How Capitalism Broke Young Adulthood

Boomers have socialism. Why not Millennials?

Bernie Sanders supporters at an event in Des Moines, Iowa
Shannon Stapleton / Reuters

With Senator Bernie Sanders rising in the Democratic-primary polls, it is becoming not just thinkable but even plausible that the United States could, for the first time, elect a self-described socialist to the White House.

Instead of relying on the party’s graying voters, Sanders has galvanized a younger coalition by promising a profound expansion of the welfare state, which would include free health care, free college, and the elimination of outstanding student debt.

Skeptical older voters might see little here but a list of fantastical promises that are utterly out of step with American traditional and modern capitalism. Socialism remains deeply unpopular among Americans born before 1975. Even in the Democratic Party, Sanders polls 30 points better among Americans under 45 than among those over 65.

But the irony is that these old anti-socialists already live in a wonderland of government generosity that bears a passing resemblance to the socialism they so dread.

The federal government already guarantees single-payer health care to Americans over 65 through Medicare. Senior citizens already receive a certain kind of universal basic income; it’s called Social Security. While elderly Americans might balk at the idea of the government paying back hundreds of billions of dollars in student debt, they are already the grand beneficiaries of a government debt subsidy: The mortgage-interest deduction, a longtime staple of the federal tax code, effectively compensates the American homeowner (whose average age is 54) for their mortgage debt, thus saving this disproportionately old group approximately $800 billion in taxes owed to the federal government each decade. The economist Ed Glaeser has likened these policies to “Boomer socialism.”

In this framing, Sanders is not offering his more youthful constituency a radically new contract. Instead, he is extending the terms of an existing social contract to cover more—and, necessarily, younger—Americans.

Social Security and Medicare were the product of a consensus that the economy had broken the process of growing old. Today’s progressives argue, in part, that the economy has broken the process of growing up.

In the early 1900s, half of America’s senior citizens lived in poverty and more than half were uninsured. Over the next few decades, the federal government passed several laws—most importantly Social Security, Medicare, and Medicaid—that had the effect of making old age more comfortable and equitable. The senior poverty rate fell from about 50 percent in the 1930s to less than 10 percent today. The expected life span for elderly Americans increased by several years.

It would be hyperbolic to suggest that young Americans face the similarly dire circumstances of an impoverished 70-year-old in 1931. Quite the opposite: Some will claim that, with the unemployment rate under 4 percent and a record-low share of Americans saying the economy is the country’s most important problem, the 2020 environment is just dandy.

But this general optimism conceals an important divide. In November, the Conference Board, a nongovernmental research organization, reported that the economic-confidence gap between consumers under 35 and those over 55 was the largest on record. For the past 40 years, younger Americans have historically been the most optimistic, but that relationship has dramatically inverted over the past five years. Some of that inversion surely reflects partisan differences, since young Americans are more liberal than the rest of the country. But political polarization doesn’t explain it all.

The simple fact is that young people live and work in a very different economy from their parents. And one good way to see this is to walk, beat by beat, down the road to adulthood.

Start with college. Millennials are the most educated generation in U.S. history to date. They “did what they were told,” as Sanders once said. “They got an education and worked hard. But instead of being rewarded, Millennials are now being punished with crushing student debt.” According to a study commissioned by Sanders and written by the Government Accountability Office, 45 percent of Americans ages 25 to 34 have student loans, compared with just 16 percent of Baby Boomers at the same age. Millennials’ loan-to-income ratio is more than double that of previous generations.

Next, there’s the labor force. While the unemployment rate is low, wage growth has fallen behind its historical trend line, putting the American dream at risk. In 1970, a 30-year-old had a 92 percent chance of earning more than her parents did at the same age. But today, she has just a 50 percent chance of outearning her parents. In these 40 years, this version of the American dream has gone from a near-certainty to a coin flip. Meanwhile, the cost of many necessities has gone up. Medical coverage is expensive, even for the full-time employed, and child care is often unaffordable, even when both parents are working.

Finally, and perhaps most important, there’s housing. Even dutiful penny-pinchers who make their own morning coffee and avoid avocado toast may still find homeownership out of reach. Young people in their late 20s and early 30s today are about one-third less likely to own a house than their parents were at the same age, according to the Federal Reserve. The homeownership rate among young black Americans has fallen below 30 percent, its lowest rate in 60 years.

This gap is crucial, because houses account for almost all wealth for the bottom 50 percent of Americans. Without a home, Millennials are cut off from their most important source of wealth building. The Federal Reserve summed up their plight in seven words: “lower earnings, fewer assets, and less wealth.”

One question that remains is whether the Sanders agenda addresses the crisis of adulthood as directly as Social Security and Medicare addressed the crisis of old age. In other words, is Bernie socialism as directly effective as Boomer socialism?

Some, but not all, of the problems facing young adults would be well addressed with an expansion of government. Universal health care—either through a single-payer system or a federally managed network of private and public insurance—could reduce needless suffering and financial ruin for millions of uninsured and underinsured Americans.

On housing, however, many states and cities need less government rather than more. Onerous rules and zoning laws limit the construction of new housing across the country. Sanders has proposed a rent-control policy to deal with the crisis of rising rents, but this prescription might exacerbate the disease. Rent control has a history of reducing new construction, both by discouraging builders from investing in new buildings and by encouraging owners to convert their properties into condos, thus reducing the total stock of rental units and driving up rents. Here, the right solution might be a combination of more government spending on housing—as Sanders has proposed—with an emphasis on deregulating local housing markets to allow for more construction.

For young Americans, there is a mounting sense that whatever the ladder to adulthood is—or whatever traditional or normative markers of financial independence have been historically associated with adulthood—it’s been shattered by modern American capitalism. This is why Sanders appeals to young voters when he says, “If we don’t fundamentally transform our economy, we are facing—for the first time in the history of this country—the possibility that our young people will suffer a worse future than their parents had.” Whatever you make of their argument, it’s rich hypocrisy for beneficiaries of Social Security, Medicare, and housing subsidies to argue that a little socialism cannot help the U.S., when it has so obviously helped Boomers become the most financially secure generation in history.