NEWSWIRE: 2/11/19

  • A new Fed analysis finds that the median net worth of married Millennials nearly doubled from 2013 to 2016, while the net worth of unmarried Millennials hasn’t budged. This finding suggests that the precarious state of many Millennials’ bank accounts may be holding them back from tying the knot. (Federal Reserve Bank of St. Louis)
    • NH: If you look at adults age 25-34 over the last twenty years, you see that the median net worth of married couples has held steady at around $25K per household (albeit with a temporary hit after the GFC) and that the median net worth of singles and unmarried couples has held steady at around $8K per household, all in real 2016 dollars. Overall, however, Americans in this age bracket have been losing ground. Why? Because the married share is shrinking. Back in 1987, 60% of them were married. Today, only 40% of them are. That, at least, is one way of cutting the data.
    • It is well known that--among all age brackets and in nearly all societies--married couples have always done a lot better economically than the unmarried (holding age, race, education, and other obvious variables constant). Social scientists have published reams of articles trying to untangle the causality behind this fact. Does affluence make marriage more probable (maybe because those with money or great career prospects find it easier to marry)? Of does marriage make affluence more probable (maybe by changing people's lifestyles in a way that favors career success)?
    • If forced to choose, most experts probably would favor yet another hypothesis: that an unobserved third factor is tipping the scales toward both marriage and affluence. A basic personality trait that is partly heritable and largely stable over a lifetime, for example, may be rigging the association. Consider likability and conscientiousness: People higher than average in these traits are both more likely to get married and to make more money. (Ditto for those low in neuroticism.) The evidence favoring this broader explanation is that married people turn out to have a lot of other unrelated outcomes in common: They are a lot happier; they get sick less; they live longer; they are more connected to the community; and so on.
    • Now let's get back to Millennials. For them, the third explanation does not help explain the rapid decline in the share who are getting married at all. But maybe the first explanation does. An undiminished share of Millennials want to get married. But Millennials have acquired--from older generations and from their own heightened perceptions of risk--certain standards of what kind of economic preparation is needed for a marriage to work. And now that fewer of them can meet that standard, fewer are getting married. And this may bring us back to the second explanation: If marriage itself is to some extent a causal generator of higher incomes and wealth accumulation, fewer Millennials are benefiting from that dynamic. (Unmarried cohabitation, though increasingly prevalent, does not seem to confer the same economic advantages.)
    • Sure, we'd like to know more about the extent to which marriage may actually cause affluence. Unfortunately, we cannot conduct randomized trials to test this causation--except, perhaps, on TV reality shows like A&E's "Married at First Sight."

Trendspotting: Are Finances Keeping Millennials from Marrying? - trendchart2  1

  • A survey of Canadian Boomers reveals that a majority would stay on the job longer if employers allowed them to shift into semi-retirement. Boomers are torn between their financial need for a paycheck and their desire to enjoy their golden years with family. (CBC)
    • NH: The U.S. and Canada both had large post-WWII baby booms that are now rapidly aging past age 65. To date, the U.S. has done a much better job in keeping this generation employed past age 65--a fact that has helped boost U.S. GDP and productivity. From 2000 to 2017, the employed share of seniors in the U.S. rose from 12 to 19%. In Canada, it has risen from 6 to 13%. The employment rate is rising fast in Canada, but it remains quite a ways behind.
    • To be sure, greater senior employment in the U.S. may in part be due to the "success of failure." The demise of the defined-benefit pension plan, the inadequacy of 401(k)s, the scaling back of Social Security benefit levels--just to name a few challenges now facing U.S. Boomers (see: "Trendspotting: 8/13/18")--are compelling many seniors with retirement plans to keep working instead. But it's also fair to say that many Boomers, especially the affluent professionals who have experienced the biggest employment-rate jump, find that work is more central to their lives than it was for the last two generations of seniors. And they find employers and clients more accommodative of the sort of flexibility with hours and benefits they need to stay employed. (See: "Trendspotting: 4/9/18.") The Canadian labor market, with a weaker tradition of entrepreneurship and a larger share of all jobs dominated by large corporate employers, has struggled to show the same flexibility.
  • On the heels of its first-ever profitable quarter, Spotify announced plans to acquire two podcast companies, Gimlet Media and Anchor. With the moves, Spotify extends its lead in the streaming industry, but beware: The threat of a Big Tech company swooping in from nowhere and shaking up the market should worry investors. (The Wall Street Journal)
    • NH: Spotify finally showed a (small) profit in Q4. But guidance and expectations say this could be just a brief gasp above water level before going under again for the next quarter or two. What's going on? Spotify is caught in a industry--music streaming--with tight margins, lots of competitors, a commodified product, little pricing power, and few economies of scale. It is spending desperately to stake out a new area where it can attract greater customer loyalty and widen its margins. It is betting that area is (drumroll)... podcasting.
    • CEO Daniel Ek observes that downloaded videos command a $1 trillion market, versus only one-tenth of that for music and radio combined. “The question I always ask myself is, ‘Are your eyes really worth 10 times as much as your ears?’ And I don’t think that’s the case.” By plunging into podcasting, Ek is determined to find out. He'll certainly face a few big U.S. competitors, like Apple iTunes and Sirius Media plus all the big radio networks (that are now online) like iHeartMedia, Entercom, and Cumulus. Will Spotify's experience with music translate over into talk? Will its economies of scale improve? Stay tuned.
  • This new quiz will help you find out if you’re an “Xennial,” a marketing term used to describe adults born between 1977 and 1983. There’s plenty to laugh at here: For instance, according to the quiz, you know you’re an Xennial if “you can still remember your landline number,” or if “you remember when floppy disks were actually floppy.” (The Guardian)
    • NH: My favorite is: "You made a mix tape for someone you fancied. And it was on a tape." In principle, there is nothing wrong with talking about first or second waves of a generation or about a generational cusp, when one generation fades into the next. In some respects, generations can have well-defined borders: Those born in one year, for example, may remember an event or be eligible to serve in a war while those born in the next year may not. But in other respects, the boundaries can be a bit fluid, with cohort trends from one generation merging into the next.
    • Other "cusp" birth cohorts would include Americans born, say, from 1940 to 1946. Those on the Silent Generation side of that line certainly shared some Boomer traits: They include Bob Dylan, Simon and Garfunkle, the Chicago Seven, and most of the Freedom Riders. Those on the Boomer side of that line shared many Silent traits: They mostly got married early and have done very well economically. Or look at Boomer-Xer cuspers born in the late 1950s and early 1960s. Jonathan Pontell calls them "Generation Jones" and says (fairly enough) that they share some qualities of both Boomers and Xers. Xennials are just the latest iteration of this phenomenon. We will hear more about it.
  • Almost half (47%) of practicing Millennial Christians believe that it’s at least somewhat wrong to evangelize others, compared to 27% of Xers and 19% of Boomers. This is true even as Millennials are also the most likely to say they’re ready to respond if asked about their faith, suggesting that they’re torn between their convictions and their generation’s inclination to keep the peace. (Barna)
    • NH: This fascinating study illuminates a distinctively Millennial trait: an unwillingness to judge or argue with or disagree with other people. The study shows that in every measure of personal conviction and self-assessed ability to "testify their faith" to others, practicing Millennial Christians do not differ from older generations of practicing Christians. But they are much more likely than Boomers to say that it is wrong to try to change someone's mind about faith. What's more, they are much more likely to agree (40% to 9%) that "if someone disagrees with you, that means that they're judging you." We know from other Barna surveys that Millennials worry a great deal more than older generations about how they are perceived when they talk about religion: They fear being viewed as extreme, intolerant, judgmental, or insensitive.
    • This fear of confrontation or disagreement has implications that go far beyond religion. It helps explain why Millennials are so good at building friendly communities of like-mindedness--but are often so tentative about sticking up for their beliefs, assuming leadership, or speaking truth to power.
    • According to Brenda Hafera, a student blogger at Villanova: "Millennials are shirking one of the most fundamental duties: the duty to disagree." I will quote further: "Fundamentally, Millennials believe our choices are simply matters of personal preference--and it makes no difference whether we are talking about brands of hummus or sexual orientation. The only cardinal rule is that one person's views should never be imposed upon another. Therefore, every statement must be prefaced with a disclaimer such as "I feel" to denote the speaker is merely expressing a personal opinion. This avoids any possible misunderstanding that she thinks what she is saying should be a truth universally acknowledged, a very disturbing notion." From a Boomer's perspective, very disturbing indeed.
  • Columnist Lois M. Collins points out an unfortunate demographic paradox: We have a mini boom of women of childbearing age, but record-low fertility within these age brackets. The result is that, barring a dramatic fertility speedup or increase in net immigration, the U.S. economy will have to contend with a sustained working-age population growth slowdown. (Deseret News)
    • NH: The CDC just released its final fertility report for 2017, confirming what we already knew--that in 2017 the U.S. total fertility rate (TFR) fell to 1.77. Some regions in the U.S. have TFRs that would fit right in to Western Europe. Consider, for example, New England's TFR of 1.54--not much above that of Italy (1.49), Japan (1.48), or Germany (1.47).
    • Meanwhile, updated CDC quarterly birth data point to a continuing decline last year. YoY trends for Q3 2018 show age-specific birthrates down for every age bracket under age 35 and up slightly for age 35 to 44. That follows a longstanding trend: steepening declines for the youngest brackets, which are gradually creeping up to bring down the oldest age brackets. The final total fertility rate in 2018 will almost certainly be below the rate for 2017. According to Demographic Intelligence, it will weigh in at 1.72. This would be the lowest TFR in U.S. history, finally dipping below its earlier "Baby Bust" lowpoint of 1.74 in 1976.
    • As result, yes, total births are falling even though the population of women in high-fertility age brackets is peaking. Consider that, back in 1990, the "Baby Bust" generation of mothers gave birth to 4.16 million babies. In 2017, a much larger generation of Millennial "Echo Boomers" gave birth to only 3.86 million babies.

Trendspotting: Are Finances Keeping Millennials from Marrying? - trendchart3

  • Lamenting “The Fleecing of Millennials,” op-ed writer David Leonhardt urges 2020 candidates to put young people’s policy priorities first. This is an oft-repeated plea, but with more Millennials now on the campaign trail and in Congress, we may be reaching the inflection point when it actually becomes reality. (The New York Times)
    • NH: All roads lead to Rome. And for a liberal NYT columnist, all discussions of generational injustice lead to more arguments for why Trump and GOP legislators should be thrown out of Washington. Still, Leonhardt states his case well and reprises the generational impact of declining business dynamism in a novel fashion (see: "The Next Big Thing: Declining Business Dynamism: A Visual Guide"). He also offers two up-to-date charts on income and wealth trends by age bracket that I show below. (See also: "The Next Big Thing: The Graying of Wealth.")
    • While Leonhardt does not deny that there is a zero-sum trade-off in public resources available to invest in the Millennials' future, he denies that this will necessarily result in a "generational war" between Millennials and Boomers. I think he is generally correct in this assessment. Boomers don't mind ceding power and resources to the rising generation. What they're looking for is youthful leadership they can trust.
    • He cites the noteworthy example of Pete Buttigieg, a gay 37-year-old veteran who is also the two-term mayor of South Bend, Indiana. A 1982-born Millennial, he is a rising star in the Democratic Party. Before his first election, Buttigieg asked South Bend voters whether his young age worried them and he reported that Boomers were the least likely to say it was a problem. Oh, and Buttigieg is on the verge of declaring his candidacy for the 2020 presidential election. Of course he's a long shot. But if elected, he would be the youngest U.S. president in history (and to be sure the first gay president).

Trendspotting: Are Finances Keeping Millennials from Marrying? - trendchart4

Trendspotting: Are Finances Keeping Millennials from Marrying? - trendchart5

  • According to a new survey, Millennials are open to buying motorcycles—but primarily for practical reasons, namely “ease of transportation.” Though Harley-Davidson is already trying to recruit young riders, it faces the daunting task of capturing a problematic customer: not the rebel in love with the open road, but the nerd who just wants to get to work on time. (CNBC)
    • NH: We've covered HOG's generational challenges many times. (See: "Trendspotting: 11/5/18" and "Trendspotting: 7/21/17.") The CNBC story includes a great 4 minute video with a thumbnail history of the Harley story. One single fact that best illuminates Harley's competitive global position: In FY 2017, Harley-Davidson sold 242,000 motorcycles worldwide, down from the year before. Honda sold 17.7 million motorcycles worldwide, up from the year before.
  • About 93% of all new student loan dollars proffered to undergraduates this academic year were co-signed by a parent or other adults, up from 74% a decade ago. Soaring tuition costs and closer parent-child bonds, combined with tighter loan limits enacted post-2008, mean that Boomers are increasingly stuck paying for college well into their golden years. (The Wall Street Journal)
    • NH: Some Boomers went back to school themselves late in their career. Mostly, though, Boomers co-signed their kids' loans and ended up on the hook for them. Some 40,000 seniors are getting their Social Security checks or tax refunds garnished to pay back these debts. Here's one more burden that many Boomers are bearing for their kids. (See: "Trendspotting: 1/14/19.")

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  • Now that we’ve reached the end of the alphabet, WSJ asks (somewhat) facetiously, how will we come up with new generational monikers? If one thing’s for sure, it’s that generational naming is an art, not a science, and by the time there’s a new generation to be named, a “new unforeseen name may grab hold of the public’s attention.” (The Wall Street Journal)
    • NH: Yes, yours truly gets discussed in this story. But honesty, naming the next generation is nothing I will ever lose sleep over.

                                    DID YOU KNOW?

                                    Restaurants Turn to Big Tech for Big Profits. The U.S. restaurant industry is struggling in the face of changing consumer tastes: Nearly 80% of meals are eaten at home, a share that has risen over the past decade. To reverse the tide, chains are betting big on delivery. Many are leaning on one or more fast-growing delivery startups: In late 2017, McDonald’s partnered with UberEats to offer its new “McDelivery” service. But this business model comes at a cost. Delivery services can be pricey: DoorDash, for instance, commands a 20% commission fee on top of delivery and service fees. Restaurant brands have made it clear that this is not an optimal arrangement: Darden Restaurants CEO Gene Lee is on record as saying, “We’re not happy with the economics.” But restaurants often feel that there is no better alternative. Yes, they could always set up their own in-house delivery services. But this decision comes with huge upfront costs and sacrifices the logistical know-how of dedicated delivery startups.