Monday, April 4, 2011

"Echo Boomers Are DOOMED!"

Popular Media Mythology

I would expect to see articles like this one become more ubiquitous about Echo Boomers. Luckily, the article is a year old, but other media will paint similar stories. Let's focus on why these articles are popular in the first place before addressing some of the inaccuracies.

Bad news sells. Bad news stimulates fear, and for whatever reason, humans seem to return to fear time and time again. Now, I won't go as far as writing that fear stimulates dopamine (though it might depending on what neurologists find), but I would adduce - based on the success of fearful media - that some humans are addicted to fear (The Culture of Fear cover this well). Make no mistake, I am not blaming media here: at any point in time, humans can shut off media sources if they dislike the fear that's being sold.

I write this blog to convey Millennial financial data and analyze some things in an economic manner, but without the fear. For instance, we may not have a housing recovery since Echo Boomers aren't prepared to buy homes, but that doesn't mean that we, as a country, face steep financial hurdles. If housing doesn't recover, other areas in the economy will do better. For instance, Echo Boomers tend to have student loans encumbering them from buying a home, but they are still stimulating the economy by going to school. A home is not as valued as higher education to Echo Boomers.

My main point here is that you might read some bad news on this blog from time to time, but it's nothing to be afraid of - it indicates that our economy is changing, and people will mutate accordingly.

By contrast, the writer at USA Today states:

Now, stagnant wages, job insecurity, the decline in employer-sponsored health insurance and retirement benefits, the rapid increase in basic expenses, soaring debt and minimal savings have jeopardized the economic security of the entire generation, according to a recent report by Demos, a public policy research and advocacy think tank.
It's official Echo Boomers: we're doomed! However, the article fails to portray reality in a correct manner. During the recession, when this article was written, some companies were cutting back on retirement matches, as an example, as some Echo Boomers told me they lost half or more of their matches. But some Echo Boomers said that their employers raised their matches! Not quite the dismal picture the article above paints. The same holds true for the other claims - many Echo Boomers lost jobs or had their salaries cut, but some Echo Boomers picked up other jobs, started their own jobs, or saw an increase in their pay. No one can say with absolute certainty that everyone is worse off after this recession.

Other problems with the article:
This generation is the least likely of any to be covered by health insurance. Just 61% say they were covered by some form of a health plan, the Pew study said.
This sounds like a disaster until you realize that young people experience very few health problems.
Millennials are graduating from college with an average of $23,200 in student debt, according to the most recent data from the Project on Student Debt. That is a 24% increase from 2004.
We see this all the time in media, but be careful about the deceit of average.
"And many of them don't manage money very well."
The writer fails to mention a brief fact about humanity: we tend to learn from our mistakes, and young people make a lot of mistakes.

The economy is changing, and Echo Boomers will help usher in that change. Yes, that may mean less housing demand; that may mean more student loan debt; that may even mean a generation who would rather spend time with each other than work their life away. But nonetheless, the economy will adapt to these changes, so there's very little reason to be "afraid," unless you are betting on a particular outcome.