I’ve already talked about how US Social Security (and likely other western public pensions) are currently paying out unsustainable benefits, leaving the younger generation with a not-yet-discussed financial burden. Another example of inter-generational inequality results from the higher education bubble (Wiki link in my Finance 101: Saving post). What’s now necessary for a decent job, or at least a job with relatively stable (not falling) wages, is a college degree. The cost of this has ticked along at higher than inflation for a while.
Anyway, Bloomberg has a good article this morning about the effect these college bills have had on Generation X relative to their parents’ generation. A prime example of why my dad might be right in saying this generation may be the first in the US which is poorer than the generation before.
The solution? Maybe greater public acceptance of online courses, which are frequently free. Take edX: same courses as those paying $10,000s in tuition, free online. OK, no PhD teaching assistant to help with coursework, but the material is the same. And you’ll likely remember just as much, and use the material just as much, as if you attended campus. The Economist wrote a good piece on how this may, indeed, be the future.
On intra-country economic inequality: the Fed’s Survey of Consumer Finances came out recently, so much analysis has been done on how (once again, it seems) the rich are getting richer and the not-rich are getting poorer. The New York Times has a good summary of the data. The bit about stock ownership is intriguing – those who have owned stocks since 2008 have made back every penny of their losses in the financial crisis, plus some interest (e.g. The S&P 500 is up 36% from Jan 1, 2008 as of yesterday). Those who didn’t own stocks, but lost their jobs in 2008? Well, their wages aren’t increasing very much, if they’ve found similar jobs…