Can you imagine a future where computers monitor humans from birth, predict sickness, and help us heal faster? Or a time when chronically ill or elderly persons can live at home and be monitored by instruments that a home nurse or caregiver can use?
Judith Donath, a fellow at Harvard University’s Berkman Center for Internet and Society, predicts that individual healthy diets based on each person’s unique genetics, locations, and activities are going to be common in the future, while drugstores will have booths that function as remote examining, treatment, and simple surgery rooms. In 1950, few could imagine the impact computers would have on everyday life in the year 2000. Today, everyone has a mobile phone, email has replaced physical letters, and online markets are challenging the economics of brick-and-mortar retailers.
The Emergence of Killer Applications (Apps)
Merriam-Webster defines “killer app” as “a computer application of such great value or popularity that it assures the success of the technology with which it is associated.” PC Magazine calls it “the first of a new breed.” To a layman, a killer app is a computer application that saves money, time, or energy, makes the user safer, or enhances the experiences of the user to the degree that it must be acquired and used.
The 1979 appearance of the first killer app, VisiCalc, ignited widespread business and personal use by consumers – use that couldn’t have been conceived of in the early 1940s when computers were first developed. According to the Computer History Museum, computer use in its initial stages was limited to research laboratories, large companies, and the Federal Government.
Personal computers (PCs) appeared in the early 1970s with the introduction of the microprocessor, integrated circuit boards, and solid state memory. The first commercially accepted PCs (Apple II, PET 2000, and TRS-80) were introduced in 1977 but remained niche products for the scientific community and hobbyists. According to a 1983 article in InfoWorld, only a half-million microcomputers were in place in 1980, and they were primarily used to play simple electronic games.
Atlantic Magazine asserts that Millennials are the “best-educated generation in American history,” with more than a third holding a bachelor’s degree or higher. Nevertheless, they may become the first generation of Americans to be worse off than their parents, with lower incomes, more debt, and higher poverty rates.
To succeed, Millennials will need some major preparation, especially considering the world around them is changing constantly. This article will answer three questions that are critical to the success of every Millennial:
Which obstacles will this generation face during their careers?
Who can Millennials trust for financial advice?
What are the most important, time-tested strategies for building wealth?
Millennials Face Mounting Challenges
The challenges facing young people born between 1976-1996 are unlike those faced by any previous generation. The workplace of this generation has drastically changed from the one encountered by their grandparents and parents:
Slower Economic Growth
For the working careers of most Millennials (2010-2060), economic growth measured by gross domestic product (GDP) will average 2.08% annually, according to projections by the Organization for Economic Co-operation and Development (OECD). This rate is less than half the rate of GDP growth of 6.86% experienced in the previous half-century (1960-2010) calculated from figures supplied by the Federal Reserve Bank of St. Louis.
Increased Skill Requirements
Physical work requiring little to no formal training is quickly disappearing as intelligent machines assume more of the tasks formerly done by humans. According to figures compiled by the Brookings Institute, the manufacturing sector’s share of GDP accounted for 12.1% of annual real GDP during the period 1960-2010, while its proportion of the workforce fell from approximately 25% to 8.8%.
Expanded Workplace Automation
Routine tasks are increasingly becoming mechanized. Some experts found that 47% of workers in America had jobs at high risk of automation. The jobs at risk include taxi and delivery drivers, receptionists, programmers, telemarketers, and accountants.
Reduced Employee Benefits
Defined contribution retirement plans have replaced defined benefit plans (pensions), while more employers are transferring health care costs to employees in the form of higher insurance premiums, co-pays, and limited coverages.
Extended Nontraditional Employment
Contract labor is replacing employees as companies seek to lower fixed costs and increase flexibility. One report estimates that more than 40% of the American workforce – 60 million workers – will be self-employed as freelancers, contractors, or temporary employees by 2020.
Escalated Income Inequality
The historical link between productivity and pay is disappearing, exacerbating the disparity between the “haves” and “have-nots.” In 1970, almost two-thirds of Americans were considered middle class, reflecting the link between productivity and pay between 1948 and 1973. Although productivity has continued to increase, about half of American families were considered “middle class” in 2014, according to the Pew Research Center. Rising income inequality is likely here to stay.
Fragile Social Programs
The survival of social safety nets, such as Social Security and Medicare is uncertain as Federal and local governments wrestle with unprecedented national debt levels. Simply put, neither Social Security nor Medicare is guaranteed for future beneficiaries without significant changes in the programs.
Eugene Steeple of the Urban Institute predicts that Millennials are likely to experience cuts in benefits for themselves and their children, higher taxes, and reduced government services. This is partially a consequence of financing much of America’s growth and increased standard of living during the last 50 years with borrowed funds. According to Pew Research, most American households are vulnerable to financial disaster:
1. Family Income Is Increasingly Volatile. More than 40% of families experience an income gain or drop of more than 25% every two years. While drops and gains have balanced out in recent years (about the same number increasing income as those losing income), only two-thirds of those families suffering a drop recover their previous income level within the next decade.
2. Emergency Savings Are Virtually Nonexistent. Most households (75%) lack sufficient emergency funds to replace their income for a 30-day period. The top quarter of households have savings to cover just 52 days of income. Liquidating their investments and retirement funds would increase this to an estimated 98 days of protection. In other words, three-quarters of American families could cover only four months of their income (without selling their homes) if a major economic shock occurred.
3. Almost Half of Families Spend More Than They Earn. As a consequence, they are unable to save and rely on borrowing to make ends meet. One in 11 Americans now pays more than 40% of their income on interest and debt repayment.
In addition to an uncertain economic future, Millennials begin their working careers with greater student debt than any previous generation: $16,500 for a 1999 graduate, rising to $37,172 for a 2016 graduate. In other words, the average Millennial graduate is shackled to a $23,000 ball and chain (the average debt for graduates during the period) that will impact retirement savings, homeownership, and the age of marriage and parenthood.
The debate about free trade versus protective tariffs (taxes) has raged for centuries. However, it has become especially virulent as industrialized countries lose an increasing amount of jobs to emerging nations. Free traders, worried about the possibility of new tariffs to protect native industries, predict a trade apocalypse. Reported by TIME, Robert Zoellick, president of the World Bank, claimed, “If we start to trigger a round of protectionism, as you saw in the 1930s, it could deepen the world crisis.”
Proponents of free trade – including many economists – claim that the benefits of lower prices far outweigh the costs of lower incomes and displaced workers. Professor of Economics Alan Binder, writing in the Library of Economics and Liberty, claims that a country’s wage level depends not upon its trade policy, but its productivity: “As long as American workers remain more skilled and better educated, work with more capital, and use superior technology, they will continue to earn higher wages than their Chinese counterparts.”
Opponents of free trade disagree. Senator Bernie Sanders of Vermont has consistently voted against trade agreements, including the North American Free Trade Agreement (NAFTA). He argues that trade agreements have encouraged corporations that seek low-income labor and fewer regulations to close factories and ship jobs overseas. According to the senator on Fox News, “Over the years, we [America] have lost millions of decent-paying jobs. These trade agreements have forced wages down in America so the average worker in America today is working longer hours for lower wages.”
Understanding the history of tariffs and free trade, especially in the United States, is necessary to evaluate the effects of NAFTA and the proposed Trans-Pacific Partnership (TPP). Two other major trade agreements are also being discussed – The Transatlantic Trade and Investment Partnership (TTIP) and the China Bilateral Investment Treaty (BIT) – which could have global ramifications as well.
Tariffs and Free Trade in the 20th Century
By the end of World War I, advocates of high tariffs recognized that tariffs weren’t the most important source of government revenues and so adopted an alternative argument. There was the widespread belief that tariffs benefited the wealthy while raising the cost of goods for other Americans. As a consequence, protectionists justified tariffs primarily as a way to promote employment for citizens of their country. This argument coincided with a growing concern that inexpensive foreign goods would destroy domestic manufacturers and lead to widespread unemployment.
After World War I, economic nationalism and protectionism dominated world trade with countries creating new taxes on foreign goods to protect native industries and maintain full employment of their citizens. As the global economy shrank, countries retreated behind the new tariffs and trade blocks to protect native industries until after World War II.
In 1916, John D. Rockefeller, the father of the petroleum industry, became the world’s first billionaire. Nearly a century later in 2015, there were 536 American billionaires of a total 1,826 billionaires worldwide, according to Forbes. That number may in fact be low – the Wealth-X and UBS Billionaire Census estimates there were 2,325 billionaires globally in 2014, including 609 Americans.
Identifying those who are billionaires from those who have significant wealth can be difficult, since many are reticent about publicly discussing details of their wealth. Also, for many, growing personal wealth is not a goal, but the byproduct of their business activities. In his book “Trump: The Art of the Deal,” Donald Trump, the real estate mogul ranked at number 405 on the Forbes 2015 list, explains that money was never a big motivation for him, except as a way to keep score. “The real excitement is playing the game,” he states.
According to the U.S. Census Bureau, in 1916, Rockefeller was the only billionaire of the approximately 102 million people in the United States. Today, there are 320 million people in America with a billionaire for every 600,000 residents. Assuming that the number of U.S. billionaires will continue to increase at its historic rate of 6.49% annually, there will be more than 4,800 American billionaires by 2050, or one billionaire for every 91,000 people of the projected 439 million total U.S. population. Dreams of becoming a billionaire may not be as far-fetched as once believed.
What Is a Billionaire?
Simply stated, a billionaire is a person who has a net worth of $1 billion or more. In other words, if you can sell all of your assets for cash, pay off your debts, and have $1 billion remaining in the bank afterward, you are a billionaire. Having $1 billion in assets with debts of $900 million doesn’t make you a billionaire, although you and your family are unlikely to worry about future college expenses or retirement.
A billion dollars, like all large numbers, can be difficult to comprehend. For example, counting to $1 billion at the rate of a one dollar bill per second would be a lifetime career for three men working a standard 40-hour work week. If you hired them at age 21, they would complete the task more than 44 years later, assuming they worked eight hours every day without taking a single sick day. The counted $1 bills would fill a building the size of a football field to a height of 8.3 feet and weigh more than 1,100 tons.
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