Inflation is a hell of a drug

Words by Edward Wong
Art by Rebekah Rose

“When I was your age son, I had a job, a house, a car and a family. Son, what in the hell is bloody wrong with you?…”

For a generation that drifts from paycheck to paycheck, I’m sure this soul-crushing line has catalysed many a quarter-life crisis. So, do we drown our insecurities with caffeine? Do we swipe right vigorously and tell ourselves that ‘love’ is just a few emojis, filters and profile pics away? Do we settle for a career in professional bartending with a Bachelor of Science degree?

Millennials. We’re either too arrogant for our own good, too soft for the ‘real world’ or overqualified for that ‘stable’ entry level job. Yet the uncomfortable question lingers on, with its clutches ensnaring another disappointed parent as it silently quells whatever was left of the ‘Millennial Dream’. Maybe Tim Gurner was right and we’re to blame for indulging in $19 avocado toasts?

It doesn’t make sense. We have unprecedented access to a wealth of information, technological advancements and decreasing barriers to business where almost anyone with enough talent and grit could become an entrepreneur overnight. Did we millennials fuck up that badly? 

Sure grandad got his job without any qualifications and bought the house you visit every Christmas soon after. But hold up there grandad, and let me explain why I’m not as successful as you were….yet.

Grandad belongs to the Baby Boomer generation, born between 1945 and 1964. The world had, seemingly temporarily, defeated fascism and was focused on rebuilding a better and brighter future from the ashes. Government policies on health care, education, unemployment and tax benefits were imbued optimistically. Jobs were plentiful and many industries were desperate for work.

“Oh but grandson, back in my day I would save every penny of my hard labour,” grandad would then say.

Yes, it’s true that I definitely can improve my spending habits or actually commit to those budgeting apps on my phone. However, it’s a little discouraging when the average cost of a residential property was $64,000 AUD, where it now costs at least ten times more. In 1975, the median house price was just 5 times the average full-time earnings; today it’s a morbid 13 times.

To be free from ‘confirmation bias,’ I must mention some startling facts I came across during my research for this article. The Committee for the Economic Development of Australia reported that early millennials, born between 1981 and 1985, experienced household income growth of 27 per cent, whilst granddad and his mates aged 70 to 74 enjoyed growths of only 2 per cent higher than the national average. So if statistical data is telling us that we’re earning so much more than our forefathers, should we give those ‘back in my day’ lectures some serious thought?

Before the millennial readers amongst us go ballistic at this revelation, allow me to explain the economic concepts of ‘real wages’ and ‘wealth accumulation’.

I earn $100 an hour today waiting tables whilst granddad earned $10 an hour doing the same job, all things being equal. After that I go out on a dinner date with my girlfriend for some lovely Macca’s nuggets. It costs me $10 AUD for 24 nuggets. Granddad goes to Macca’s as well ‘back in his day…” with the girl who eventually became grandmother and it only costs him $0.50. Relatively it cost me 10% of my hourly wage to buy those nuggets whilst it only cost Granddad 5% of his hourly wage. Hurray for inflation. NAHT.
This example is used for illustrative purposes only and is not financial advice. I am by no means an expert in the economics of chicken nugget prices.

The ABS reports that households with people under 35 years of age were slightly worse off in wealth terms in 2015-16, than a decade earlier, with their net worth falling by around eight per cent. But, grandad and some of his mates aged 65 and over experienced increases closer to 40 per cent in real net worth. This is because houses were much more affordable when grandad was 24 and when complemented with a ‘savings mindset’ post WWII; you get the perfect recipe for wealth accumulation. The scarcity of land, increasing competition and over-stretched resources only exacerbates the bane of housing unaffordability for millennials whilst grandad is busy on the phone with his accountant figuring out how to ‘minimise’ his capital gain. It’s also important to consider the socio-economic perceptions of home ownership during the baby boomer generation, in contrast to today’s perception of home ownership as a speculative asset.
Whilst wages are increasing, real wages aren’t. Where home ownership was once affordable, millennials, are we doomed to rent and tolerate our housemates who ‘accidentally’ eat that lunch you’ve been saving?

In my naïve optimism, I believe that creativity and passion always finds its way regardless of any generation. The Millennial Dream still exists. We just have to filter away over information and, ironically, simplify our lives. Channel some of that ‘back in my day….’ advice. Or, we could just order UBER Eats because who cooks nowadays anyway?



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