To understand how our economy works, I’ve had to resort to some science fictional conceits, namely, zombies and time travel.
First, let’s consider that mortgages are a form of time travel.
It’s not the fun kind where you hop into a flying Delorean and zip back and forth, maybe visiting the Old West. It’s a bit more ordinary than that.
Let’s say you got a mortgage in 2004, 20 years ago, and you’re still living in that home today.
You’re a financial time traveller.
If you’re an ordinary, cautious sort of borrower, you put down 10 or 20 per cent of the purchase price, and you got a fixed-rate 25-year mortgage with five-year terms, and you’ve paid off four of those terms.
So you live in two timelines at once. Your present self is hopefully collecting wages at 2024 rates. Your past self is paying for a home at 2004 prices, give or take a few pesky ups and downs in interest rates.
This is why no one over 55 really understands the scale of the housing crisis, or gets the existential terror their children or grandchildren feel about it. They can’t. They have one foot in the past, where they reaped the benefits of cheap housing, and one in the present, where they get all the benefits of inflated real estate values. They are unwitting time travellers.
Some of those time travellers are also zombies, and that’s an increasing problem for businesses, employees, and eventually, everyone.
A time travelling zombie is someone who got a decent job and bought a home. And then they stuck with that decent job. Maybe they got raises over the years for seniority, maybe they got promoted a few times, but they’re basically doing the same thing they did 15, 20, or even 30 years ago.
Even if their pay has only gone up at the rate of inflation, though, they’re fine! Plenty of cash to pay that mortgage, after all.
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But now, they’re getting ready to retire.
Who will replace them?
Have you ever idly perused job listings and wondered how anyone can live on the wages some employers are offering, given the cost of housing?
People can’t live on those wages, actually. They’d wind up paying 70 per cent of their income for housing, or they’d have to find seven roommates.
So companies have trouble finding workers, because the bosses (who bought their houses in 1995 or 2007 and are also time travellers) don’t understand why they can’t keep paying zombie wages.
We have talked a lot about the crisis that will come when every last Boomer hits their twilight years, and we need a lot more doctors and seniors care in this country. That day is almost here.
But we haven’t talked about the crisis when every last Boomer and older Gen Xer retires, and no one is willing to do their jobs for $40,000 or $50,000 a year, because that might as well be Monopoly money when houses cost $1.5 to $2 million.
Someone has to figure out who’s going to do the work all these time travelling zombies are retiring from, before it’s too late.