'm curious it does the bowl market that we've
Speaker 1: basically seen for the past ten years in stocks and
Speaker 1: a bunch of other assets, does that factor into or
Speaker 1: offset any of the reluctance of millennials to actually invest,
Speaker 1: because year after year after year, for the most part,
Speaker 1: have they just invested in an index fund PEG to
Speaker 1: the SMP five hundred, they would have made a decent return.
Speaker 1: Is there not a sort of fear of missing out
Speaker 1: among some millennials or are they just so overwhelmed with
Speaker 1: their other economic needs that it doesn't even come into play.
Speaker 1: So I preface this by saying, I'm the child of
Speaker 1: two bankers who worked for TD for twenty years each.
Speaker 1: I am literally the perfect example of someone who grew
Speaker 1: up with financial literacy from birth. If you're saying, you know,
Speaker 1: with the bull market, I was, I chose an industry.
Speaker 1: Unfortunately that I was not given the breathing room to
Speaker 1: continue to either have a savings cushion or add to
Speaker 1: that savings cushion during the period of the bull market.
Speaker 1: You know, to invest in the bull market, you have
Speaker 1: to have capital in order to put in and if
Speaker 1: we've seen continuously, the millennial generation does not have this
Speaker 1: excess capital either. They could not access the loans. They
Speaker 1: were either discriminated against, especially if there were women and minorities,
Speaker 1: for accessing these loans for mortgages, personal finance or they
Speaker 1: were charged significantly more for car loans and education and
Speaker 1: personal finance loans. Then there's the fact that they started
Speaker 1: off with education loans and they couldn't immediately pay them
Speaker 1: off in the first five to ten years following graduation
Speaker 1: the same way that previous generations could, even with gen
Speaker 1: X is experience of their own recession, right with the
Speaker 1: dot com boone in the nineties. Then there's also the
Speaker 1: fact that you're just like crawling yourself out of that
Speaker 1: hole over and over again. And so even the bullmarket,
Speaker 1: it's really about watching which organizations continue to look for
Speaker 1: efficiencies and either crawling back pay raises or in terms
Speaker 1: of new hiring or even benefits. Right there was continuous
Speaker 1: union busting or in terms of reducing the portion of
Speaker 1: benefits everything from define pension plans and to find benefits
Speaker 1: or even the contributions that they were making too four
Speaker 1: O one case, and the Canadian and UK equivalents imagined
Speaker 1: someone listening to this, maybe their gen X, not me,
Speaker 1: but you know someone maybe they're a little older gen X,
Speaker 1: or maybe they're a boomer, and the millennials, it's like, yeah,
Speaker 1: there's all this stuff that's been difficult for them, But
Speaker 1: we had our own difficulty. You we had like inflation
Speaker 1: in the seventies, we were terrified of the Cold War
Speaker 1: and we had to duck and cover, and we were
Speaker 1: worried about a nuclear bomb annihilated the world. They would say, like,
Speaker 1: we had all kinds of things, you know, we had
Speaker 1: our own issues, We had our own college costs to
Speaker 1: deal with whatever it is. What are the sort of
Speaker 1: data points that you look at, They would say, yes,
Speaker 1: of course every generation has its anxieties, but substantively, this
Speaker 1: is how why millennials like really did start deeper in
Speaker 1: a whole than other generations. So I think going back
Speaker 1: to the subject of capital um and capital investments, so
Speaker 1: to go back to the Boomer generation and even to
Speaker 1: a small degree, Gen X, the boomers could access capital,
Speaker 1: whether it be through wealth building, through real estate, and
Speaker 1: as well in terms of there's intellectual capital through education,
Speaker 1: those definitive costs, and remember using the concept of compound interest,
Speaker 1: they were able to benefit in a multi decade experience
Speaker 1: in the way that the millennials will never have. And
Speaker 1: the Cold War is a real concern, right like nuclear
Speaker 1: disaster is a real concern. The problem is it's the
Speaker 1: millennial generation that has to deal with you know, say
Speaker 1: the toxic pool of waste right now in the Marshall
Speaker 1: Islands that could be uncovered due to climate change, and
Speaker 1: gen Z to a larger degree will also have to
Speaker 1: deal with this. And so it's the wealth that boomers,
Speaker 1: especially white boomers in several countries, have been able to
Speaker 1: build up and benefit from compound interest, whether it be
Speaker 1: through capital investments in property and in uh financial investments.
Speaker 1: They had the excess capital in order to invest in
Speaker 1: the bowl market over the last decade and benefit from
Speaker 1: those gains. And then they were able to also benefit
Speaker 1: from the low cost of education, right like my mother
Speaker 1: talks about going to university for the cost of a car.
Speaker 1: You know, in the United States now the cost of
Speaker 1: a car is one semester's tuition, not including room and board.
Speaker 1: So I think about that. And then there's also physical
Speaker 1: and mental anxiety and the long term effects. Right we
Speaker 1: know right now that their studies showing millennials will suffer
Speaker 1: both in the short and long term in terms of
Speaker 1: healthcare costs because of all of these cumulative factors that
Speaker 1: we've outlined. So also have to plan to spend both
Speaker 1: in the short and long term on these on dealing
Speaker 1: with these issues, whether it be heart issues, health issues
Speaker 1: right and possibly cancers and other long term illnesses, all
Speaker 1: of those combinations combined, there's definitely going to be a
Speaker 1: lot of issues. But even when it comes to boomer healthcare,
Speaker 1: there's gonna there's gonna be much more capital for them
Speaker 1: to say, retrofit their homes or go into long long
Speaker 1: term care facilities, and also to buy the things that
Speaker 1: they need. Even when there is income disparities. They're going
Speaker 1: to be able to access Social Security in a way
Speaker 1: that the millennial generation has totally written off. I'm actually
Speaker 1: really interested in that last point. But real quickly, would
Speaker 1: you say that you and your peers just assumed that
Speaker 1: Social Security isn't going to be there when you retire.
Speaker 1: I mean, we've stopped assuming that we're going to have pensions.
Speaker 1: Like the joke is like but its like but no,
Speaker 1: what like? I mean, theoretically, the law says you're paying
Speaker 1: into this trust fund. It's kind of made up. But
Speaker 1: the law as it stands says that you'll get this
Speaker 1: money out of every paycheck. But in your view, do
Speaker 1: you think people are just like, yeah, it's not gonna
Speaker 1: be there. So the problem with social security and the
Speaker 1: way that it's funding, you know, I'm really I look
Speaker 1: at a lot of economic indicators every day, everything from
Speaker 1: the replacent rate, like if you're having fewer kids, if
Speaker 1: people every generation continues to have fewer kids based on
Speaker 1: the projected cost of everything from educating and feeding them
Speaker 1: and you know, making sure that they're still alive, then
Speaker 1: there's also the effect of Social Security. I think it's
Speaker 1: also just like you know, like the minimum wage has
Speaker 1: an increase in Stily two thousand and nine, and you know,
Speaker 1: there was a report recently that shows people who are
Speaker 1: earning less than fifteen dollars an hour, if they try
Speaker 1: to get a new job, it's very difficult for them
Speaker 1: to ascend to a job that will pay them more
Speaker 1: than fifteen dollars an hour. So there's incredible wage stagnation
Speaker 1: among a generation. Not just millennials, but millennials are highly
Speaker 1: affected by this lack of basically mobility in the ability
Speaker 1: to rise to the middle class on a a stable,
Speaker 1: long term basis. So this procarity just precludes you from
Speaker 1: setting aside money both that the government needs but also
Speaker 1: that these individuals need on a long term basis, So
Speaker 1: just zooming out a little bit. You're talking about, well,
Speaker 1: you mentioned union busting earlier, and you're talking about a vastly,
Speaker 1: vastly different um both work and personal situation for millennials
Speaker 1: today versus what their parents experienced when they sort of
Speaker 1: came of age in the workforce. What do you think
Speaker 1: change sort of economically or in society or in the
Speaker 1: way corporations operate. That's a really big question. Sorry, but
Speaker 1: like something must have happened, right, So there's a culture
Speaker 1: in which, unfortunately, I think there's a generation I would
Speaker 1: say that lean's libertarian or conservative in terms of everything
Speaker 1: from how things are taxed. There was a huge withdrawal
Speaker 1: of public funding towards education in especially in many specific states,
Speaker 1: but across the United States, for better for worse. It
Speaker 1: was hyper focus on the individual. It's like you're not
Speaker 1: working hard enough, you're not doing enough to save personally.
Speaker 1: So it made system disparities much greater, especially among genders
Speaker 1: and minorities, which are growing groups in the United States
Speaker 1: through immigration and through birthrates. Right, Like we know birthrates
Speaker 1: very wildly between different ethnicities. Like I really think the
Speaker 1: rise of personal finances, individualizing systemic factors and saying you
Speaker 1: are not saving enough of your own personal income regardless
Speaker 1: of these systemic factors that are preventing you from earning
Speaker 1: more at work or setting aside these funds. You know,
Speaker 1: things that other countries have taken care of for them,
Speaker 1: whether it be child care or uh, you know, the
Speaker 1: cost of going to the hospital or paying for higher education,
Speaker 1: or even in terms of the way that costs have
Speaker 1: been privatized. And what is the government's priority. I think
Speaker 1: it's really about, like I said, going back to the
Speaker 1: philosoph view of thinking and the culture of thinking about
Speaker 1: the short term and and then especially the rapid focus,
Speaker 1: especially in the last decade that the other Karen talked
Speaker 1: about on Wall Street. It's it's really about what can
Speaker 1: you get so that your latest quarters results increase the
Speaker 1: share price on the market. You know, it's actually it
Speaker 1: would be so it's so ridiculous kind of but you
Speaker 1: guys would have been a good joint. No, seriously, because
Speaker 1: so much of like what her point was that like
Speaker 1: the sort of internal culture of the banks then has
Speaker 1: the sort of like outward manifestation. And now I feel
Speaker 1: like you're talking about the outward side of it. And
Speaker 1: so even though it's kind of random that maybe one
Speaker 1: day we should have another one where you're both on
Speaker 1: at the same time, because I feel like there's a
Speaker 1: lot of what you're both saying that are kind of
Speaker 1: like the same story from a different perspective. Before we
Speaker 1: wrap up, I'm curious, like, in your view, is this
Speaker 1: whole too big to dig out of? Like, if they,
Speaker 1: let's say, the expansion, the economic recovery were continue to
Speaker 1: go on, and the labor market were to continue to
Speaker 1: be you know, three point six percent unemployment pretty good
Speaker 1: if that were to continue, could eventually this whole will
Speaker 1: be dug out of? Or do you think that the
Speaker 1: sort of economic traumas that were unique and specific to
Speaker 1: this generation, plus the burden of various debts, the sort
Speaker 1: of gouging that we see in healthcare and education really
Speaker 1: basically guarantees that a permanent scar has been left on
Speaker 1: the one generation essentially last forever on that happy Now.
Speaker 1: I think it's really about what's going to happen in
Speaker 1: that's going to determine a lot of what's going to
Speaker 1: change or not change, because there is right now no
Speaker 1: incentive or no motivation for a lot of these organizations
Speaker 1: and corporations to change their behavior. Right in terms of
Speaker 1: the tax cuts, basically, so far, the reporting shows that
Speaker 1: none of the organizations have really reinvested the money that
Speaker 1: they supposedly saved on taxes, right. They just continue to
Speaker 1: either give that out to shareholders or attain it um
Speaker 1: as cash on hand. Then there's the problem in regards
Speaker 1: to digging out of the whole requires specific government policies
Speaker 1: like raising the minimum wage. You know, I was shocked
Speaker 1: to see that there are exemptions I think in Montana
Speaker 1: and Georgia for minimum wages lower than I think five
Speaker 1: dollars and fifteen cents. In Montana it's four dollars. And
Speaker 1: then you know, we have an increasing number of people
Speaker 1: who are participating in a gig economy that is paying widely,
Speaker 1: you know, exploitive rates for everything. I think it's really
Speaker 1: about looking at the systems that are pushing people to
Speaker 1: need this money. You know, I thought the report on
Speaker 1: mechanical turking was horrifying in terms of what people felt
Speaker 1: like they had to do in order to pay for
Speaker 1: basic medical prescriptions, um like saving insulin. It's really about, unfortunately,
Speaker 1: what are the priorities of governments, Because corporations are not
Speaker 1: being incentivized, like I said, doing things like investing in
Speaker 1: reducing pay gaps or even tuition incentives that increases cocks
Speaker 1: and expenses and on their balance sheets. That looks bad, right,
Speaker 1: because it looks bad for a net income, it looks
Speaker 1: bad for quarterly results. And unfortunately, it's treated very differently
Speaker 1: than if you got like a government fine for violating
Speaker 1: privacy issues. Karen, thank you very much for joining us.
Speaker 1: That was awesome. Thanks so much. Perspective Karen Tracy, I
Speaker 1: really I wasn't kidding. We we should have or we
Speaker 1: should at some point have a podcast with the two
Speaker 1: Karen's at the same time, because I really did feel
Speaker 1: like her. This Karen's perspective was almost exactly what the
Speaker 1: other Karen was talking about in terms of that culture
Speaker 1: of Wall Street then manifesting into culture of corporations, then
Speaker 1: bleeding down into the culture of employees and other people
Speaker 1: who live in this world today. Right, I would totally
Speaker 1: agree with you. They're surprisingly in sync. And what this
Speaker 1: Karen was talking about was basically the societal impact of
Speaker 1: all that short termism on Wall Street. One thing that
Speaker 1: really struck me was this idea of compound interest between
Speaker 1: generations as well, because one thing you often hear nowadays
Speaker 1: is that, you know, millennials are complaining now, but eventually,
Speaker 1: and this is quite dark, but it is sadly true.
Speaker 1: Eventually the baby boomers are going to die and there
Speaker 1: could be this big transfer of capital slash wealth to
Speaker 1: their children, and at that point millennials will have some
Speaker 1: capital to play around with. But of course, as Karen
Speaker 1: pointed out, they've already missed out on decades of actually
Speaker 1: doing something with that capital. I also think it's interesting
Speaker 1: because this concept of labor market procarity or economic procarity,
Speaker 1: I think for millennials in particul there's actually been like
Speaker 1: a double whammy because there's one there's like the deep
Speaker 1: economic cycle, so that we had the Great Recession, and
Speaker 1: we've had a pretty weak labor market for a long time,
Speaker 1: particularly in this country, So that lends itself to economic
Speaker 1: procarity because the job markets not that great. Compounded with
Speaker 1: or added on to that, we have these new modes
Speaker 1: of labor, expectations of the gig economy, other things, in
Speaker 1: which even in a good economy, even when the job
Speaker 1: market is robust, there are these changing expectations about how
Speaker 1: much permanent unemployer owes an employee and so forth, And
Speaker 1: so I really think that, like there's the cyclical aspect
Speaker 1: to procarity, that's the ups and downs of the GDP
Speaker 1: and the unemployment rate, and then there's the structural aspect
Speaker 1: of labor market procarity, which is just the nature of
Speaker 1: work seems to be changing. And it really feels like millennials,
Speaker 1: unlike any other generation, just got hit with two different
Speaker 1: kinds of recarity at the same time. Yeah, I would
Speaker 1: also say it's it's even a triple whammy because you
Speaker 1: also have the impact of sort of starting your career
Speaker 1: immediately after the financial crisis, when people really weren't certain
Speaker 1: what investing was or what the market was going to
Speaker 1: look like. And then at the same time, you're sort
Speaker 1: of struggling to gather together enough money to actually put
Speaker 1: in a four oh one K or any type of
Speaker 1: financial asset, and you're watching stocks hit new highs basically
Speaker 1: every year, and you're worried that you're coming in at
Speaker 1: exactly the end of the bull market. And I mean,
Speaker 1: you and I both know that for the past eight
Speaker 1: years people have been talking about the end of the
Speaker 1: bull market. And I think it's really really hard for
Speaker 1: people to get over that initial experience and actually dip
Speaker 1: into the market. Oh totally. Everyone always thinks that the
Speaker 1: moment they get in is going to be the peak.
Speaker 1: And then I think the one other thing, and I
Speaker 1: think this is like a ongoing worse sending trend in
Speaker 1: American economy, which is just these crucial sectors of the
Speaker 1: economy I think are getting driven by oligopoly and rent seeking,
Speaker 1: and so whether it's universities, whether it's healthcare, whether it's rent,
Speaker 1: you have these entrenched, powerful forces that are really sort
Speaker 1: of I think in a lot of people's just kind
Speaker 1: of making a mockery of capitalism and free markets, where
Speaker 1: prices are just getting worse. As Karen put it, like
Speaker 1: you know, uh now one semester of college basically costs
Speaker 1: as much as a car as opposed to a whole education.
Speaker 1: It is getting worse. It is these things are getting
Speaker 1: more expensive. Healthcare is getting more unaffordable by leaps and
Speaker 1: bounds every year, in part because these industries are just
Speaker 1: like so broken and u arguably so corrupt, so lots
Speaker 1: of bad things or in Amazon that's able to sort
Speaker 1: of exert enormous downward pressure on wages. And what's actually
Speaker 1: really worrying is that a lot of policymakers are only
Speaker 1: just beginning to scratch the surface of these dynamics. And
Speaker 1: I know at Jackson Hole last year, people were talking
Speaker 1: a lot about monopsony, which was sort of the technical term.
Speaker 1: I guess for a lot of these dynamics. We haven't
Speaker 1: really heard that much since then. No, but I guess,
Speaker 1: you know Karen mentioned, and I think a lot of
Speaker 1: the question for policy perspective is like, you know, the
Speaker 1: true no trend can last forever. So are we going
Speaker 1: to find a way as a country to sort of
Speaker 1: curb some of these trends or is it going to
Speaker 1: like all break one day and some huge revolution and cataclysm.
Speaker 1: So that's something investor should think about. Okay, On that
Speaker 1: happy note. On that note, this has been This has
Speaker 1: been another episode of the Odd Lots podcast. I'm Joe Wisenthal.
Speaker 1: You can follow me on Twitter at the Stalwart and
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at
Speaker 1: Tracy Alloway. And you should follow our guests on Twitter.
Speaker 1: She's at Karen k Ho and be sure to follow
Speaker 1: our producer on Twitter, Laura Carlson. She's at Laura M. Carlson,
Speaker 1: and check out all of Bloomberg's podcasts on Twitter at podcasts.
Speaker 1: Thanks for listening.