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Home Publications Blogs Beat the Press If Millennials Do Worse Than Their Parents, It Will Be Because Bill Gates' Kids Have All the Money

If Millennials Do Worse Than Their Parents, It Will Be Because Bill Gates' Kids Have All the Money

Saturday, 01 October 2011 05:43

The Washington Post had a column by a millennial columnist complaining about the lack of opportunity. It is striking that the column never once mentioned income inequality.

There is no doubt that millennials will on average be far wealthier than their parents. Output per hour has roughly doubled over the last three decades, meaning that the real wage could be almost twice as high today as it was in 1980. Insofar as the typical millennial is not seeing the benefits of this productivity growth it is due to the fact that so much income has been redistributed upwards, not the result of any generational dynamics.

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written by cemmcs, October 01, 2011 8:20
Jetro, the government fosters income inequality, i.e. the upwards redistribution of income.
Income wealth
written by NoMan, October 01, 2011 8:33
The point made by Warren Buffet is pretty much spot on. Several forms of taxation are regressive. Payroll taxes on both the individual and the corporation are regressive. Taxes on certain forms of income but not on others is also regressive. What that means is that middle to high-middle class, (small business owners, in other words), pay an extraordinary amount of taxes relative to the incredibly rich, (top 1%).

Likewise, tax loopholes encourage large firms to shift jobs overseas as they can report losses domestically and receive subsidies, (err.. "tax expenditures") and and gains overseas and avoid paying taxes. The best plan might be to drop corporate taxes altogether and institute a VATS tax instead to make up the losses, as corporate taxes are minimal anyway due to all the cheating and this would at least encourage a shift to domestic production and upwards growth on the production market.
written by diesel, October 01, 2011 9:20
Jethro, there seems to be some disagreement with your interpretation of the source of job creation, as this from the Bureau of Labor Statistics shows, "Historically, from September 1992 through March 2006, firms with 500 or more employees have accounted for, on average, 34.6 percent of quarterly net employment growth. These data are from Business Employment Dynamics."

Other sources say similar things. Also, I understood (but may be mistaken) that numbers are skewed today because franchise operators, such as fast food chains and carpet cleaners, are classified as "entrepreneurs" when they are clearly a far cry from being such in any meaningful sense of the word. And also, it has been the tendency of larger firms to sell or spin off their divisions in order to avoid pension and health care costs and instead sub-contract their services. So, taken all in all, the data may not be as cut and dried as you make it appear.
If Millennials Do Worse Than Their Parents...
written by LSTB, October 01, 2011 10:17
...it will be because their government is a predatory lender.

It doesn't help that millenials are encouraged to double-down on overpriced degrees and finance them by borrowing excessive amounts of student debt from the Department of Education.

The Post's columnist probably doesn't realize that the baby-boomer summer-of-love protestors she writes of didn't have tens of thousands of dollars in nondischargeable debt.

-[a rel="nofollow" href="http://wp.me/pVpv4-1a1"]LSTB[/a]
written by jethro, October 01, 2011 11:08
This also from the BDS - I guess it just depends on what the agenda is.... I also don't consider 500 employee firm to be large and only then it is 35% ??????

The new study, The Importance of Startups in Job Creation and Job Destruction, bases its findings on the Business Dynamics Statistics, a U.S. government dataset compiled by the U.S. Census Bureau. The BDS series tracks the annual number of new businesses (startups and new locations) from 1977 to 2005, and defines startups as firms younger than one year old.

The study reveals that, both on average and for all but seven years between 1977 and 2005, existing firms are net job destroyers, losing 1 million jobs net combined per year. By contrast, in their first year, new firms add an average of 3 million jobs.

written by Ethan, October 01, 2011 2:20

Your link doesn't make clear whether "new locations" -- presumably opened by existing firms -- are included in or excluded from those adding the 3 million jobs per year. My guess is that existing company expansion is a net job creater.

Additionally, since a start-up, by definition, can't fire people it hasn't yet hired, and since many start-ups fail in their 2nd or 3rd year but the jobs they then destroy are considered destroyed by "existing firms" the study's presentation of the data gives a false impression that it is the large, long existing, major business which destroy jobs. Again my guess is that many of the destroyed jobs only existed for a year or two.

Think about it this way. AT&T started out with a few hundred employees. Today it has a few hundred thousand employees. It can't have been a net destroyer of jobs every year -- or even very many years -- of its existence .
written by bmz, October 01, 2011 3:19
Healthcare has been the primary mechanism for redistributing income and wealth upwards. But for increasing health care costs, over the last three decades US real wage increases would have more than doubled. US healthcare costs are twice, or more, of that of virtually every other industrialized countries; and consistently, the incomes of healthcare providers in the US are twice theirs. Hence, the single most important way that we can reverse the upward redistribution of income is to adopt a fully socialized healthcare system (similar to the Veterans Administration).
written by jethro, October 01, 2011 6:23
AT&T has grown their payroll by acquisition not by net new job growth. That's why I referenced the study (that was done with a methodology and is referenced) instead of just offering my opinion.

Healthcare - no mention that the USA is currently the fattest nation in history. 1/3 obese and another 1/3 overweight. Diabetes is at epidemic proportions with 40 million Americans. #1 cause is a sedentary lifestyle (overweight).
So nationalize away, people will not be healthier unless they are motivated to do so...
written by Jay, October 01, 2011 11:25
Right now, young people are just trying to get income period. I feel Millennials are losing a lot of income due to underemployment or unemployment.

Wages have been flat or decreasing. No pensions for most. Benefit reductions. Unions are rare. Education is expensive. Bubble bursts. No job training.

It seemed like in the past people with a strong work ethic could get a job and figure out how to do it. Now, the emphasis is placed on only hiring experienced people with a limited skill set or expensive certifications.

Although, I think it is short-sighted to say the parents had it easier. People had to deal with more discrimination, higher taxes, getting drafted into wars, and declines in manufacturing. I have seen a lot of people get laid off from the only thing they have known for years at the end of their careers.

But Dean is right. It's not productive to pit generations against each other. All of us have been effected by policies designed to redistribute wealth to top with economic pundits and politicians alleging it will trickle down through the free market.

I feel the young have the benefit of not necessarily being a victim of a paradigm change but it still doesn't make getting a job any easier.

written by Joe, October 02, 2011 7:56
Bill Gate's dad had a radio interview a few years ago. He discussed the family money issue and indicated that while the Gates kids will be comfortable, they won't be very rich by today's standards; most of Bill and Melinda Gates money will go into their foundation when they pass.
Okay, how do you count this
written by BH in MA, October 02, 2011 9:39
I'm being laid off along with 50% of my department. My boss (also being laid off) is forming a company and intends to hire most of us. We will be working for our old employer (at least) doing the exact same work.

So how does this work? The amount of work hasn't changed and the number of workers hasn't changed. Will my new job be counted as having been "created" by my boss' new company?
written by jethro, October 02, 2011 10:10
Contrary to Jay's comments, BH's situation is the free market at work. Large Company wants to outsource function A and let's go 10 people. Those 10 people (in a free market that does not over regulate and encourages new business) form a new company and small company makes performs function but makes a profit. Large company still makes $1B profit so nothing changes there. Small with 10 employees has owner(s) that doesn't just make a salary (like at Large company) but creates wealth.

Jay - if I am missing something, or if you have another way (besides some government program to redistribute $) would love to hear it.....

To answer your question BH, you need to read the details of the study I referenced, but in my opinion there was no NET new job growth as 10 people lost at Large Co. and 10 added at Small Co., but the point is now Small Co. grows and provides services for other new Co.s and you have net new jobs ?
[b]If the Bosses Get all the Money...[/b]
written by greg, October 02, 2011 2:20
If the bosses get all the money, there's less left over to pay the workers. Lower wages, higher unemployment. See:[a rel="nofollow" href="http://anamecon.blogspot.com/2011/09/unemployment-average-wage-and.html"]http://anamecon.blogspot.com/2011/09/unemployment-average-wage-and.html[/a href]

Unfortunately, upward redistribution by the government is part of the problem.
written by jethro, October 02, 2011 3:05
Three votes down for my comment !! Would love to actually meet those 3 voters !!

Wake up !! This is my very point. Large corporations do not share the wealth, and a large bureaucratic over regulating government only supports large companies - because they (large Corps) can afford to handle the regulations.
written by joe, October 02, 2011 8:08
you got voted down because you created a straw man and argued against it. The blog post was merely bringing attention to the fact the article never mentioned income inequality and was inaccurate.

You made it about govt trying to police inequality when that was not even mentioned.

Also, SarbOx and FrankDodd are not road blocks to entrepreneurs. Sarbox applies to large corporations traded publicly. Who has been prosecuted under SarbOx? Can't think of anyone but if you have a example of this law being enforced would love to see it. FrankDodd is intended to protect shareholders so that investment banks are run for the benefit of shareholders rather than senior management. Again, hard to see how that is a road block to job creation.
written by liberal, October 02, 2011 9:11
jethro wrote,
What is striking is the hole left in your comment that allows those that "just don't get it" to believe that income inequality is another issue that government needs to fix.

What is striking is that you apparently aren't aware of the concept of "economic rent," and the fact that most large fortunes consist primary of unearned rents.
The premise is wrong: Bill Gates like Warren Buffett is giving it all away
written by Seattle Guy, October 03, 2011 1:20
Nice post, but the comparison is wrong. Lots of super-rich want to pass on great wealth to their kids, but Bill Gates, like his buddy Warren Buffett, is not among them. Like Warren, he believes that every generation should prove itself, so he has said that he'll give away at least 95% of his wealth before he dies.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.