Millenials and Gen Z will be hard pressed to be able to save for retirement. We all blame the Boomers, although it started (1970's) before half the Boomers even joined the workforce. The link between production and compensation has gone askewed, with the lion's share going to the owners. There are a few owners who are willing to cut $1M of their 8-figures income so that they can pay their workers living wages, but they're few and far between.
May I offer some historical perspective? This askewed disconnect began with the focused opinion theory of Milton Friedman, who promoted the concept that corporations have but one party to whom they answer, the 'owners'. Prior to that, much of corporate culture considered all the stake-holders: the owners, management and the rest of the employee workforce, the customers, the vendors and the community.
A consultancy called McKinsey ran with that idea, selling their opinions to receptive BODs and C-suite execs. McKinsey became the go-to corporate advisors for squeezing profits and redirecting resources to the shareholders alone. Counselling companies on how to be more 'efficient', how to cut benefits and payroll, how to maximize lifespans of existing infrastructure (is it more cost effective to modernize or allow a facility/process to run until it rusts out from under), how to offshore labor, technology support and manufacturing, and how to use corporate resources to influence government regulation. This came to a climax when lobbyists (gee, I wonder who) convinced the neo-cons overseeing the SEC in '83 to allow unfettered stock buybacks by public companies. [The next time a politician bloviates about the evils of regulation and promotes budget cuts to regulatory staff, look to see who owns him or her.]
Rather than profits being reinvested in wages, or R&D, or infrastructure, companies have for 4 decades been following the McKinsey method, reinforced by famous graduate 'Schools of Business' as how 'modern companies operate'. Stock buybacks in particular have been toxic. Many C-suiters and BODs benefit directly, as they have both stock options and performance bonuses. Bonuses are often structured based on one major metric: the EPS improvement during a mgmt's reign. If the EPS goes up, the bonus metrics are made --, regardless of whether the share prices actually rise in the long-term. Anyone can do the math: buy back a bunch of stocks, and even if the share price hasn't moved a penny, EPS rises. Bonus!
Usually, share prices do rise on these artificial inflations due in part from the temporary 'good news' cycle that a company was profitable enough to buy back stocks. Such is the reasoning of Wall Street press. Note that previous to stock buybacks, more of that profit would have been funneled into dividends -- but we can't have that since dividends are taxable to the shareholder. I worked for a company of 300k employees that earmarked $24Billion+ to three years of buybacks. If mgmt had earmarked HALF of that money to raises, it would have been a $6.50/hr increase for each person over the same period. They'd still buy back $12Bil. McKinsey may be the most powerful consultancy ever, yet almost no one has heard of them.
@Mousse points to millionaire 'owners'. Perhaps he meant CEOs and other C-suite denizens. While many receive obnoxious levels of pay, even if they were stripped down to $1/yr and no bonuses of any kind, the compensation savings wouldn't raise the average worker more than a few pennies. The real owners (of public companies) are the shareholders, and the majority of that are institutional investors and hedge funds. The same institutional investors that provide those 401k-type and pension programs. So anyone here who has stock investments -- you are an owner. Those hedge funds and 'actively-managed' mutuals cannot match the annual performance of VTI and other diverse low expense ETFs, but their owners and managers still make bank. The C-suites and BODs would lose their jobs in a heartbeat if they were brazen enough to stop with the stock buybacks. They are controlled completely by the large investor entities and the 'advice' of McKinsey.
. I still also have a pension and although it will be frozen as of next year, I will still get some income out of it. My personal savings is another matter, but I don’t fall into that can’t scrape together $400 in an emergency category.
