Thursday, February 20, 2003

Baby Boomer Lies and Statistics 102 (second of a continuing series)

Correction from yesterday: the “festering inter-generational borderzone” would be better termed a “festering inter-generational fault-line”. The fault-line metaphor is preferable to the border one (I was thinking of the US/Mexican crossing at San Ysidrio/Tijuana, BTW), because it nicely conjures up the abrupt cliff – between people born before and after ~1963 – that must disrupt so many otherwise politely-behaving bell curve graphs. Less certainly, this post-63 inter-generational subsidence, may also have an equally abrupt end. If this does indeed hold true (and only time will tell), the cliff will separate those born before and after ~1978.

Yesterday’s private hospital cover stats and analysis are one, clear example of post-63 statistical subsidence, of course. More ambiguous, however, are the various statistics that point to the broader financial wellbeing of Gen X.

Plainly, the spectacular rise in Australian house-prices – and so overall wealth per person – in the last five years or so – has largely bypassed Gen X in comparison to all older Australians:
What still remains to be seen is the extent to which this having missed the wealth bus, as it were, will have a further long term downside, such as many Gen X’rs (and possibly younger generations too) never being able to afford home ownership.

On the other hand, if we zoom-in on the pin-up, typical Gen X’r – a university graduate and qualified professional – the picture seems much more rosy. Despite the introduction of substantial, and ever-escalating tertiary fees in 1989* (just as the last of the seven-year-arts-degree baby boomer undergrads scuttled off into the workforce), statistics purport to show that graduate return on investment remains more-or-less equally healthy for Gen X as for baby boomers – yielding a net total lifetime gain of about $380,000 for a male graduate, which equates to a 14% ROI:

c.f. the curious extrapolation of this article by blogger/economist John Quiggin:

“As this article by Ross Gittins based on research by Jeff Borland, shows, despite the substantial growth in numbers of graduates in recent years, the wage premium for graduates has remained unchanged (in the US where growth in graduate numbers has been slower, the wage premium has risen greatly). This outcome would make sense only if there was substantial growth in demand for tertiary graduates as against high school graduates and another article by Gittins shows that this is indeed the case”:

On first impression, and certainly on my own lived experience, such statistics are counter-intuitive: the ratio of graduate starting salaries to average weekly earnings has remained in a trough of 80-85% since (surprise, surprise) the late 1980s, significantly lower than the late 1970s to mid 1980s average of 95%:
Even Roger Bartley, executive director of the Graduate Careers Council of Australia, has publicly doubted that the average graduate lifetime earning premium is anything like $500,000 (the figure given in a 2002 Commonwealth government higher ed review)**.

Next: graduate unemployment rates


* fees that were imposed even during the undergraduate studies of hundreds of thousands of Gen X’rs (myself included) in contempt of the most basic precepts of contract law.

** “Graduate salaries up but losing ground” by Misha Ketchell, The Age 21 August 2002.

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