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As usual, there's a few chart crimes in here. Chart 1 shows CPI and inflation adjusted wages on the same graph? Why? Inflation adjusted wages already take into

As usual, there's a few chart crimes in here. Chart 1 shows CPI and inflation adjusted wages on the same graph? Why? Inflation adjusted wages already take into account CPI. There's no sensible reason to plot these two on the same graph. The caption is "wages are up 80% but that didn't keep up with living costs" - you cannot draw that inference from this graph. This graph actually shows that in fact wages grew faster than inflation. Housing is another red herring, of course, because the average new American home is 2x bigger now than it was in the 70s - and the average American family is like 10% smaller. Broadly, 1 square foot of the 'average' American home costs exactly the same as it used to in the 1970s. [1] So yes, housing is more expensive in big cities but that's because of zoning as Mr. Andreessen will tell you. Outside big cities it's still zoning, which requires minimum setback, garages, square footage, etc. In fact if you look by cohort, inflation-adjusted, millennials are doing roughly as well as other generations did at their age. [2] Their flagship claim that folks have 86% less purchasing power now holds zero water. The poverty rate remains basically unchanged since the 70s. [3] You'd think there'd be a lot more people in poverty if they only had 1/10th the buying power no?! Some things are more expensive (college, healthcare, 1 sqft of house in a big city, new houses outside of town) and yes, productivity growth far outpaced wage growth - but wage growth kept pace with inflation. That means folks are just the same off, instead of the better off they could be. [4] [edit] If you really slice it by decile, the bottom 10% of millennials is much worse off (like 15%) - that's what it looks like when you massacre the social safety net. But millennials as a whole are just as well off as previous generations. [1] https://fee.org/articles/new-homes-today-have-twice-the-square-feet-per-person-as-in-1973/ https://fee.org/articles/new-homes-today-have-twice-the-squa... [2] https://ofdollarsanddata.com/no-millennials-arent-poorer-than-previous-generations/ https://ofdollarsanddata.com/no-millennials-arent-poorer-tha... [3] https://poverty.ucdavis.edu/faq/what-current-poverty-rate-united-states https://poverty.ucdavis.edu/faq/what-current-poverty-rate-un... [4] https://www.cnbc.com/2022/07/19/heres-how-labor-dynamism-affects-wage-growth-in-america.html https://www.cnbc.com/2022/07/19/heres-how-labor-dynamism-aff...

NovemberWhiskey 4y ago
>As usual, there's a few chart crimes in here. Chart 1 shows CPI and inflation adjusted wages on the same graph? Why? Inflation adjusted wages already take into account CPI. There's no sensible reason to plot these two on the same graph. That's absolutely right - it's a gibberish chart.
wbsss4412 4y ago
> Housing is another red herring, of course, because the average new American home is 2x bigger now than it was in the 70s. Roughly speaking 1 square foot of the average home costs exactly the same as it used to in the 1970s. [1] And the average family has become smaller. So yes, housing is more expensive in big cities but that's because of zoning as Mr. Andreessen will tell you. Just because houses have gotten bigger and families have gotten smaller, doesn’t mean you can buy an average 1970s house in major cities for the same inflation adjusted price. A lot of those old homes are either gone, extremely expensive, or situated in different metro areas than younger generations live in today.
- arcticbull 4y ago
  I have long advocated for Japanese-style federal zoning rules which would stop local municipalities from playing these games. I agree that housing is more expensive, but of course, housing is priced into inflation numbers - and wages have kept pace. Housing is a major driver of inflation. Part of the discrepancy here - and housing needs its own entire article - is how low interest rates factor into affordability. In the 80's, a 30-year fixed cost 18%. Last year it was 2.5%. On a monthly basis (which is how many calculate affordability) a $166K loan at 18% APR is $2500/mth. A $635K loan at 2.5% APR is $2500/mth. These houses are equally affordable on a monthly basis. Even though one home is $200K and the other is $800K. The only delta is the down payment.
  - jfim 4y ago
    Isn't the down payment delta pretty significant? Having to save 160k instead of 40k for a 20% down payment significantly delays the point at which a millennial household could start accruing home equity, feel confident about starting a family, etc.
    - ceejayoz 4y ago
      First-time homebuyers can get a FHA loan, which allow a 3% downpayment.
nerdponx 4y ago
> If you really slice it quintile, the bottom quintile of millenials is much worse off - that's what it looks like when you massacre the social safety net. But millenials as a whole are just as well off as previous generations. This I think warrants more than a footnote. A return to extreme class stratification is really quite bad, not just for those individuals affected but for society overall.
- arcticbull 4y ago
  I completely agree. That's also why I think it's important to paint a picture that's as accurate and faithful as possible.
thewebcount 4y ago
> Housing is another red herring, of course, because the average new American home is 2x bigger now than it was in the 70s My spouse and I ran into this when we were looking for our current home 5 years ago in Los Angeles. Even though we're older, it's just the 2 of us, so we didn't need something huge. It was really hard to find a reasonably-sized house for 2 people (plus a little room to have a guest stay over). It was really hard to find something because people who want huge houses kept buying small ones for more than asking price, then tearing them down and building a much bigger house on the same lot. The one we did eventually buy had even been enlarged sometime between the 50s when it was built and today.
folkrav 4y ago
There's literally nothing more recent than something built in the early 70s without going 1h30 outside the city that I can currently afford, and we're a two-income household with a single child. My parents could afford their - much bigger than I'll ever own - house on a single income (in the same ballpark as my current individual salary, adjusted for inflation) in their early 20s, 30min from downtown. My current freaking rent for a 1200sqft flat is higher than the mortgage they paid on the 2200ft house they bought in the mid-90s after selling the first one. The latest inflation, especially on food and transportation, has been eating in my savings/investing budget so less opportunites to make that money work for me. I guess the numbers you're pointing at do seem to point towards that I'm supposedly faced with provided with opportunities as they were, but I can't help but feel like I'm getting shafted somewhere along the way cause I'm pretty damn far from feeling like it does. Maybe my timing is just horrible, I don't know - I did get out of school right after 2008, and wasn't financially ready to buy a home before mid-2020... But I just cannot subjectively recognize my situation in those numbers.

NovemberWhiskey 4y ago

>As usual, there's a few chart crimes in here. Chart 1 shows CPI and inflation adjusted wages on the same graph? Why? Inflation adjusted wages already take into account CPI. There's no sensible reason to plot these two on the same graph. That's absolutely right - it's a gibberish chart.

wbsss4412 4y ago

> Housing is another red herring, of course, because the average new American home is 2x bigger now than it was in the 70s. Roughly speaking 1 square foot of the average home costs exactly the same as it used to in the 1970s. [1] And the average family has become smaller. So yes, housing is more expensive in big cities but that's because of zoning as Mr. Andreessen will tell you. Just because houses have gotten bigger and families have gotten smaller, doesn’t mean you can buy an average 1970s house in major cities for the same inflation adjusted price. A lot of those old homes are either gone, extremely expensive, or situated in different metro areas than younger generations live in today.

arcticbull 4y ago
I have long advocated for Japanese-style federal zoning rules which would stop local municipalities from playing these games. I agree that housing is more expensive, but of course, housing is priced into inflation numbers - and wages have kept pace. Housing is a major driver of inflation. Part of the discrepancy here - and housing needs its own entire article - is how low interest rates factor into affordability. In the 80's, a 30-year fixed cost 18%. Last year it was 2.5%. On a monthly basis (which is how many calculate affordability) a $166K loan at 18% APR is $2500/mth. A $635K loan at 2.5% APR is $2500/mth. These houses are equally affordable on a monthly basis. Even though one home is $200K and the other is $800K. The only delta is the down payment.
- jfim 4y ago
  Isn't the down payment delta pretty significant? Having to save 160k instead of 40k for a 20% down payment significantly delays the point at which a millennial household could start accruing home equity, feel confident about starting a family, etc.
  - ceejayoz 4y ago
    First-time homebuyers can get a FHA loan, which allow a 3% downpayment.

nerdponx 4y ago

> If you really slice it quintile, the bottom quintile of millenials is much worse off - that's what it looks like when you massacre the social safety net. But millenials as a whole are just as well off as previous generations. This I think warrants more than a footnote. A return to extreme class stratification is really quite bad, not just for those individuals affected but for society overall.

arcticbull 4y ago
I completely agree. That's also why I think it's important to paint a picture that's as accurate and faithful as possible.

thewebcount 4y ago

> Housing is another red herring, of course, because the average new American home is 2x bigger now than it was in the 70s My spouse and I ran into this when we were looking for our current home 5 years ago in Los Angeles. Even though we're older, it's just the 2 of us, so we didn't need something huge. It was really hard to find a reasonably-sized house for 2 people (plus a little room to have a guest stay over). It was really hard to find something because people who want huge houses kept buying small ones for more than asking price, then tearing them down and building a much bigger house on the same lot. The one we did eventually buy had even been enlarged sometime between the 50s when it was built and today.

folkrav 4y ago

There's literally nothing more recent than something built in the early 70s without going 1h30 outside the city that I can currently afford, and we're a two-income household with a single child. My parents could afford their - much bigger than I'll ever own - house on a single income (in the same ballpark as my current individual salary, adjusted for inflation) in their early 20s, 30min from downtown. My current freaking rent for a 1200sqft flat is higher than the mortgage they paid on the 2200ft house they bought in the mid-90s after selling the first one. The latest inflation, especially on food and transportation, has been eating in my savings/investing budget so less opportunites to make that money work for me. I guess the numbers you're pointing at do seem to point towards that I'm supposedly faced with provided with opportunities as they were, but I can't help but feel like I'm getting shafted somewhere along the way cause I'm pretty damn far from feeling like it does. Maybe my timing is just horrible, I don't know - I did get out of school right after 2008, and wasn't financially ready to buy a home before mid-2020... But I just cannot subjectively recognize my situation in those numbers.