A recent Pew Research report found that after record high debt-to-income ratios during the booming economy of the early 2000s, young adults have taken a big chunk out of their debt compared to their older counterparts following the Great Recession. But the reasons behind the great debt reduction may be the lack of solid economic foundations among millennials.
After the recession, young adults - those 35 or younger - now own fewer houses, fewer cars and carry less credit card debt than they did during the boom years. Sounds great, but unfortunately it may have less to do with their economic success and responsibility and more to do with economic struggle. According to Pew research, the median debt of households headed by someone younger than 35 fell by 29 percent from 2007 to 2010. Also, the share of younger households holding debt of any kind fell to 78 percent, the lowest level since the government starting keeping records in 1983.
Less debt always sounds good until we look at the reasons behind it - more younger people are prevented from qualifying for loans to buy cars and homes because they don’t have the resources to pay them back. Before the Great Recession young adults were catered to by banks offering ‘no-money down’ loans with 100 percent financing on homes and cars. These loans seemed great to millennials who had seen their parents and grandparents drop as much as 20 percent down for loans with interest rates in the double digits.
Today’s weak job market and tighter lending standards at banks have made it harder to get mortgages - more like the old days. Millennials lucky enough to have a job may be making less than they expected or worried their job won’t last, and if they don’t have a job they can’t get a car loan or buy a house. So the news that young adults have less debt may initially sound great but if we look deeper it shows how far they have to go to get their slice of the “American Dream.”
The concept of saving for things they want may seem foreign to some in the younger generation who grew up in boom times where things were readily bought and given by doting parents. But it’s a concept that may come home to roost as they go out on their own and establish their own families and homes and the debt that inevitably comes along with it.
The median mortgage balance went from $150,000 in 2007 to $128,000 in 2010, perhaps a sign that the younger generation is reeling in their spending.
Many millennials are delaying marriage and forming households later, which reduces their home buying and mortgage debt. But the shrinking debts don’t necessarily mean younger adults are in better financial shape than they used to be - they still owe more relative to their income than older people.
Debt reduction among young adults during bad economic times has been driven mainly by the shrinking share who own homes and cars, but it also reflects a significant decline in the share who are carrying credit card debt, from 48 percent in 2007 to 39 percent in 2010.
Student debt was the only major type of debt to increase among young households during the recession, according to the Pew study. In 2007, 34 percent of young households had outstanding student loans. That figure rose to 40 percent by 2010.
Younger households have pared their credit card balances and in 2010 only 39 percent of them carried a balance, down from 48 percent in 2007 and 50 percent in 2001. And the amount they owe is lessening as well, down from $2,500 in 2001 to $2,100 in 2007.
So our younger generation may have less debt - and it’s never a bad thing to not be beholden to others for credit - but if we read between the lines we see it’s because they are facing challenges many of us haven’t faced in years - the threat of declining access to good, steady jobs with a hopeful financial future.
A couple of weeks ago when the chamber’s Leadership Pickens class toured the county offices, Commissioner Rob Jones was asked by one class member if the new chief financial officer had straightened things out. Jones told the group during a public session that there was nothing to straighten out and that they shouldn’t believe everything they read in the paper.
We’d like to respond by reprinting headlines from the past seven months.
February 28, 2013 - 10-year review of county finances sought
January 10, 2013, Commissioners vow to slash county budget by $1 million
January 3, 2013 County CFO resignation still up in the air
December 27 County finance officer resigns ... Maybe
December 13, County budget shows slight increase
December 6, 2012 Auditor: Former CFO sloppy, but nothing illegal
From the story - The transitional audit recently released shows the former CFO ran sloppy books and had poor communication with county officials, but that no illegal activity took place during her employment.
November 22, 2012 Former CFO had county months behind paying bills
September 13, 2012 Commissioner agrees to cut tax hike half
This story reported that following public outrage at a proposed 9-percent property tax increase, the commissioner decided to cut it back to 4.5 percent, still an additional $328,347 increase over 2012 collections.
September 13, 2012 County finance officer resigns
September 13, 2012 An Open Letter to Taxpayers of Pickens County from Robert Jones
This issue also included an open letter from Mr. Jones, which acknowledged the problems cited above.
Following what was hailed as an unprecedented meeting of all elected officials, Mr. Jones’ letter stated, “correspondence generated by my office does not accurately describe your elected officials’ expenditures.”
It also stated, “a correction will be forthcoming from my office in the near future after certain personnel changes are finalized.”
Furthermore it said, “County spending will change next year. You have asked for it to be decreased and it will be decreased.”
September 6, 2012 - Anger over proposed 9 percent tax increase grows -- Final chance for cuts not encouraging, says Jones
August 30, 2012 Tax hike too much, citizens tell commissioner
And finally back to where it all began last summer when in Mr. Jones’ telling a single legal settlement where the county had to pay back taxes it knew were subject to dispute touched off the whole chain of events.
August 23, 2012, Commissioner blames tax hike on Young Life settlement
The Progress is optimistic that with the current CFO and three-member board of commissioners that county finances are on the right track, but to deny there was ever a mess or that it was somehow created through our reporting is more than we could abide. We stand by all our original stories, keeping the citizens and taxpayers informed.
When we’re scrolling along Facebook checking out the status updates of all our friends and clicking that seemingly friendly “like” button when we see a post about someone’s new hair style or a witty quote another friend has posted, it may reveal more about us than we intend.
Our likes reveal us as fans of country music or Beyonce, a football fanatic or NASCAR groupie but those friendly “like” buttons can also out us as married or single, an extrovert, or whether we prefer cigarettes or alcohol as our vice of choice.
Researchers at Cambridge University recently published findings from a study involving 58,000 volunteers and what they found may surprise us. Just by studying our Facebook “likes,” researchers can tell how intelligent we are, how happy we are, our political leanings, and a host of other personal traits, including our religion, race and sexual orientation.
As we decompress at the end of the day – or constantly throughout the day while we should be working – checking out what our friends are up to via the online social network, who would have thought that a quick “like” of a post saying “Life is like a roller coaster. It has its ups and downs. But it’s your choice to scream or enjoy the ride” could reveal how old we are or the color of our skin? Sure, clicking “like” on a picture of President Obama with a tag line that says “Impeach” might hint we are Republican, but Cambridge researchers can figure out our political leanings with much subtler references to our online “likes.” Scary or brilliant?
Facebook launched the “like” button just four years ago and the small thumbs-up symbol has become as iconic as the Nike Swoosh or Coke’s ribbons. According to Facebook, roughly 2.7 billion new “likes” are hit every day – from songs to pop stars and TV shows, we share our tastes in the stroke of the keyboard.
These surprisingly accurate personal portraits, according to researchers, proved 88 percent accurate for determining male sexuality, 95 percent accurate in distinguishing African-American from Caucasian-American, and 85 percent for differentiating Republican from Democrat. Christians and Muslims were correctly classified in 82 percent of cases and relationship status and substance abuse was predicted with accuracy between 65 percent and 73 percent.
Businesses looking to cash in from customers via personalized marketing may love the new study, but those campaigning for online privacy are cringing at the news. The study found that the best predictors of high intelligence include liking “Thunderstorms”, The Colbert Report, “Science”, and “Curly Fries.” Low intelligence, it found, was indicated by likes for “Sephora,” “I Love Being A Mom,” and “Lady Antebellum.”
So what does it say about those of us who like both Downton Abbey and The Walking Dead? Our “like” of zombie killing might say we are loners who consider a possible un-dead apocalypse an exciting prospect for the future, while our equal affection for the lives of 1920s English aristocracy shows a longing for a past way of life with more formality and pomp.
Some of us may display a dichotomy of traits, but researchers found more straightforward assessments of our personality. For instance, men who liked professional wrestling were more likely to be straight than those who liked the song-and-dance show “Glee.” – no shocker there. The study also found drinking game aficionados were more outgoing than fans of fantasy novelist Terry Pratchett. People who preferred pop songstress Jennifer Lopez usually had more Facebook friends than those who favored heavy metal music.
Sharing our likes might not seem intrusive, but it allows insight into our individual behavior in areas that are far more personal than we realize. Some things should stay private, but just for the record we really “like” curly fries and thunderstorms.
We like to hear from readers. We particularly enjoy publishing well-crafted and thought-out letters to the editors. Even if you disagree with us, if your letter brings something new to the table of public discourse, we appreciate it.
Letters with clear opinions commenting on local issues are among the most popular and powerful articles you’ll find in a weekly newspaper. This is where the public has an open venue for voicing their opinions.
At the Progress it’s rare that we don’t publish our letters to the editor. One writer was surprised that we would run his politically conservative musings since (he assumed) all the press is liberal.
We ran them. We also run far left-wing letters.
Frankly, if they are talking national politics we really don’t like them. We prefer someone commenting on what’s going on in this community. A poorly-written letter reflecting something specific to Pickens County beats a finely-crafted document on any national subject any week of the year. This is what community journalism is all about and, goodness knows, there is plenty of long-winded diatribe on national politics everywhere else you look.
When we decide what letters to run, we look at each submission individually. Since writers can address literally any subject under the sun from any point of view with any language or writing style, issuing broad rules on what we run doesn’t work. Most newspapers follow a similar letter-by-letter decision making process. If you have called our office wanting a snap decision on what we’ll run, you have likely heard us say we’ll have to see it first.
About the only set rules we have are length. It has to be 400 words or less, baring an exception. And that exception is a letter from someone who has been the subject of a story and wants to respond. If you are writing about gun control, yes we are going to cut you off at 400 words. If you feel that we have unfairly portrayed you in the paper, then we’ll give you all the space we can within reason to respond. Similarly if you are a direct participant in a news story you may be allotted more space. If you are the person whose home burned or saw the UFO, we can bend that rule.
The other area we steer clear of is personal issues and that includes letters about local businesses. There is simply too much liability involved. You may have gotten horrible service, but that business may say your demands were impossible; we’re not going to referee.
We are adding a third restriction starting with our next issue – two letters per month, per person and this includes responses.
Earlier this month, someone called to say that he would like to write on his thoughts on school budgets. We suggested that he send it as a letter to the editor since that section is just for people to sound off.
His reply caught us off-guard -- somewhat. The potential writer wasn’t sure he “wanted to be on there with all the regular nuts.”
It’s true that at times our letters page becomes a back and forth and almost every time this has happened it’s been a national subject that elicited the never-ending point/counterpoint. The replies tend to get nastier and nastier the longer the issue ferments.
We’ll take this opportunity to invite people who have shied away from the letters page to give it another shot. We want this space to be as inclusive as possible on subjects that the community feels are important. While people are free to disagree with your points, we’ll see that the letters’ page maintains a civil tone.
And for those who like to mix it up, the Progress offers a message board at www.pickensprogress.com that is open for more vigorous debate (though with some restrictions).
Two weeks ago we covered a story that may have made some taxpayers angry. The Pickens County government agreed to back a bond for a private-sector company. If the company defaults, the county will ultimately be responsible for payment and the bank could force the county to levy up to one mil more in taxes.
But this company, Restaurant Interiors, Inc., was experiencing a rapid growth spurt and needed to relocate quickly from their 6,000 square foot warehouse to something larger that would allow them to add employees and equipment. After partnering with the Pickens County Development Authority, which owns a 77,000 square foot building behind Jasper Middle School, a deal was hammered out in which Restaurant Interiors would lease the building from the Development Authority. If the business defaults the Development Authority will take over payments until they can find a new tenant. Only if the Development Authority ran out of money, which they have enough of to cover payments for 20 months, and then could not find a new tenant would the county be held liable for the payments.
Everyone involved in the deal said the risk of backing this private company was very low, but the potential for economic development was high and worth putting one mil of taxes on the line.
Because they were able to relocate, Restaurant Interiors added over 50 new positions, with over 90 percent of their new employees being previously unemployed and from Pickens County. The company is looking to expand even more by the end of the year, hoping to add another 30 positions. Those employees, who again mostly live in the county, will spend money here and further impact economic development in a positive way.
But remember one of presidential candidate Mitt Romney’s mantras during the campaign (even President Obama when pushed)? “Government doesn’t create jobs,” Romney said. This is obviously wrong, and claiming that the government has no role in job creation is a partisan argument that ignores facts.
The fact is that the Restaurant Interiors deal is one prime example of how the government can help fuel private sector job growth, and like it or not the government also provides necessary services by employing people that the private sector doesn’t. These services range from public school employees, emergency personnel, roads employees, state parks employees, soldiers, etc., to the tune of 22 million jobs that are paid by taxpayers on federal, state and local levels.
Granted, the backing of Restaurant Interiors is not the same creature as jobs the government, i.e. the taxpayer, fund. Restaurant Interiors pays its own employees and pays its own bills, but the owner said without backing from the county she would not have been able to expand at a crucial point for her business, and those 50 people who are now employed would still be without work.
The point is that government is indirectly creating jobs in this situation, just as it indirectly creates jobs in the private sector by purchasing goods from the private sector, or by employing people who go out and spend money in the private sector, which helps create jobs, too. Of course, the focus of our leaders should be primarily on encouraging the free market, which employs over 90 percent of the working population, but go ask those 50 local people who are now employed through Restaurant Interiors if they are happy the local government got involved? We’d bet they would tell you yes.
Again, we are not arguing that the government should be the primary guiding force for economic development, but rather that those who claim government has no role in job creation should belly up and admit that it does directly create, or indirectly encourage, jobs that are of value.