Gen-Xers Waiting for Boomer CEOs to Retire. NewsWire

NEWSWIRE: 6/10/19

• About 7% of S&P 500 CEOs were younger than age 50 at the end of 2018, down from 16% at the end of 2009. Despite pushes for younger and more diverse CEOs, Gen Xers are relatively underrepresented among corporate executives, whose median age is 58. (The Wall Street Journal)
• NH: If you think that Gen-Xers must be ruling the corporate suite by now, well, you're wrong. Slightly more than half of all S&P500 CEOs are Boomers or Silent born in the 1930s, 1940s, or 1950s. And over the last decade, the average and median age of both CEOs and directors has risen about two years. The average CEO tenure, at the end of 2018, was 11 years--the highest tenure since 2002. Only 30 CEOs (6%) are under 50. And only 2 CEOs, Mark Zuckerberg (Facebook) and Conor Flynn (Kimco Realty) are under 40.
• More remarkably, the average age of a new CEO when hired has risen by 5 years over the last five years (2012 to 2017). Which means that the share of all new CEO hires born since 1961, just under half, has basically stood still during the current economic expansion.
• Is this just one more example of everyone forgetting Gen Xers exist? (See "Xers: The Overlooked Generation.")
• Simple demography has something to do with it. Boomers are a very large generation. And a rising share of Boomers at the affluent and educated end of the spectrum are healthier and living longer than previous generations of 60- and 70-somethings. Ray Kurzweil (age 71) expects he and his SV peers will live forever. I know that sucks, Xers, but just remember: After all those Boomers have downloaded their wetware into software, you guys will be able to just pull the plug.
• Boomer workaholism, a generational trait, also has something to do with it. Boomers are working longer and retiring later. And that goes double for Boomer professionals with college degrees. (See "Are Retiring Boomers Suppressing Wage Growth?") One more thing: Boomer males born in the late 1940s and early 1950s were more likely to get high SAT scores, earn four-year college degrees, and enter a profession than Xer males born in the early 1960s. (I once wrote a Washington Post op-ed about this.) So maybe fewer Xers are even in the running for CEO.
• Top leadership in business roughly tracks what we see in the military. While Xers dominate all upper officer ranks from Major and Colonel through Major General, Boomers still outnumber Xers in the very top posts. Most of today's four-stars (there are 42 of them) continue to be born before 1960. As for politics, here Gen X has been far slower than any earlier generation to become governor, enter Congress, or run for the presidency. (See "Gen X's Short-Lived Presidential Spotlight.") Maybe that's a bit more understandable. Most first-wave Gen-Xers came of age voting for Reagan and really haven't seen much purpose in government.
• Eventually, of course, Gen X will accede to all these top spots, even if its tenure there may be shorter than usual. When is that likely to happen? In business and in politics, generational turnover speeds up during and just after a crisis. In business, the average CEO age fell sharply in 2008 and 2009--when many of the remaining Silent CEOs were pushed out the door. So wait until the next recession. Ditto for politics. Wait until the next realigning election. Who knows? It may be coming right up.
• According to a recent Fed analysis, the richest 10% of households now represent 70% of all U.S. wealth, up from 60% in 1989. This increase has largely been driven by gains among the top 1%, who have benefited the most from the rising price of business equity and real estate. (MarketWatch)
• NH: Data geeks like me are really excited by this major new Fed project, called "Distributional Financial Accounts." For decades, economists and policymakers have argued over the level and distribution of U.S. household wealth without any good data. With the DFA, we can still argue--but at least we can start to agree on the numbers. At last, DFA integrates various data sources, including the Fed's own SCF (Survey of Current Finances) but also administrative tax, estate, pension, and benefit records into one single and comprehensive measure. What's more, numbers are consistent with national income (GDP) accounting; they go back to 1989, and they are updatable within weeks after the end of each quarter.
• This initial DFA series basically confirms the distributional trends suggested by the SCF and other data sources. Basically, since 1989, wealth inequality has risen. The share of wealth held by the top 10% of households has increased from 60 to 70% of all wealth. Nearly all--9 percentage points--of that increase went to the top 1% of households.
• Where did that extra 10 percentage points come from? Seven came from households in the 50-to-90% bracket, what you might call the "middle class." Their share declined from 36% to 29% of all wealth. The bottom half of all households also lost ground, from 4% to 1% of all wealth. Amazingly, over the last 30 years, this bottom half has experienced no increase at all in its nominal dollar net worth per household.
• The DFA shows that the rising value of real estate and business equity (both corporate and noncorporate) largely explains the shift to the top 1%. Growing pension wealth went mostly to the next 9% of households. As for recessions, these have temporarily equalized wealth by driving down the share of the top 1%. Economic recoveries along with rising stock market indexes have typically driven that share back up again.
• The Fed's interest in creating the DFA was no doubt kindled by the growing stature of the "World Inequality Database" (WID), developed with the pioneering methods of Thomas Piketty, Emmanuel Saez, and Gabriel Zucman. This Paris-Berkeley axis of left-leaning economists deserves credit for pioneering a perspective that dovetails nicely with growing populist passions around the world. While the DFA and the WID show the same trend over time for the United States, the WID shows a somewhat steeper rise in gains for the 1% due largely to its method of imputing fixed-income gains from lower interest rates.
• Big arguments remain over whether these inequality measures overstate or understate reality. Conservatives argue that the data show more assets owned by the wealthy in part because lower tax rates have induced households to declare more of their income from assets. They also suggest that the present-value of future Social Security and Medicare benefits are a vast source of wealth for the bottom 50% that goes uncounted. Progressives counter that less regulation and tax auditing actually mean that more--not less--wealth is today hidden from view. Zucman's doctoral dissertation, later published under the title The Hidden Wealth of Nations: The Scourge of Tax Havens, propelled this precocious Millennial to overnight fame.

• In the nationwide “Nuns and Nones” project, religion-free Millennials and nuns live together and learn from each other. While this pairing might seem unusual, the two groups have a lot in common: They’re community-oriented, drawn to structure, and concerned with social justice. (The New York Times)
  
• NH: This is a delightful and compelling story. Nuns are literally dying out in America. The last big generation of women to enter the Catholic Church's religious orders was the Silent. From 180,000 in 1965, there are only 50,000 nuns today--and their average age is nearly 80. For Millennials, most nuns are about as old as their grandmothers.
• The young "nones," it turns out, are less interested in the nuns' beliefs than in their rituals. They want to know how the nuns are able to translate their higher cause into a daily life that has habits, rhythm, and stability. Overwhelmed by life's choices, these young people are drawn to emulate the nuns' ethic of sacrifice. As for the vows of community, poverty, modesty, and celibacy, no problem. Many Millennials are already used to co-living with friends, "sharing" rather than owning possessions, and trying on "modest fashion." Oh, and celibacy? With a rising share of under-30s expressing no interest in sex, it seems they have that box checked as well. (See "Celibacy Hits Record Highs.")
• People often describe monastic life as utterly conventional. And of course it is--the word literally means "coming together." But this sort of conventionality is as revolutionary, in its own way, as the Boomers' counterculture was to their parents. Nuns and Nones is an intriguing concept. Once upon a time, back in the 3rd and 4th centuries AD, monasticism became one of Christianity's most striking innovations. From time to time, it continues to fascinate the rising generation.
• Singapore is struggling to increase the birth rate as pro-family government initiatives clash with anti-family realities like long work hours. The overall fertility rate is still falling with only one exception: ethnic Malays, the poorest of Singapore’s three main ethnic groups. (The Economist)
• NH: Singapore joins Hong Kong and Taiwan in defining the very bottom in total fertility rates (TFR) around the world. What do they have in common? They are all Confucian societies based on patrilocal marriage (wives leave their parents to serve the husband's family) and an ethic of filial piety (children are supposed to serve parents until the end of their lives). In the race to lowest TFR, the other Confucian societies are close runners up: South Korea, for example, is at 1.2; Japan is at 1.4, and China (PRC) is at 1.6.
• All of these nations actively promoted birth control back in the 1960s and 1970s. And, one by one, all have gradually reversed direction and are now actively subsidizing parents who have children. The PRC is the most recent to turn around. (See "China's One-Child Policy is Over But Chinese Fertility Rates Still Low.")
• All of this aggressive pronatalism has thus far generated disappointing results. Unlike the United States, where women are having fewer children because they feel they can't afford them, in East Asia young women are having fewer children because they don't want them. In the Confucian framework, having children reinforces a pattern of filial obligation that many young couples want to break away from. This may pose a tough challenge for government policymakers. Ethnic Malays in Singapore, who are poorer and overwhelmingly Muslim, are more easily persuadable.
• A new study finds that U.S.-based journalism has become measurably less objective since 2000. While the issue of journalistic integrity has risen into prominence in the wake of Donald Trump’s election, this study shows that “truth decay” has been decades in the making. (RAND Corporation)
• NH: I'm delighted that RAND has produced such in-depth substantive research demonstrating that the news media have become more subjective in recent decades. But in your gut, you already know that, right?
• Once again, as Boomers have gotten older, their youthful innovations have ended up triumphing throughout our culture. Young Boomers were the "New Journalism" crusaders back in the 1970s: They believed news is more authentic when it reflects the attitudes and emotions of the "engaged" observer. Xers followed suit. And Millennials have never seen or read anything else.
• One reason why subjectivity has won out is that people are less trusting of those who are supposed to know or be in charge. In the RAND study's description of the "older" style of journalism, it says that story writers used to prioritize the objective facts of the story (who, what, when, where, why) and they did so be quoting official sources. "The three newspapers’ reporting before 2000 used language that was more heavily event- and context-based; contained more references to time, official titles, positions, and institutions; and used more-descriptive, elaborative language to provide story details. In contrast, we found that post-2000 reporting engaged in more storytelling and more heavily emphasized interactions, personal perspective, and emotion."
• But of course, Boomers made it fashionable not to believe in official sources. The very possibility of objective knowledge ("logocentrism") is derided in Boomer-dominated post-modern academia. While this was supposed to foster more progressive attitudes, it is ultimately fueling populist frenzy. To paraphrase Lord Chesterton: When people stop believing in something, they'll believe in anything. For a wonderful, if zany book on this theme, see Kurt Andersen's Fantasyland: How America Went Haywire.
• Sign of the times: Charmin has created a giant new toilet paper roll for people who live alone. The Forever Roll, which is three times the size of a conventional roll but takes up half the storage space of a typical package of rolls, was made with Millennials and aging Boomers in mind. (Business Insider)
• NH: Brands that used to assume that the typical consumer is the head of four-person household are retooling around a new target: A very busy consumer who lives alone. These are consumers who find it annoying that they have to buy a full loaf of bread or head of lettuce or bunch of bananas (since part of it goes bad before it can be eaten). They don't have much time, so they don't want anything that requires preparation or repackaging into smaller containers. And they don't have much space, so they crave small appliances, small refrigerators, small tables.
• As for giant toilet paper rolls... really? The appeal here eludes me. But P&G has focused-grouped the concept and apparently it works.
• A recent piece explores the reasons why more Boomers are skipping downsizing and remaining in their homes longer. They’re putting off retirement, housing their adult kids, or just don’t feel the need: Fully 52%, in fact, say they’ll never move from their current home. (USA Today)
• NH: I've been writing about this for a while. Yes, some Boomers are selling their McMansions. (See "The Unfortunate Timing of the Boomer Homeselling Boom.") But most have no such plans. Many, indeed, find that their large homes are gaining new occupants--children and grandchildren--as they grow older. (See "Home Designers Gunning for 'Aging in Place' Boomers.")
• This article has it right. "A growing number of aging baby boomers are saying, 'No, thanks' to downsizing, choosing instead to remain in the same sprawling houses in which they raised kids and created lifelong memories. 'We’re just not seeing that much downsizing,' says Alexandra Lee, a housing data analyst at Trulia, a real estate research firm."
• The mandatory coursework for a Northeastern University computer science major includes one unconventional class: improv. The university’s goal is to “robot-proof” these STEM types and beef up their emotional intelligence, a terrifying prospect for left-brained Millennials like Caitlin Wang: “I don’t know what’ll happen, what I’ll say, or how people will react.” (The Wall Street Journal)
• NH: For a left-brained generation that has spent a lifetime studying to prepare for an endless gauntlet of standardized tests, emotional and situational awareness can be a surprisingly difficult challenge. (See also "Stanford Encourages Students to Get 'Touchy Feely.'")
• A new analysis examines the ways in which the profile of U.S. immigrants who arrived in the country within the last five years has changed. Recently arrived immigrants are increasingly likely to have a bachelor’s degree (or more), to be proficient in English, and to be from Asia. (Pew Research Center)
• NH: Since 2010, Asians have exceeded Hispanics as new immigrant arrivals to the United States. Hispanics are down over the last decade partly for short-term reasons (the depressed demand for manual labor, especially in construction, after the GFC) and partly for long-term reasons (sharply declining fertility in Latin America, which has shrunk the supply of new young adults). East and South Asia are meanwhile a growing source of immigrants. But these are more on the higher side of the skill and educational spectrum. China, in particular, has sent well over a million youth to study at American colleges over the last decade--though this "global education" boom has probably already peaked and is now fading (see "Why Has Global Higher Ed Lost Its Luster?").
• Extrapolating from these (admittedly preliminary) trends, the Census Bureau now projects that Asian immigrants living in the United States will outnumber Hispanic immigrants by the year 2055.
• Once upon a time, there was little debate over whether America should prioritize high-skill or low-skill immigrants. Nearly all experts believed that high-skill immigrants do most to boost economy-wide productivity--and that low-skill immigrants do most to pull down the wages of low-income workers. About the only group that favored low-skilled immigrants were certain (usually Republican-affiliated) corporations that relied heavily on cheap labor. Think Tyson Foods.
• In the last few years, though, we've seen a stunning realignment. The Trump administration has joined Canada, Australia, and many other high-income nations in favoring a rigorously "high-skill" bias in legal immigration preference. And many on the Democratic left, apparently abandoning their party's union supporters, are denouncing this "high-skill" bias as heartless and racist. That's a novel argument. Let's see how well it works for them at the voting booth.

• For once, a Millennial writer is here to praise the Boomers: Salon tech editor Keith Spencer believes they showed a humanism that his generation lacks. At its heart, however, his piece is less a paean to Boomer values and more a lament about the career anxiety and obsession with ROI that has so many young adults burning out. (Salon)
• NH: Salon pioneered the Millennial-bashing-Boomer essay. So this is a great turnabout. Maybe, just maybe, progressive Millennials have something to learn from those old hippies.
• "Baby Boomers were the last generation that was able to conceive of a world where capital didn’t govern all aspects of our lives. In-between Generation X found its rebellion in "slacker culture," rejecting the Reaganite yuppie work culture; Millennials went the other direction, all-in on the workplace, as we were told since we were young that this was the purpose and function of our existence. Hence, Millennials often spend our leisure time on activities that will have the ancillary effect of making us money in some way, or making us more marketable as employees, or getting us closer to that dream career, or helping us stave off poverty... This is how politics may die if we forget the lesson of the Boomers. A lack of love and an inability to perceive the world except in marketable terms will doom any left-progressive movement."
• I'd like to say more about this to Millennials, but (sigh!) you just had to be there. Peace, man.

DID YOU KNOW?

A Penny for Your Data. In February, California Gov. Gavin Newsom proposed a “data dividend” that would allow residents to get paid for providing access to their personal information. The idea that consumers should share in tech companies’ wealth is catching on—but according to a new survey, the public is in for a rude awakening about how much their data is worth. When U.S. adults were asked how much they’d charge a company for access to different data, the median price ranged from $50 (for items like full name, mailing address, and shopping history) to $1,000 (Social Security number, biometric data, and banking information). Data brokers, however, are paying considerably less: On the dark web, a Social Security number goes for $1 and a shopping history $20. Only passports fetch in the thousands. And while advertisers and businesses do give consumers discounts or services in exchange for their information, one ad tech exec says this value “more likely [equates to] cents and pennies.” (Morning Consult)