Many on college campuses are protesting — but it’s all about political correctness and nothing about their uncertain financial future.
Millennials aren’t in revolt against baby boomers frisking them to fund entitlements, and it might be a ploy in biding their time.
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The government has shown little desire to reform social security and Medicare, or revise the tax system to lower the burden on millennials, Robert Samuelson noted. Baby boomers grew up during strong economic growth, have higher median household incomes than anyone else, yet refuse to shift the burden of retirement onto themselves. Yet, millennials have not united to force a change.
Samuelson identifies two factors that he thinks explains that trend. Millennials are optimistic and expect their economic woes to be temporary. With the passage of time, things will improve and they’ll find stability.
Then, when that happens, millennials will get the jobs — and benefits — that baby boomers now dominate.
Passing on the “youth in revolt” reputation of the baby boomers, millennials have chosen to bide their time.
“The massive departure of boomers from employment might also create a tight labor market. Jobs might be easier to find, and ‘real’ (inflation-adjusted) wages might rise as employers compete for scarce workers. Bargaining power would shift from firms to workers,” Samuelson wrote.
Some tax reform that lowered marginal rates for millennials could be appreciated, but structural reform would result in them getting less in benefits when they age after paying for their parents’ and grandparents’ benefits.
That model, however, is concerning. With fewer workers per beneficiary, entitlements will require lower benefits per recipient or higher levels of taxation to cover the change. Entitlement spending makes up a larger portion of spending than even military spending, and with more baby boomers reaching retirement, the growth in entitlement spending will continue.
That could benefit millennials by the time they reach retirement, but where the money will come from, and the less money available for economic investment and growth, will be a bigger problem in 20 years than it already is.
