UNSOLVED MYSTERIES

Posted in Rants on August 15th, 2013 by Ed

As many veteran readers know, I enjoy distracting myself with automotive news. Cars are neat. I've only owned two in my life (one of which was purchased used) so I'm not exactly a useful consumer to the auto industry. But I do like to read about the technology and the industry itself, which is in many ways a good reflection of the larger trends in the manufacturing economy.

Over the past two years there have appeared any number of stories from auto industry analysts about how elderly buyers are starting to outnumber younger ones. Whereas the primary target for auto sales in the past was the 25-55 age group – the period in which people traditionally have growing families and their peak earning potential – it has consistently shifted higher in the past two decades. The key demographic in the U.S., if you ask any industry insider off the record, is the 60+ crowd. No one wants to admit that; in fact, name brands like Lincoln and Oldsmobile (RIP) and models like the Crown Victoria / TownCar struggle specifically because they are perceived to be the domain of Old People. But the fact remains: a 65 year old man is a lot more likely to be in the market for a new car than a 25 year old one in 2013.

Annoyingly, these reports are inevitably accompanied by some sort of sociological explanation for why younger people – say, the 21-39 crowd – are not buying cars. The same is true of stories about why college grads live at home, or why younger people are renting rather than buying homes. It's usually something about different preferences, more "flexible" lifestyles, residential patterns, or some squishy hypothesis that we love Mother Nature too much to soil her with an automobile. And they all tapdance around the bleedingly obvious fact that Baby Boomers now buy more cars than their children because they have money and their children don't. I'd wager that plenty of people in their 20s and 30s would buy a new car on occasion if the opportunity arose.

But it doesn't. The labor force has been radically restructured (by the Boomers, not insignificantly) so that we work, when we can find work at all, longer hours for less money with no job security. How does one save up for a car or mortgage down payment on the kind of salaries most people who weren't born into wealth earn in their 20s? How are young people expected to make a 5 year auto loan commitment (or 30 for a mortgage) when their employment is "at will" or when people spend years working as "permanent temps"? As I've said before, even the people in my age group I know personally who are doing well – and as someone with full-time employment and health insurance, I consider myself fortunate to be in that group – have tremendous insecurity about the future. In other words, even those of us who might be able to afford a new car now refuse to buy simply because we don't know if our job will still exist (or who will be doing it) in a couple of years.

It is amusing to see how far analysts and journalists will go to avoid grappling with the relatively obvious fact that young people aren't buying what they're "supposed to" be buying because we, as an economy, are not paying them much. Or employing them at all. Or giving them any kind of long-term security necessary to induce them to make financial commitments to homes, cars, or other expensive purchases. This kind of denial of the obvious is becoming a trademark of Boomer-led journalism and financial analysis, the wailing and gnashing of teeth over the failure of consumers to rescue the economy by buying the things they're supposed to be buying. Yet rarely do they consider the simplest solution, that younger people do not make these kinds of economic commitments because this society is now structured to make doing so impossible. God help the auto industry when this wave of retirees dies out.