Millennials Aren’t Spending Money Because They Simply Do Not Have The Extra Money To Spend

Millennials aren’t the “new generation” that sociologists are talking about in terms of their potential for the future, as that title has gone to Generation Z. However, because Millennials constitute the current major bloc of persons in the world force, pushing out the Boomers and now even Generation X, they are at a time in their lives when historically speaking, one would be forming families, working in regular jobs, and doing “normal adult things.”

However, this has not been happening with Millennials. From everything from refusing to indulge in pastimes of previous generations to reduced family sizes, to not even getting married, it is said that millennials “killed off” these things in comparison with previous generations. A closer look reveals that a large amount of this has to do with money, because Millennials are, on average strapped with large amounts of debt and with jobs at stagnant or declining wages and no real economic future in sight:

Since millennials first started entering the workforce, their spending habits have been blamed for killing off industries ranging from casual restaurant dining to starter houses. However, a new study by the Federal Reserve suggests it might be less about how they are spending their money and more about not having any to spend.

A study published this month by Christopher Kurz, Geng Li and Daniel J. Vine found millennials are less financially well-off than members of earlier generations when they were the same ages, with “lower earnings, fewer assets and less wealth.”

Their finances were compared with Generation X, baby boomers, the silent generation and the greatest generation.

The researchers examined spending, income, debt, net worth and demographic factors among the generations to determine “it primarily is the differences in average age and then differences in average income that explain a large and important portion of the consumption wedge between millennials and other cohorts.”

Millennials, which the study defined as those born between 1981 and 1997, with ages ranging from 21 to 37, “paid a price” for coming of age during the Great Recession. They had to face historically weak labor demand and unusually tight credit conditions.

Dealing with those financial obstacles probably created “attitudes toward saving and spending” that might be “more permanent for millennials than for members of generations that were more established in their careers and lives at that time,” the study says.

Despite millennials’ much maligned, unofficial hipster status, the study indicates they’re pretty mainstream.

Their spending on motor vehicles — which is sensitive to economic expansion and contraction, and accounts for about 20 percent of retail sales — shows millennial households have similar tastes and preferences to older generations, as does their spending on food and housing.

Their consumption habits are similar to their parents’ and grandparents’ — millennials just have less money to spend.

The researchers also examined debt between each generation. While the comparisons were “somewhat mixed,” researchers said it “seems fair” to conclude that millennials have levels of debt about the same as Generation X and more debt than baby boomers.

The study also noted newer financial obstacles for millennials. Broad economic trends depict a rise in health care expenditures, as well as a rise in college tuition that has outpaced general inflation that previous generations avoided in their young adulthood.

And the generation’s higher rates of racial diversity, higher educational attainment and lower rates of marriage? Those are all consistent “with secular trends in the population and are therefore not the aberrations of a single generation,” the study said.

Millennials are still fairly young, so “it remains to be seen whether having reached adulthood during those unfavorable years will have permanent effects on their tastes and preferences,” the study says. (source)

The point about millennials having the same level of debt as Generation X and even more than the Boomers is very telling because it points to the source of the debt. It is a known fact that Millennials are buying houses at lower rates than previous generations, and the reason is because many are overburdened with large debts from student loans at jobs that pay less than previous generations and with wages that remain comparatively stagnant or in decline. This indicates that the debt levels held by Generation X, while high, are due to housing and other personal debts not related to student loans, while for Millennials the debt is mostly due to student loans.

Student loan debt is a particularly toxic form of debt because it is only one of two types of debt that cannot be discharged by bankruptcy under law, the other kind being that determined by a court for a crime as a payment to a victim. Because of this, student loans “follow” the individual no matter where he goes, even to his grave.

The current amount of student loan debt held is over $1.5 trillion USD, with the average for the class of 2016 being just over $37K per student. However, this data is not entirely accurate because some naturally own more and some less, and in some cases nothing at all. Because of this, there are some people who assume debt in the form of several thousand dollars, and others well over $100K in loans.

This is an unsustainable system, and what it has done is to bring about a new form of modern slavery, except instead of to the yoke of a master in a field with a whip, it is to a man in a well-pressed suit sending monthly statements.

However, slavery to one form of debt (student loans) has, clearly, ongoing effects, the largest of which is that as American life runs on the assumption of debt, one cannot get debt in the form of house loans, car loans, or things that would be used to have a family and run a household. The entire process is delayed, stunted, and results in a new form of eugenics. This is not to say the debt is good, or that one should burden oneself with any form of debt, but that the entire “mechanism” by which American life runs, by creating a “bottleneck” in one area for selfish gain, has choked off the rest of society with serious long-term repercussions.

It is all the more reason why if one is not in debt, it is imperative that one stays out of debt as much as possible, lest one become a slave to the very means by which one tried to help himself.