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It’s Not Your Imagination
If you were born between the years of 1982 to 1997 give or take a year or two on either side depending which demographer you are speaking with, you are a millennial. Said in another way, if in 2017 you are turning 20 to 35, you are a millennial.
Millennials are known to be entitled, needing instant gratification, lacking grit, and each feeling like a special snowflake. I’m not going to go into causes, reality versus perception, or cry about gross overgeneralizations. Whenever a stereotype exists, there is some truth there. Certainly I would personally admit to a lot of these things.
At the end of this post, I’ve included an article from my favorite blog Wait But Why1 and a 15-minute video by Simon Sinek2 discussing in more detail how they think we got to be this way.
Perhaps what is not as well known but certainly more true is that millennials are doing worse than their parents generation, and each generation before that since WWI. Even the Great Depression babies recovered and did extremely well compared to their parents – and were subsequently surpassed by their Baby Boomer children (who are the parents of the millennials).
We are more in debt, own fewer assets, and make less money than our parent’s generation at the same age.
Now some of you might take issue with me using income and wealth as measures of wellness. Some might prefer something like number of places travelled, a happiness index, number of friends, life expectancy, or contend that we shouldn’t be judged by any standard index since each of us is unique (just like snowflakes). As good as that may sound, it doesn’t lend itself to analysis; and so income it is.
It seems like good jobs are harder to find, raises are smaller and harder to come by, real promotions (where your income increases substantially) are rarer, owning a home is more difficult, and saving money sounds downright impossible.
Well it’s not your imagination. All of those things are true. So what’s happening?
Our Economies are Slowing
Speaking for countries like the US, Canada, Australia, UK, and other large, advanced western economies, GDP – a measure of all income earned by a country – is growing more slowly.
Take a look at the chart below, with the rate of GDP growth on the y-axis:
Notice two things:
- Growth has been slowing since about 2005 (even if we ignore the Great Recession) from nearly 4% a year to a more muted 2% a year.
While a 2% difference might not seem like much, over a 10-year period, it’s the difference between growing 48% and growing only 21%.
- The Great Recession knocked roughly 3% off of GDP. Previous recessions took only about 1% off, and growing at 3% the year after means it only took about four months to recover. It took us nearly two years or 6-times longer to recover this time.
Since GDP is growing more slowly, GDP per capita (or average income) is growing more slowly.
The Median Guy or Gal is Doing Even Worse
Even with the slower growth, GDP in the US has gone from $2.9 trillion in 1980 to $18.0 trillion in 2015. That’s an astounding 620% increase.
The situation is similar across these major economies. In the mean time, population hasn’t gone up nearly that much, so the average income has gone up more than five-fold. But not so for median income.
I’ll sneak in a mini-statistics brushup about the difference between median and average income.
Median income is the number which 50% of people earn less than, and 50% earn more than. Average income is when you take the total GDP of a country and divided by the number of people who live there.
Imagine 2 sets of numbers:
set 1 – 3, 5, 7
set 2 – 3, 5, 70
For for set 1 and set 2, the median is 5 – there is one number higher than 5 and one lower in each case.
The average for set 1 is (3+5+7) / 3 = also 5. So the median and average are the same. But for set 2, where the first two numbers are the same and the third number is 10-times bigger, the average is now (3+5+70) / 3 = 26. So the average is now much higher than the median.
Why does this matter? Because most people are below average when it comes to income. This is called “skew”. A few people with very high incomes skews the average upward so that the average is above the median. Again, that means most people make below average income.
The bigger the difference between the two numbers, the bigger the income gap between the top earners and everyone else.
Before I show the next chart, please don’t get distracted thinking about “equity” and “equality”. No political statement is being made here; there are already too many of those. Slowing growth and widening income gaps are realities that gave rise to Brexit and President-elect Trump. These are not imaginary problems; the political divisiveness is only regarding the cause and solution.
From this chart, we see that even though total income (or GDP) has been growing according to figure 1, albeit slower, at least half the population has not seen any improvements for 25 years.
Arithmetically, then, the next graph is inevitable. The share of the total economy in the US has almost exactly inverted. The other economies aren’t much better off.
Millennials are Doing Even Worse
That’s right. It could be our lack of grit, our whining, a worse economy, or some mixture of those things, but millennials are definitely doing worse.
It needs to be said once again that this post is not exploring political ideology or proposing any economic solutions, but rather examining some facts and figures. In fact, I trimmed off the title from the next chart just to keep it as cerebral as possible.
The horizontal axis on this chart is the year of birth, and the data points show how likely by either age 30 or 40 you are making more than your parents at the same age. It’s clear to see that as you enter the millennial birth years, that probability is going from the mid-90% range down to below 50%. So while 60-80% of Baby Boomers did better than their parents by age 30, less than half of us can claim the same.
What happened? I’ll give one major contributor.
Recall figure 1. It shows a how deep the Great Recession was, with massive job losses mixing with already slowing growth.
That means in 2009 to 2011, when the early millennials were 20 to 27 years old and studying to/just entering the workforce, the economy was slowly absorbing all the unemployed experienced hires; which means not only were jobs difficult to come by, wages were also being depressed. To get a job with little or no experience when there is vast excess of experienced applicants meant depressed wages. Some professions – finance most obviously – suffered even more than others.
Putting it All Together Paints a Grim Picture
Consider one more unhappy fact, that one significant way to be in the top 1% is to be born into the top 1%. That means on top of all of the above, if you started in the 99% of households, it’s statistically even more difficult still to become successful.
Since early all advanced economies are slowing causing GDP per capita (or average income) growth to slow, and the median person does significantly worse than the average person, and median millennial is doing even worse than that, and safely assuming most of us weren’t born into 1% households, it is much more than 50% likely you are doing worse than average. And being worse than average runs directly counter to the special snowflake syndrome.
If we were born in the 50s and started our careers in the 70s, being mediocre (or median, if you prefer) meant living better than the previous generation, and doing better as your career went along. For those of us born in the 80s and after starting our careers in the late 2000’s, this simply no longer the case. We have to leave median behind.
But not all of us can do that. In fact, if we want to be above average, we have to leave median far, far behind since average is already much further above median than it used to be.
What does this all mean?
If we want to improve our circumstances, being “normal,” “mediocre,” or even “average” is no longer good enough. It means “conventional wisdom,” “typical [career],” “keeping up with the Joneses,” and so forth are not options anymore.
To be above average as a millennial, we must be extraordinary.
How to Be Extraordinary
Before diving in, I want to define extraordinary as “not mediocre” and “above average.” I don’t mean 1% or anything like that, because I’m not in the 1% so why should you listen to me about how to get there? A lot of people (though less than half) can be extraordinary. It’s actually not all that special.
Here’s a chart to make this more clear:
I started my career in 2009 at below median salary, got to median, and then promptly via career mismanagement went to $0 – as in unemployed – for 18 months. Fast forward to today: several non-typical moves, a bit of luck, and a very kind boss/mentor later, I’m positioned comfortably in pay scale, and more importantly in a career path where personal growth will be rewarded professionally.
I’m not an extraordinary person by any stretch. Perhaps a tad above median for intellect, circumstance, and education, but certainly below average.
Without extraordinary hardware – such as intellectual genius or inheritance, we must rely on building ourselves extraordinary software. Software that can guide us to the extraordinary by definition must be software that makes atypical decisions.
Bad atypical decisions will put us below median, and good atypical decisions will help move us above average. Optimization requires both making better decisions, and knowing when to diverge from the flock.
Here are two ways I use to optimize for better decisions, and two decisions which deviated me from my peers:
- Say “No”, like, a lot
There are 168 hours in a week. In a week, I sleep for about 45 hours, work about 55 hours, workout for 6 hours, commute for 10 hours and spend roughly 5 hours total eating, grooming, or leaving someplace. That leaves me 47 hours of net disposable hours.
If I hangout three or four times a week, that’s 20% of my disposable hours. If I watch TV, go on Facebook, binge watch Netflix, and browse random websites for another 4 hours a day (I did, still do, to a large extent), that’s another 60% (the average American does this for 9 hours a day, which would put me over 100%, so they must be cutting out other stuff).
That leaves me 20% which I probably used to squander.
If you and I can get that percentage up to 60%, we would be doing something extraordinary. That’s only 2.7 hours a day of doing something constructive, but it requires us to say no a lot. No to series, no to hanging out, no to Facebook, Instagram, Snapchat.
And not even no completely, just no half the time.
It’s a fact that most people don’t like to read. I don’t mean articles on the internet or stuff people share on social media, or even novels like Harry Potter and GoT; people love reading that stuff. I mean self-improvement books, knowledge sharing books, learning books (and articles, and blogs).
The selection process also needs to be stringent. Have a focus, use your time wisely. I’ve stopped reading celebrity news, and I’m planning to cut down on reading regular news, because it’s shallow knowledge that doesn’t actually help me build on anything.
In 2015 I read about 15 business, startup, statistics, and history books all of which played at least some part in getting my current job.
- Change industries
I spent 18 months of my life proving to myself that finance was a dead end (for me). There are extraordinary millennials currently making a killing in finance, but I believe they started off as extraordinary people and did extraordinarily well in school, both of which are not true for me.
Vancouver, like many cities in advanced economies, simply doesn’t have that many opportunities because of slowing growth, and bigger portion of the pie being taken by the 1%. Obvious exceptions would include San Francisco, New York, et cetera, depending on your industry.
Now the last 2 points are extreme changes, and even if you’re willing, require copious prudence, research, and forethought. It took me a total of 4 years to do both, and it wasn’t always on purpose. Don’t give into that instant gratification!
But the first two points can be done, starting today.
It’s not enough to believe we are extraordinary, no matter how deep our conviction. If we look around and we’re doing the same thing as all our peers, then we are by definition normal, mediocre (median), and typical.
Yes, I can attest, all of this makes me feel disconnected and lonely at times. You won’t be up-to-date on the latest gossip, know what happened on TV, or know which celebrity is marrying/cheating on/divorcing whom.
But if we operate like a “typical” millennial, then we can only expect “typical” results. Extraordinary results must be self-inflicted.
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As promised, here are some links for the extraordinarily curious: