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April 30th, 2017

Insight

Granny, of all people, has traded places with the wolf

Suzanne Fields

By Suzanne Fields

Published June 19, 2015

   Granny, of all people, has traded places with the wolf

We've launched another generation of graduates out to seek a fortune that seems more elusive than usual, in a world more upside down. The graduates will discover, if they have not discovered already, that we're a divided nation. Republicans and Democrats, conservatives and liberals, rich and poor have always sounded their differences in the arena. But there's another division that's difficult for even the most skilled politicians to talk about. It's the economic divide between young and old.

Granny, of all people, has traded places with the wolf. She's gobbling up Little Red Riding Hood's goodies. The woods are thick and overgrown, and the path to Granny's house is dark and menacing. Little Red Riding Hood's basket for delivery to Granny is filled, not with cookies and cakes and pies, but Social Security checks, Medicare payments, and the revenue from Granny's growing investments. And Granny isn't finished yet, having put off retirement instead of making room for Miss Riding Hood and her friends.

Little Red Riding Hood represents Mr. and Ms. Millennial, who were so praised and celebrated at their commencements from high school and college, but are now more and more likely to be living with their parents because they can't find jobs, let alone jobs that pay enough for independent living.

"This is the first generation of young Americans that our government systematically disfavors and the first generation of Americans whose prospects are lower than those of their parents," write the economists Diana Furchtgott-Roth and Jared Meyer in their book, "Disinherited: How Washington is Betraying America's Young." They describe millennial Red Riding Hoods as having lost their birthright to Granny and her cohort, who benefit disproportionately from government largesse.

The grandparents of the rising generation grew up after World War II, when optimism, industrial prosperity and pride in country fed economic growth. The safety net was established and relentlessly strengthened. The 25 million seniors between the ages of 65 and 74 are better off than the graying population of an earlier time; even those pushing past 75 are often enjoying a rising income. There are exceptions to the collective statistics, but in general they occupy what one economist calls a middle-class "sweet spot." Politicians dare not disturb this sweet spot. (Granny votes.)

These seniors didn't set out to take advantage of their grandchildren. They find themselves at a point in their country's history when the rising generations are reaping the unintended consequences of generous but blinkered economic policies. Washington continues to raise the federal debt with unfunded promises to retirees, both current and coming, as slow job creation means fewer jobs for those now looking to enter the workforce.

Older Americans benefit from longer and healthier lives and lengthy participation in the workforce, and the hardest hit are those between 16 and 24, suffering longer from the recession and the slow economic recovery. Their decline in labor-force participation has fallen from a rate of 61 percent in 2004 to 55 percent in 2014. A historic number of the young between 18 and 24, who dreamed of moving quickly into the world and living independently, are instead burdened with college debt and can't easily support themselves even if they're fortunate enough to find work. As a result, many millennials have boomeranged into the bedrooms of their childhoods, surrounded by the fraying posters of rockers and rappers of yesteryear. Granny, who ran off with Gramps, sends occasional postcards from cruise ships, illustrated with images of fjords, white-sand beaches and even an exotic dancer or two to raise Gramps' blood pressure a point or so.

Unemployment rates for young adults between 20 and 24 stands at an overall 11 percent, and 20 percent for young blacks. The teenage unemployment rate stands at 20 percent, with fully a third of young black men and women unemployed.

Raising the minimum wage is not the panacea liberals say it is, either; employers seek those with higher skills or switch to technology instead. Raising the minimum wage poses the trade-off of higher wages for some against unemployment for others.

Reducing burdensome licensing requirements, which inhibit job entry and entrepreneurial opportunities, is a no-brainer, but some states even impose stringent and expensive requirements for walking tour guides, flower-arrangers, hair-braiders and interior designers, as if such "uncredentialed" workers pose a public danger.

The major source of the economic disparity between generations shows up in programs like Social Security and Medicare, which account for almost 40 percent of federal spending. To maintain benefits, younger adults will either pay substantially higher taxes than their parents for promises of benefits, or pay at the same rate and get less. That's a bad trade for a birthright.

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