In A Way, You Gotta Feel Bad For Gen Z And Millennials

Life has just become downright expensive. No matter where you live, but particularly in relatively high cost of living cities and metropolitan areas. 

Even fast food is no longer a bargain (this includes most of the stocks!). Value menus appear to be shrinking, starting from higher price points or both. Prices have absolutely gone up. That’s objective fact. And they’ll likely go up more. 

In California, McDonald’s (MCD) and Chipotle Mexican Grill (CMG) have already vowed to increase prices in response to the law that goes into effect on April 1st increasing fast food workers’ minimum wage to $20 per hour. 

Say what you want about the merits of the mandate, it speaks to the two-pronged tug of war happening across society:

• Low-wage workers earning enough to be able to pay for your basic needs and relatively modest wants, such as a pizza or fast food meal. 
• People making decent or better money who still struggle to become homeowners and save for retirement because the cost of living on objective needs and tough-to-resist wants is out of control. 

In some ways, the struggle is the same, just at different levels. It’s all relative. 

Of course, the big difference is that people in the first group tend to have less choice. 

Folks in the second have the luxury of choice. It’s tough to feel bad for the person making at or around six figures and dropping $3,000 a month on an apartment with month-end cash left to spare. But this doesn’t mean the squeeze on relatively well-off people, particularly high-earning millennials and other young people, isn’t a big deal. It is. 

A Juice reader sent us a note that nicely summarizes the situation. 

We’re going to do something different with today’s reader feedback. We’ll play devil’s advocate with it, taking the other side or a different perspective throughout. Doesn’t mean we disagree with the reader. We just think it’s a worthwhile exercise. As always, please use the feedback link at the bottom of this email to share your thoughts with The Juice. 

It is not just Zen Z that do not own a home. Plenty of Millennials do not own a home. I am a baby boomer retired now and our focus once we graduated college was saving for a home. Today, the younger folks are much more about experiences than home ownership.

Can we blame them? If you’re staring down a high-five or even six-figure down payment followed by a $7,000 monthly payment on a 30-year mortgage at 7%, wouldn’t you also say, “screw it, let’s have some fun.” Because the cost-of-living impact of becoming a new homeowner today, especially in large or medium-size metros, is hardly something to run to.  

I have a millennial son who does not own a home living with his finance that enjoys expensive restaurants and drinks on a relatively low income. Unfortunately, he lives in California where housing costs are very high. His mother and I are able to help him with a home purchase, but they want the dream house rather than a starter home or condo.

Could your perception be skewed? Maybe based on your experience. In California, even condos and starter homes approach or pass a million bucks. Even with some help from Mom and Dad, there’s no escaping that outsized mortgage payment. 

This devil’s advocate argument of skewed perception can be applied to the fast food discussion. Lots of people, especially older people, scoff at paying $20/hour to work in fast food. But it’s still not enough to make ends meet in big cities. This argument is an outdated relic of completely different times. Twenty years ago, you could have lived super well on $3,200 a month (which makes the generous assumption of a 40-hour work week), even in San Francisco or LA. Them days are gone! 

The mindset is different for the younger generation than the baby boomers. Unfortunately, they will pay the price in retirement with little savings especially since home ownership is a primary source of savings (equity).

No doubt. The mindset is different. Big time. And this is where we’ll stop playing devil’s advocate and tie it all together with a nickel’s worth of free advice for young people coming up amid a housing and cost of living crisis. 

The Bottom Line: If you’re lucky enough to be making enough to pay high rent, drive a new car and still go out to eat at pricey restaurants and bars, you probably can — quickly and painlessly — find a couple to a few hundred bucks a month to sock away. 

The Juice thinks large numbers of Gen Zers and millennials who can, but don’t do this aren’t merely irresponsible experience seekers. We just don’t think it’s on their radar. Was saving money on the radar of a baby boomer smoking weed in Golden Gate Park in the 60s or 70s? Probably not. 

Our government spends a lot of money on stupid stuff. We need a concerted national effort to encourage young people to save a little bit of money for the future. And we’re not talking about restrictive and what they might see as complicated retirement accounts. A government campaign that doesn’t involve old and insane politicians. One that speaks young people’s language (maybe using some influencers) might go a long way to doing some good. To put the importance of not being left with nothing 30 or 40 years down the road on their radar, alongside a solid, silver platter solution.

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