The Boomer Supremacy Summary

Hi all,

For those who didn't get a chance to read the article, I wrote a summary:

The article offers unique insight into the cultural and economic paradigms between two rival generations: Baby Boomers and Gen Y’s. From fiscal settings, government policy and legislation to social attitudes and job security, Gen Y has certainly copped the brunt of it (not to mention the patronizing and pull-your-socks-up accusations from government and media).

The premise of the article is this: young people are suffering and there isn’t a whole lot the government is doing about it.

Symbolism of lockout laws.
The NSW lockout laws constitute a “final straw” for many young Australians who are marginalised from several aspects of society. Not only are they locked out from drinking past curfew, but they are locked out of the property market, affordable education, the welfare system and secure employment opportunities. As Cooke aptly put it, the lockout laws are “confirmation of who the country is run by, and who it is run for.”

Relative property affordability.
Various media outlets insist on the make-believe affordability of property for Gen Y’s. A young person is put on a pedestal for owning multiple properties (if they can do it, then you can too!). Only in the fine print of the article does it go on to say that the young investor inherited a large sum of money, or that “mum and dad went guarantor” which eliminated the need for a hefty deposit.

Young people are criticised for making money mistakes or for not buying property sooner: if they’d bought property three years ago, for half a million dollars, they’d have made $250,000 by now. Media claims that young people are too “spoilt” or “undisciplined” to own property, but what they fail to recognise is that everything is relative.

For baby boomers, things were a little easier. The postwar era encouraged a high rate of saving where consumer goods were expensive and property was relatively cheap.

In 1975, the average Sydney homebuyer took three years to save their deposit, and the average home cost four times the annual income. In 2015, the average Sydney homebuyer took nine years to save their deposit, and the average home cost 12 times the annual income. Also, baby boomers weren’t simultaneously paying off a $50,000 HECS/HELP debt.

Government policy favours boomers.
Who drives economic policy? Yep, you guessed it. Baby boomers have driven government policy for decades.

Nearly all benefits of the mining boom in government expenditure went to older voters. As Greg Jericho reported in the Guardian, from 2003–04 to 2011–12, households where the head was aged 55 to 64 saw their wealth rise $174,000 (19%). The households of 24- to 34-year-olds lost $10,400 in wealth – a 4% drop.

Cooke claims that Gen Y’s have been ripped off. Citing a candid opinion from Chris Richardson of Deloitte Access Economics who said: “There is a stunning generational unfairness in our [budget] settings and all those disengaged younger Australians need to wake up to the fact they’re being massively screwed by … what the baby boomers are leaving for them.”

In regards to negative gearing, Gen Y’s have missed out yet again. Ben Oquist of the Australia Institute explained in February, “the under 30s [are] taking approximately 1% of the benefit of [capital gains discount and negative gearing] tax breaks worth $7.7 billion a year”.

Access to job security.
There is a stark contrast between job security prospects for both generations. While young people tackle pseudo-employment or unpaid internships in return for “ongoing support and of course lunch!”, their older counterparts enjoyed stable employment “behind tariff walls”.

Young staff are condemned for having poor work ethic due to “expecting too much” or “spending too much time on social media”, yet organisations do little to manage employee expectations or support young people within a dynamic and competitive workplace.

 

I'd suggest there is generational inequity, there always has been and it will always exist. Over time populations and economics vary and one generation has opportunities and barriers that did not exist for the previous generation.

This could be good or bad, opportunities have changed. It's wrong to judge something that occurred in the past by todays morals, ethics, economics or expectations.

I once read an article complaining about the winging of first home buyers that didn't expect to have to sacrifice to get into the market. Apparently the first home buyers didn't want to work their way up the property ladder and were spending all their money on frivoulous luxuries. The article was dated in the late 1960s, it could have been written today.

I'm willing to bet that in 30 years you could write a similar article which would outline that the current generation has had opportunities stollen by the previous gen x,y,z.

 

Hi Belinda - some interesting points you've raised. I'm gen Y and I don't really think there's as much "generational inequality" as you might be suggesting. Or if there is, there are a lot of ways where the younger generations have considerable advantages as well, and in a way where I think it balances out in the end.

Certainly my personal view is that the newer generations are the "luckier" ones and increasingly so in many ways.

 

I have to agree with a lot of this article. No matter which way you cut it property prices as a mutiple of income are a lot larger than previous generations. Yes money is easier to get and at low rates but that also inceases risk.

Work is also harder to come by as the years have gone on the red tape has also increased. Just look at all the laws that have come about in the last 15 years or so.

However we as the younger generation are tapped into a lot more news and information which can aide us in our investing journey, providing you can decipher the noise from the quality stuff.

I beleive in general we as Gen Y have to take more perceived risks and get out of our comfort zones more so than previous generation to make a dollar.

 

I vote no. They will never be equal simply. The passage of times make access and type of resources to be different. It doesn't mean Gen Y is always at disadvantages or vice versa.

 

What about X?
The lost generation. You Y's have rich boomer parents and much better jobs.
But I'm still voting no.

 

I was told by a broker (not on here I hasten to add) that if the parents of young people weren't prepared to go guarantor then they only have themselves to blame and just have to put up with renting. Which I thought was an interesting approach.

Generational inequity is something which does exist - but how it is felt is very dependent on where you are. And what industry you work in.

There's a big problem with the casulatisation of the workforce which does have a knock on effect on housing. If you have zero job security, it's much harder to get a mortgage. If you work in an industry where it has been decided that you can work for free it reinforces the existing class structure - e.g. architecture and media, unpaid internships are the norm.

 

I hear these discussions all the time. I think it's just natural that baby boomers will hold more wealth and have more benefits than the younger generations because they've been the ones working for the past 40+ years.

However, I think gender also comes into play. For example Gen Y females have it vastly better than their baby boomer female compatriots now that there is a lot of focus on promoting equal pay and opportunity for women. For example SA police are now introducing a 50/50 gender intake and many companies/Government Departments are now actively trying to increase the amount of female managers and board members, although it is still a long way from 50/50- but they are trying to make it 50/50 e.g. Government. Personally I find they are taking affirmative action a bit far. As for males without a special skill there is almost 0% chance of getting an office job. These sorts of jobs almost exclusively go to women.

As for job security it was much better for baby boomers. I often hear 50+ year olds complaining of age discrimination. I'm not disputing that it doesn't exist, but I think a lot of it is that they just can't compete in the modern environment unless they are highly skilled (which most of the population isn't). For the Boomers it was a lot easier. They didn't have the same level of competitiveness around entry level jobs. In comparison for a Gen Y to get a job they had to finish year 12 with a high score, go to university and work a part-time job on the side. They then had to get good marks at university and compete against hundreds of other Gen Y for a graduate job where they had to work for several years on low pay. There's also a lot more immigration now and 457 visas etc., which also adds to the employment pressure. Currently there are close to 2 million Australians in the labour force who are either unemployed or underemployed!

I do like living in this time. I can't imagine life without a lot of the technology we have today, such as computers, internet etc. At the same time I often think life would've been a lot simpler back in the day if I was born 30-40 years ago- I'm a Gen Y male.

 

Belinda - welcome to the forum.

This topic isnt anything new, and Im pretty sure that there are many pages of back and fourth on the subject.

For me, I sit on the border of GenX and GenY (Millenials).
I cant really comment on previous generations - as I didnt live through it. However, ask any of them and they all say "it wasnt easy for us either". Recieving a guarantee from the folks, an inheritance or some other kind of 'leg up' would be the rareity rather than the norm I would imagine.

Personally I think we have far more opportunity than our folks did. Finance in easier to come by than ever before - and its cheaper. Everything is online and instant. Its fairly easy to operate internationally - without ever even meeting half (or more) of the people you work with.

Job security is an interesting thing. A lot of our generation 'want' it. However, place no value on it. When comparing my collegues/friends of similar age, Ive had reasonably stable employment. Only 4companies in 13years. Others change jobs more often than I change my underwear. In honesty I think job security is something which the BB want and value, and have trained us in the same way. But really - we dont care. We will jump as soon as a new opportunity presents itself.

Are things cheaper? More expensive? Same? who knows. Analyse it till the cows come home. It is what it is. Take it - or dont.
You have just as much opportunity as previous generations, and maybe even more.

Blacky

 

Would like to see the pension/super system sorted out, there are so many ways it can be rorted. Super is a massive tax break and when you retire you can spend it all in one go and get the full pension not long after. The family home should somehow be in the asset test or bring back death duties.

As for not be able to drink until the wee hours of the morning, build a bridge and get over it. Trust me you'll be glad you did less drinking in later life rather than more.

If we all want to live in such a socialist society we'll have to start paying for it.

 

I think companies have created the environment for themselves because of the way they hire. Employers in many professions don't want to train new recruits, but then hire people with experience who aren't likely to stick around as they're waiting for something better. I've been stuck in my job for a while chasing something better, but I lack the experience to get something better (there isn't much opportunities to progress with my current workplace). Despite that I'll often get interviews and when I don't get the jobs the feedback is usually along the lines of "we found a candidate with more experience". <1 year later their job gets re-advertised because that ideal candidate moved on.

 

I'm annoyed that I'm Gen-X and missed the moon landing. *** Shakes fist at baby boomers ***

 

My view is that current generation never seen company as stable. They might want it, but they don't believe stability (as in working in one company for years) is realistic.
I view job security as ability to grow with the industry, I.e. to be in demand candidate than it is about being able to stay in a company for years.

 

Not lost
I personally think Gen X is a big contributor in making better workplace. Most of my wonderful bosses are Gen X

 

I voted no, I could equally make a case that Gen X were hard done by as many left school or Uni around the time of 10%+ unemployment in the early 90's during the 'Recession we had to have'.
Many people I went to Uni with took years to become established in their careers only to watch a new generation of job seekers pick and choose their employer based on 'work life balance' in the mid 2000s on starting salaries of $150,000 plus.

The current generation still have great opportunities and have access to a much improved and more generous Superannuation scheme which will go some way to ensuring that they are not left in poverty like many older retirees today especially women who have only ever worked part time.

At some point in the not too distant future there will also be probably the biggest transfer of wealth the country has ever seen as the younger generations will inherit enormous real estate wealth.

Yes the market is outrageously expensive in Sydney but it's never been cheap compared to the rest of the country.

If I feel sorry for any generation it is for whose who came previously suffering through 2 world wars.

 

Of course there's going to be some inequality, but I think it all averages out so that at the end of the day so there really isn't inequality. Some things are better now, some worse.

No matter what, if a young person nowadays wants to get ahead, and is willing to do what it takes, then the world is at their feet. Information has never been easier to get, and that equals dollars.

Back in the dark ages (when I was young) if you didn't have the right connections, or the right education, etc, things were harder.

Taking this to property investing, for instance, I came from a poor working class background. Bought my first property, got hit with 17.5% interest rates, and then was looking at ways to pay the house off, came upon a newspaper add for a Company , which inadvertently has lead to me purchasing well over 20 properties. Of course, I'm condensing this somewhat....but what I'm trying to say is that people like me didn't know how to buy more than one property, or any of the pitfalls. It was something that 'rich' people did, but stumbling across that small piece of information changed my life. These days, you've only got to open up a computer screen, and there's as much info as you are willing to take in.

As for drinking until the wee hours of the morning....well, that's never been my scene, but back when I was young you couldn't do it either...so build a bridge. Remember that alcohol is expensive, and so are homes....so if you really want to buy a place, you will need to reign in the spending, just like we did all those years ago. Which brings me to all the spending that many of the young do these days, then complain that they can't afford something. The one thing that I was taught, right from a young age was the value of money. You only have so much of it each week. Spend it wisely, save the rest, and suddenly things become more affordable.

 

True. But then they're the ones with the best longevity and good health into their eighties and beyond.

 

I disagree with the OP it is a mindset.

If everything was easy then everyone would be doing it. I know BB who don't own and will never own a house and I am a Gen Y who will be looking at purchasing another investment property later this year (sum of around 500-600k purchase price). A work mate of mine just bought his second house and he is 2 years older than me (still Gen Y). He (I assume from our conversations) and I (I know for sure) have not received any financial assistance either through direct funds or guarantor.

I paid 500k for a house before the age of 25 (well had a mortgage) but I saved my 20% deposit during my early 20s. Yes it took time and yes I was excited but also sad to see it disappear out of my bank account, however I went without a lot. During this time my friends were literally ******* it up against the wall (literally).

Of course the BB are going to have more wealth than us on average, guess what they have worked more than us! Even if I did nothing more with my properties I would (using history) 4M easy but am at the early stages of my cycle. Give it another 10 years and I would hope to have numerous other properties which would change the 4M figure to a much higher number.

Yes there are friends of mine who do not have a property and will probably also never buy a property, I don't look down on them as heck sometimes I feel they enjoy life more than me going to events and theme parks. However there is a thing called delayed gratification and I have seen it with my dad who started as a farmer's son with $50 in his wallet and retired in his early 50s with a large net worth.

 

There is a saying I have heard which I think my father told me, if you can afford to smoke you can afford to own a property.

The property is actually better for your health and better for your financial situation, same thing with going to the pub to drink. I do enjoy my drinks but I would be lucky to drink 1-2 beers and a bottle of wine a week. Most week it is nothing or maybe 1/2 a bottle of wine.

Priorities...

 

The value system held by each generation is different, I dare say. The quicker we stop comparing, the quicker we get to our goals.