I think that one important thing to remember when it feels like things are really bleak out there is there have been a lot of times in history when things have seemed really bleak economically, and what tends to happen is something in the economy just totally surprises you.
Wages have increased 6 or 7% since 2000, but the cost of living has increased 6 to 7%.
There is no world where this midterm is not hugely influenced by where gas prices are.
This is Financial Tea.
What's up, sippers? Welcome back to Financial Tea. This is the podcast where I, Mrs. Dow Jones, teach you how to build wealth with a side of market drama, money scandals, and of course, financial pop culture. Today we have Gina Smialek, and she is a correspondent for the New York Times. She covers foreign policy, she covers economics. I love her work, and she's also the author of this really interesting new book. I just finished it. It's called The Invisible Hand of Maria Edgeworth. It comes out October 6th, so it'll be out by the time you guys get this episode, and I'm just excited for you to be here to spill the economics tea, tell us about Maria. I think this is going to be really interesting to my audience. So thank you, Gina, for being on the show.
Yeah, thank you for having me.
We always start with a few rapid fire questions. First things first, what was your best purchase of the week? What was your worst purchase of the week? And how much did each cost?
Ooh, that's a good question. Um, I just bought a flight to come back and see my new nephew, who is—we're expecting any day now—and so I'm going to come back to Pittsburgh, which is where I'm from, in a few months to meet him. And so that was probably my best purchase of the week. That was a little over a thousand dollars because I live in Brussels these days and fuel costs are high. So it was an economy flight and nevertheless still pretty expensive, but still a good purchase. And I would say my worst purchase of the week is I somehow bought a $7 Americano yesterday. And you know, coffee's gotten expensive, but I feel like $7 is beyond the pale even for a good coffee, and it was not a good coffee.
First of all, I hate that it wasn't a good coffee, but also $7. I'm like, 'Girl, we're in Brooklyn. That's normal.' Like—
Okay, maybe it's because I'm coming from Europe where it's not normal, but also it was just an extremely subpar airport coffee, and I just felt it should not have cost this much.
Well, okay. I hear you, but I'm also like, 'Welcome to America, sweetie.' Like that is how much they're charging these days. I mean, I've seen a $13 coffee.
Yep. My next question for you is how did you make your first dollar?
Like so many millennial women. Um, yeah, I started babysitting when I was 13, I think, which I kind of can't believe they let us do, but I did nevertheless.
Um, so that would have been how I made my first dollar.
Love it. Do you remember how much you made?
I think I made $5 an hour, which at 13 felt like a lot of money.
Yeah, 100%. For my listeners though who might not know your work as well as I do or have listened to you on The Daily, you had a viral episode that we're going to talk about in a little, but can you just introduce yourself and give us a little bit about your background?
Sure. Um, so I have been at The New York Times for a little bit over 7 years. Um, before that I was at Bloomberg. I've spent most of my career covering economics and in particular the Federal Reserve. Um, so my first book was about the Federal Reserve. Um, and I have recently shifted to covering foreign policy. Um, and so I now live in Brussels, Belgium. I'm the bureau chief there for The New York Times. And so I do a lot of trade policy, a lot of sort of international econ, and then also a lot of international politics. Um, and so long-time writer on economic issues, now doing it from a slightly different lens.
And you know, you first came across my desk, as Taylor Swift would say, because you went viral on The Daily, the New York Times podcast, for an episode titled 'It Sucks to Be 33.' So, can you just briefly cover what you talked about in that episode? Cuz it was so good.
Oh, thank you. That's very kind of you. Yeah, so the episode is about the generation that I like to call peak millennial, which is basically the birth group that was born in 1990 and 1991, which is us. Yeah, exactly. This is a very narcissistic topic to study. But basically, we are the biggest birth year in American history, and as a result, we've had a lot of pressure as we move through the system. We're a huge consumer class, but we also competed a lot for positions at colleges, for entry-level jobs, for the housing market, for rental apartments. And so it was sort of a story documenting that competition and talking about what it meant for the broader economy.
Yeah, in the episode you talk about like, oh, when I got married, everyone else was getting married. So it, you know, made the cost of getting married higher. Or like, when I wanted to go to school, there were also so many other people who wanted to go to school, so the cost of college went up. Like, it was very interesting, cuz you sort of just hear the doomsday about the economy, but no one breaks it down from that perspective of like, oh, the supply was less and the demand is more, so obviously prices are increasing.
Completely. And it, you know, it's interesting. I think the reason that I've talked to a lot of people about this episode, and I think the reason it struck such a nerve is because so many people were sort of walking around life thinking like, I'm just such an average person. Like, I feel like I do things when everyone else is doing them. Like, I walked around life thinking that for a long time, and then I realized that I knew why I was average, and it's because, you know, statistically, there were so many of us. And I thought maybe it'd be useful to put that out there, and then I got that feedback so much. Like, oh, this makes so much sense of something that I've felt for a long time, but there were just so many people who were doing the same things at the same time and in a way that actually exerted some sort of real force on the economy.
Mhm. And made it hard to afford things.
There you go. You're an economist, ding. The economist. And also I feel like when people say at my age my parents had a house and they had two kids, like what are they leaving out of that comparison?
Yeah, you know, I think one thing that they're leaving out that's really important is—and it's a little passe to say it at this point—but the 2008 recession. You just can't forget it, you know. We came into the labor market and it was just so incredibly weak and it scarred and it took years to get really better. And so I think that rough early entry is something that really haunted millennials for a long time and I think you're seeing now that they're doing a lot of the same things that their parents did, you know, home ownership is above 55% now, you know, people are steadily moving into home ownership. People are getting married. People are starting to have kids. Those things are taking a lot longer than they previously did. Um, and it's not that this generation is completely out of luck, you know, actually 401k saving recently looks pretty decent. It does mean that things are, you know, taking a longer time than they previously did.
Mhm. And we're sort of zigzagging. Like our parents I feel like went through the steps of getting the American dream so 1, 2, 3, 4, and we're a little like 1, 7, 2, 6, 3, like, you know, the kid might come first and then the career like 10 years later, you know, and then you got married.
Completely. And I think it's worth noting that there have been additional disruptions, right? You know, we had 2008, then we had 2020, which was a big disruption. Then we had the inflation after 2020, which I kind of think deserves to be its own class of economic event. And now we're still living in the sort of aftermath of that inflation and so I think it's been relevant to this generation and I think it to some degree will also be relevant to Generation Z.
And it's also so interesting because I feel like we compare ourselves to those around us who are able to afford those milestones earlier themselves. But then we're also comparing ourselves to people who can afford the milestones earlier because their parents are paying for it.
That is a really interesting trend that when I was covering the housing market heavily, this is something realtors would bring up to me all the time. And you can see in the data. You can see that boomers are helping their millennial kids to buy houses. But it was, you know, realtors would tell me that's just heartbreaking because you'll see like a young couple who's about to buy a house and then they'll come and get outbid by a boomer who's buying it for their kid.
Yeah, and it's a really interesting phenomenon that's really changed the housing market and particularly in some metros. I think there are some places where this is really, really predominant now. And so like if you're trying to buy in downtown Miami these days and you don't have a parent, like good luck. You know, so I think it's a really interesting trend.
Yeah, that's so interesting. But also like if you can't afford in downtown Miami, I think that's a good thing.
Yeah, maybe you don't need to live there. You also said in the episode that delayed doesn't necessarily mean derailed. So which delays do you think that people can recover from and which delays do you think have these lasting costs that you'll never get, you know, out of?
Yeah, so I think the economic literature would tell us that if you start your career in a weak labor market, that follows you the rest of your life essentially.
Not necessarily for every single individual, but a generation that starts on a weak foot is always going to struggle to make up that ground. I think this is actually one place where we've had some good news on the millennial front. You know, I've started covering this generation and its economic fate basically when I was entering the workforce, you know, so I've been doing this for more than a decade now and I remember back when we were young, back when we were new in the labor market, there was a lot of concern that we would never have participation rates that looked like those of older people. So people wouldn't be working at the same numbers that older generations were. Um, and that has really not been true. Millennials are in the labor market now. And so I think there's some really good news there. Um, if you look at millennial wage earnings, they're pretty good. They're not bad. Um, and if you look at 401k balances, they are really trending up. Still a little bit low. Um, I think retirement advisors would mostly tell you that they'd like to see millennials putting a little bit more away. Um, but on average, they're not disasters. It could be a lot worse. And so I think there's actually some reason for hope there.
Oh, good. We love a little hope. That's a good thing. And do you think that Gen Z is sort of having the same experience as 2008 a little bit because of AI?
It's really interesting because you do see a really weak entry-level job market. Um, it's a confusing time to talk to economists about sort of that entry. Because there was a phenomenon where the job market was so strong for Gen Z that they weren't going to college, and they weren't going into any additional post-high school training. And that has reversed itself. And actually, economists were very worried about the fact that they weren't getting any post-high school training. And so, as the entry-level job market has weakened off of that very hot level, and they are going back to school, some economists you talk to will say like, this may not be the worst thing in the world. Um, and so I think Gen Z's story is going to be a little bit complex. Um, because there have been some really sort of countervailing trends happening at the same time. There's AI on one hand, maybe that makes them go back and get some sort of, you know, even if it's just a certificate in some practical skill, that might leave them better off in the long run.
Plumbing. You got to get more Gen Z plumbers.
Right. We love to talk about the plumbers.
We really do. God, that'll be my next guest. God bless the plumber. You said something on The Daily in that episode that I thought was so interesting too, about our generation producing, quote, 'so many baristas with bachelor degrees.' So basically, where people who are overeducated are now forced into entry-level jobs. So I'm just curious how you think that's evolved in the last 10 to 20 years and if it's worth it to still go to college.
Yeah, so I think it's a really interesting set of trade-offs and I think I will not give a satisfying answer to the question of is it worth it to go to college because I think it's very much an 'it depends.' But I think what we can say sort of concretely, what we can see in society is that we had a really, really high college attendance rates during our years in the college pool, right, immediately after, and then that started to fall off actually because the job market got a lot stronger and when we have strong job markets, we tend to have fewer people in college. It's trended back up recently, so people are still deciding that going to some sort of postsecondary education is a good idea for them, but the mix has changed a little bit. So you're seeing fewer people go to four-year colleges and more people opting for sort of more technical or more practical skills. Um, and so I do think the jury's not out on whether people still think a four-year degree makes sense for them. Um, but I do think that we have had some real fluctuations in how much people value these over recent years. I think partially because you saw a lot of baristas with bachelor degrees. Yeah. There is a strain of thought in economics. There are a lot of economists who will tell you that even if you're a barista with a bachelor degree, you're probably better off than a barista without a bachelor degree. That college education gives you an ability to sort of work your way into different jobs that might not be open to you if you didn't have that degree. And so even if you're not using it immediately, it may still be useful to you down the line and your overall lifetime earnings as a college graduate are likely to be a lot higher. Um, that calculus has changed a little bit in recent years. The numbers on it are not as good as they used to be, but I do think that's still an important thing to sort of keep an eye on is like what is your actual lifetime earnings outlook based on your major, based on your region, based on your sort of age. And a lot of that data is actually available on the Bureau of Labor Statistics website. They make it pretty easily available. And so if you're interested in this trade-off, like I think it's worth looking up for yourself, you know, like what your likely outcomes are, um, because those tools are available to you.
I should have looked at those numbers when I decided to get a degree in film studies. I'm sure it would have been dark. I pivoted to be an influencer.
I also probably should have looked at them before I decided to become a journalist.
Yes, you know. We both made it. It worked out, you know.
Okay. Let's talk about your new book, which is about a 19th-century novelist who is also an economic theorist. And no, you didn't make that up. That's a real woman. Her name was Maria Edgeworth. I didn't know about her until I read the book, and now I am obsessed. So can you explain who she was? Like, why do we need to know her? Cuz Maria's quite the gal.
Yeah. She was a complete baddie. She was so interesting.
I know. She was like the OG female financial influencer.
Yeah. I feel like I spent probably 5 years researching this book, and for five of them, I just every couple of days, I was like, 'How does the world not know about this lady? She's so interesting.' Um, so she kind of did what you do, but she did it sort of in Jane Austen time. And so she was really, really interested by economics at sort of the dawn of economics. So Adam Smith had just written The Wealth of Nations. Economics is a brand new field. Nobody knows anything about it. The Wealth of Nations, if anyone's ever read it, little tough to read. Not your easiest reading.
And what did The Wealth of Nations do? Like, it was just like this first book about the economy that sort of made everyone realize what the economy was.
Exactly. Basically, yeah. Pretty much exactly. Um, so it was this first really sweeping book by Adam Smith that kind of set out the foundations for how we understand the economy today. Like this is sort of like the birth point. Like this is when we talk about modern economics, this is where it comes from. It starts with The Wealth of Nations. And so it just happened and nobody understands this book and she thought that it would be good if the world did understand this book. And so she started putting it in fiction. She just rewrote it into fictional stories and her stories were unbelievably popular. She was basically out-earning Jane Austen by a factor of 10 at one point.
Lord Byron, who was obviously the world's most famous poet, was like super jealous because she was the lion of the season. Like it's impossible to overstate how famous she was and everybody's reading her books and as they're reading her books, they're getting the foundational principles of economics in them. And so she was really important in popularizing these ideas. She also helped to sort of change the ideas. You know, she was having regular discussions with sort of the original economists. She was sort of influencing their ideas from the ground up. And this is at a time when women aren't allowed in university classrooms, they're not even allowed to go to libraries. And so, you know, she has almost no formal access to the world of academia and yet she had a huge influence on early economics.
She really was the OG putting spinach in a brownie, which is what I always think about with financial education. That's how you have to do it where it's like make it juicy. For me, I use pop culture, she's using these novels as a way to teach people. Why do you think that works so well?
I think it worked well partially because it was just so much more approachable, you know? I think that you put some economics in like a love story or a lot of her stories were—she was very funny and a lot of her stories are satires. So you put some economics in a satire and you're kind of making fun of the character as he's learning about economics. It just feels a lot easier and a lot more painless to learn these things. Um, and so I think it worked really well and I think people didn't always realize that what they were doing was reading economics. Um, and so it was, you know, it was non-pretentious, it felt natural, and the stories were fun. They were good books.
Well, then it's like why wasn't she remembered? Because like you said, like I feel like every four years or three years there's another Jane Austen biopic and it's, you know, we're always talking about Jane Austen, the Pride and the Prejudice of it all, we're remaking it into a rom-com, and it's like why is Maria just totally erased? Why do you think that happened?
