Young People Still Crushed by Housing Bust, Banking & Economic Crisis: Bank of Spain

The contrast with retirees could not be starker.

By Nick Corbishley, for WOLF STREET:

Over the past five years, Spain’s economy has grown at a faster rate than almost any other in the Eurozone. But not everyone has benefited. And a new report by the Bank of Spain confirms, no one has paid as heavy a price as the generation that came of age in the years immediately before and after the collapse of Spain’s insane housing bubble and the banking crisis that followed.

The Bank of Spain’s triennial Family Financial Survey, based on data through 2017, shows that heads of households under the age of 35 saw their median gross income (income before taxes and contributions) plunge by 18% from 2010 to 2017 — more than any other age group. Median gross income of all age groups combined in 2017 was still below their 2010 levels, although three age groups — 35 to 44-year-olds, 65 to 74-year-olds and 75 to 84-year-olds — did see their incomes rise, at least on a nominal (not inflation-adjusted) basis.

When it comes to personal wealth, the data is even more dismal for the under-35s. In 2010 their median net wealth after debts stood at €71,600. But by 2017 it had collapsed 92% to €5,300. The main reason is that since the crisis, almost all under-35s have been financially excluded from the property market, largely due to their shrinking incomes levels. Other age groups have also seen their net wealth diminish, albeit less, since 2010, mainly as a result of the fall in house prices, which account for the lion’s share of household wealth in Spain.

The Family Financial Survey, published every three years, is meant to provide a snapshot of the financial health of Spanish households. When it comes to the youngest households, the picture is not pretty. Between 2010 and 2017, their median gross income fell from €27,700 to €22,800.

The contrast with retirees could not be starker: their median annual income jumped from €20,000 in 2010 to €25,500 in 2016. This increase is partly due to rising pension benefits, which, unlike most salaries, have more or less kept up with inflation over the last ten years. It’s also a result of an influx of new pensioners onto the pension rolls who have earned more money in their lifetime and are therefore eligible for a higher pension, which bumps up the median income for pensioners as a whole.

By contrast, young households have to contend with a job market that is rigged against them. While many young workers have contracts that are measured in months, weeks or even days, more established workers have open-ended contracts that are both exceedingly rigid and extravagantly generous when it comes to layoffs.

The system dates back to the days of the Franco dictatorship when workers received as much as 60 days’ severance pay for each year worked, making it almost impossible for companies to lay off workers without putting themselves out of business. Even today, after a series of labor market reforms, many Spanish workers receive more than 20 days’ severance pay per year worked.

To give companies some degree of hiring flexibility, without completely alienating unions and workers, Spain’s government liberalized the use of temporary contracts in the 1980’s. And companies fell in love with them. Lasting a maximum of two years (at which point the employee has to move on or be given a permanent post), the contracts offer meager protection, miserly layoff payouts, and usually dismal pay. These problems are further compounded by the outsized role of the tourism sector, which is notorious for creating casual, low-paid jobs.

The inevitable result has been a two-track labor market that encourages employers to create precarious, short-term jobs and discourages them from hiring young people — or anyone, for that matter — as permanent employees. Temporary contracts abound, by now accounting for over a quarter of all jobs in Spain, the highest rate in the EU. According to Eurostat data for the second quarter of 2019, the ratio of temporary workers to total employees in Spain was 26.8%, practically double the EU-28 average (13.6%). For under-30s, the ratio surges to 55%, 10 percentage points higher than in 2010.

Given the fragility of their financial situation, it’s not surprising that more and more young workers are choosing to stay at home. In 2018, a staggering 81% of under-30-year-olds were still living with their parents, the highest proportion since Spain’s Youth Council began compiling data in the 1990s. The proportion fell steadily in the years leading up to the crisis, reaching a record low in 2008. But it has done nothing but rise since then.

The Bank of Spain’s study concludes by calling for measures to help the country’s lost generation access the rental housing market as well as address the bipolarity of the labor market. But that’s probably easier said that done. After all, the chronic dysfunctions that afflict Spain’s labor market, making it one of the worst labor markets in Europe, date back decades. And their roots go very deep. By Nick Corbishley, for WOLF STREET.

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  93 comments for “Young People Still Crushed by Housing Bust, Banking & Economic Crisis: Bank of Spain

  1. nick kelly says:

    And this in a place working on a civil war on the side. At least Italy doesn’t have… yet. You would think one would be enough.

  2. Javert Chip says:


    I understand the gist of your comment.

    I wonder about the effect on a population that experiences years of a government (Spain + EU) imposing devastatingly ludicrous policy after ludicrous policy, all delivered in a wrapper of unaccountable political bullshit. You sit helpless and watch your wealth, family and dreams consumed in bonfires of political vanity.

    I’m actually somewhat surprised that forcing tens of millions of “citizens” thru these patently ridiculous situations has not resulted in more violence to end the madness.

    Britain has a somewhat uncertain future, but freedom (from the EU) makes up for a lot of bureaucratic mistakes.

    • Nicko2 says:

      No one forced those – now poorer – people to take out giant mortgages they couldn’t afford.

      • nhz says:

        Also, I know quite a few young Spanish people who are living in big houses for just EUR 200-300 per month, thanks to the ECB; European savers and taxpayers are paying their mortgage.

        In addition, Spain had some idiotic rules for years dictating that people who lost their job didn’t have to pay rent/mortgage for years – why look for work or cheaper housing then? I think this is no longer the case now, but while the average youngster in Spain is in a really tough position there are many others who profited hugely and undeservedly from the situation.

        Same story in much of Europe, there are big winners and big losers in every country, chosen by politics based on the demands of the elites and the wish of politicians to stay in power and catering to the voting masses. Basically two wolves and one sheep voting on what’s for dinner. Here in Netherlands new migrants get a home for free that someone who works has to pay 350-500K for, and that people on social security can easily pay out of their allowance because of huge subsidies. The result is that at least 40.000 natives (and none of the approved migrants) are now homeless, despite having a job (or having worked for many years).

      • Wisoot says:

        Nicko2 since 2009 crash those that refused to fix the system by putting the responsible in jail for the crash and changing policy, tightening regulation to make a fairer financial system for everyone – their strategy until 2020 was a laissez faire one. We own the media. We will simply program people to take debt to the level we have and by that time we can not then be jailed as everyone will be equally in debt. And so the programming started HARD AND FAST. Have what you want. Get credit. Everyone has credit. Its normal. No deposit come and talk to us. So you see Nicko2 only the very strong have been able to resist this utopia that has been literally shoved down our throats. I do not place blame with the weak minded who incidently are making the crash creators even more rich. The blame is front and centre with the educated manipulators who forced the crash. It was an intentional decision to crash in 2009. The suffering caused to a whole generation lays squarely with a few people. Im aware of who they are just through research. They know who they are. Their free ticket to lynch millions has run out. Holding them to account is the next step to heal western world wounds.

    • Staw Man says:

      J. Chip,

      It’s a given that you’d blame “government” and “bureaucrats”. How about the idiocy of the people (and corporations) who live beyond their means, whose consumption is unbounded, and corporations that avoid accountability until they can’t.


    • Javert Chip says:

      Straw Man

      I absolutely agree with your comments regarding Spaniard’s knowingly & willing living beyond their means.

      I was responding to Nick Kelly’s ruminations about Spain “…working on a civil war on the side…”. Spain has a lot of civic issues (including living beyond their means), one of which is they have a fairly unaccountable government imposed by their own poor electoral choices & the EU.

      My commenting on prior threads about Spanish (and Italian) bank problems have been unfailingly critical of the “Mediterranean” practice of pretty much everybody (corporations included) refusing to accept personal responsibility for only taking loans they can afford & actually paying them back.

      • nhz says:

        What is the difference with northern Europe like Netherlands, Sweden, UK? People take on huge loans that maybe they THINK they can pay back (based on the assumption of ever rising house prices, forever low interest rates, an unlimited supply of greater fools to buy their house from them for even more idiotic price and wishful thinking in general), but are impossible to pay in a normal economy with sound money and no bailouts.

        There is no accountability in the North either, most “homeowners” simply assume it is a one-way bet, the government will bail them out if things go wrong so why worry. Most people just do what they can get away with, often based on simple thinking like “they guy next door does the same …” and of course, if everyone around them is buying a bigger home they also have to buy something bigger.

        • Javert Chip says:


          “…What is the difference with Northern Europe…”

          Simply accusing people isn’t the same as credible evidence.

          In the context of this thread, years of bank losses in the south have been materially larger than losses in the north…not to mention governmental and bank management incompetence/corruption.

        • AngrySpaniard says:

          The difference is that northen nanny states help young people leave the nest.

          What a bunch if entitled people, thinking that somehow they work harder and save more than we the lazy south europans.

          I Will give you some examples: people in e.g. denmark holds far more debt that almost anywhere in the world. Savings rate is way higher in Italy than in Germany. And so on…

          Who is living beyond their means?

  3. Suzie Alcatrez says:

    Spain will be in much worse shape in 2020 when Brexit finally occurs.

    25% of Spanish tourists are British. Not to mention a lot of British ex-pats have settled in Spain and bought property.

    • The Oligark says:

      Thats more a problem for the brits actually. If a homeless spanish finds an empty (holiday)property belonging to some foreigner(or anyboy else for that matter) they can easily ‘hijack’ the property. If they manage to stay in that property for 48 hour without beeing reported to the police, it’s practicaly impossible to kick’em out. Spain are really a shady country to do any kind of investment in and no statistics can cover what happens there.

    • Frederick says:

      True and those expat Brits will still be there if and when GB leaves the EU or most of them anyway It will just cause them alittle bit of discomfort but not too bad I believe. We have plenty of Brits living here in Turkey and they seem to do OK.

    • nhz says:

      if a lot of these British tourist decide to leave and sell their home (e.g. because the Spanish civil war starts to heat up again, or because staying becomes fiscally unattractive), and maybe some other foreign “investors” follow their lead, the problem of unaffordable homes for the young might get solved, at least in the coastal areas ;)

      • Pail Rees says:

        Mobile Beitons will be welcomed in Portugal where the NHR tax regime entitles many of them to pay zero tax on their pensions.

        Selling Spanish homes in a depressed market will be the problem….

        • Paul Rees says:

          Britons, even….

        • nhz says:

          Yes, I think a lot of these movements are based on fiscal incentives and much of this could change when the EU (or some specific country) gets into financial trouble. I have heard a lot of Dutch people own homes in the historic areas of Lisbon and Porto and that this is also related to tax reasons and EU subsidies.

          My impression is that Portugal RE (especially new homes) is cheap compared to most of Spain, but there often is a reason for that; like low service level or the potential for future tax hikes.

    • MC01 says:

      The same was said when Russia was declared Public Enemy Number One: “Russian tourists will disappear”.
      Yet Rossiya (an Aeroflot subsidiary) still uses their former-JAL 747-400’s on the St Peterburg-Barcelona and Moscow-Barcelona routes from the beginning of April to the end of September. Aeroflot proper and S7 Airlines (a private Russian airline) run A321’s all year around on the same routes. The demand is still there.
      As Vespasian said “Pecunia non olet”.

      If there’s one thing that may affect tourism in Spain in the future is money, again.
      That GDP growth is in no small part due to the same driver all over the world: unreported inflation.
      There’s no beating around the bush: Spain is becoming more expensive faster than the rest of the European countries that supply her with a steady stream of tourists. In a way this is the same that happened to Italy in the past.
      Countries like Bulgaria and Turkey will roll out the red carpet to tourists ready to spend their hard-earned euro, pounds, francs etc. The competition is there, and it’s aggressive when it comes to pricing.

      TUI, the German travel giant, has started to push “alternatives” to Spain aggressively, just like they did with Italy: their customers may well afford the extra price but don’t like being considered sheep to be sheared.
      This is not the stock market, so greed will only get you so far…

      • Iamafan says:

        Can somebody please tell me why we need Spain? What does it have?

        • Auld Kodjer says:

          1. Jamon Iberico and Manchego, washed down with adequate quantities of Rioja Tempranillo
          2. Donostia surf
          3. Bullfighting

        • Iamafan says:

          Ok. #1 is good enough reason. I will add La Torta de Aceite Original de Inés Rosales. Perfect with Cheese and like Churos its awesome with hot chocolate.
          Unfortunately we can’t bring in meat and fruits at customs. So I gorge on Belota Belota while overseas.
          I’m hungry already.

        • Wisoot says:


  4. Ole C G Olesen says:

    There is a sentence in this Article EVERYBODY should STOP at –and REFLECT about .. especially the YOUNG PEOPLE :
    ” The days of the Franco dictatorship when workers received as much as 60 days’ severance pay for each year worked, making it almost impossible for companies to lay off workers without putting themselves out of business.” … Ahhh … really? … This evil man… ” Franco ” … PROTECTED THE COMMON WORKER… SCANDAL ! … he must be put out of Business .. Vilified … even dug out of his Grave .. so everyone learns the Lesson … DO NOT TRY TO DIMINISH THE POWER AND PROFITS OF THE UEBER-RICH …and their BRIBED POLITICAL NOMENCLATURA ….

    • mark says:

      Ole : Amen to that. Well said.

    • nhz says:

      “Protecting the workers” doesn’t alway work out as well as it seems at first glance.

      Netherlands had similar severance pay regulations until about two decades ago, making it nearly impossible to fire someone (all that without an official dictatorship). Result: inflexible, dysfunctional job market with many well-paid useless workers – especially in government jobs – relaxing in their jobs at the cost of others, ultimately resulting in new rules (again similar to Spain) that give companies permission for temporary jobs, and a surge in temporary, lower paid work contracts. We now have a two-track job market with “old workers” enjoying their gold-plated contracts (and later on gold-plated pensions) and new workers (both young and older people who lost their job) having to pay for it.

      Same story for increasing the minimum wage. Maybe there is a relation between the high minimum wage for young people in Spain and high youth unemployment, compared to e.g. Germany with its much lower minimum wage?

      • raxadian says:

        Minimum wage shoulf scalate by the job you do and it’s difficulty. Otherwise you have cases were working on retail pays almost the same as flipping burgers or being on a desk job ten hours a day.

        Is madness that people that went to university and got a degree may end earning less that those that didn’t, even if they aren’t paying a student loan.

        And careers that are highty needed might not be by the time you end graduating.

        When I was a id being a lawyer was sern as a safe stwnle job with high income. Nowadays we have so many lawyers in my country that recent graduates are screwed unless they have relatives on that job or the right connections to make it big.

        And we do need nurses but no one wanrs that job because is like 80% the effort of becoming a doctor with a third of the pay and double the health risk.

        • sc7 says:

          “And careers that are highty needed might not be by the time you end graduating.”

          At this stage, anyone going to college for a career specific major is doing it wrong. Generic, skill enabling majors like CS, engineering or even business are the way to go.

        • Unamused says:

          Generic, skill enabling majors like CS, engineering or even business are the way to go.

          Now that marketing has replaced culture the Humanities can be eliminated, and the value of every wage-slave automaton can be set by corporations according to relative profitability.

        • HowNow says:

          Great observation… I hadn’t thought of it that way: “marketing replaced culture”.

    • Nick7 says:

      Franco “protected the common worker”, yeah, and he also attempted a coup which precipitated the Spanish Civil War where about half a million people died. He then became dictator since his side won the war and proceeded to execute his enemies, anywhere from 30-50 thousand people were killed. Great guy that Franco…

    • Javert Chip says:


      Before we get all teary-eyed about Franco protecting the common man, read about Franco’s White Terror, claiming some 100-200,000 “common men” (

      But I digress…

      Part of my career was spent negotiating large US/EU M&A deals. Franco’s “protections” gave a ten-year employee 600 days (almost 3 years) of severance. At the margin, this kind of stuff kills deals, reduces economic activity and protects uncompetitive businesses. After a while, you’re left with a pretty dumpy economy as the world (except for tourists) passes you by.

  5. Old-school says:

    Allowing price discovery is not utopia, but it solves more problems than it produces. Once government says price discovery isn’t working and starts meddling in the housing market say, then usually things go from bad to much worse. I think it’s pretty clear that rent control leads to housing shortages for example.

    I think the US started down the road of sprinkling low income housing vouchers into middle class and possibly even upper middle class neighborhoods on the theory that poor people cloistered together are doomed forever to be an underclass. This obviously caused resentment because most people who have worked hard to move up into a neighborhood don’t want that jeopardized by poor strangers getting dropped in.

    My son lives in NYC and I understand that to get approval for new housing projects you have to have so many set asides for low income people.

    Lower income housing is starting to be a problem in the closest city to me Raleigh.

    I am more sympathetic to poor older people who need a safety net, but for healthy young and middle age people government should do little. If they are going to do anything for them it should be with incentives to be productive members of society.

    • Iamafan says:

      A New Yorker named Andrew Yang is young with some very interesting ideas. Another New Yorker, Bernie, is quite old and with also quite interesting ideas. The water in New York must be good.

      • Unamused says:

        The water in New York must be good.

        Affordable too. It hasn’t been privatised.

        • Iamafan says:

          I’ve had a deep well and septic system for the longest time, but I still use public roads, airports, etc. Today most public water is for showering or watering the lawn. Bottled water mostly has taken over. The Roman aqueducts are fantastic though. They work.

        • Jon says:

          New York has some of the highest taxes in the country. I wouldn’t call it affordable. Gotta pay the public unions.

    • c1ue says:

      Price discovery is not a panacea.
      Among its many weaknesses: in a cheap financing produced bubble – does price discovery help or hurt?
      Equally, price discovery assumes there are viable alternatives both existent and known.
      And then there’s fraud: price discovery cannot work if there isn’t some measure of honesty of product, brand, quality, etc.
      Ultimately, price discovery is a saint in the discredited religion of neoliberal economics – which says that markets are efficient, that humans always make the most rational economic decision, that information is equally shared and available, etc etc.

    • freewary says:

      “poor older people who need a safety net”

      I dispute the need for a government safety net. Where are their families? Extended families?

      People need a government safety net as much as they need a casino.

    • HowNow says:

      Old School,
      Please explain how price discovery works for pay-day-lenders and the borrowers who can barely add or subtract.

      • HowNow says:

        “Refund Anticipation Loans” (RAL). These short-term loans have been promulgated by the likes of Bank of America for a while, until they were fined and may have stopped doing them. If you annualize the rates for some of these loans, they can reach 200% a year, with the service fees, etc. Payday lenders aren’t what you think they may be or look like: some of them hire the top law school graduates who don’t mind skinning people alive.

      • HowNow says:

        “Price discovery”… don’t make me laugh.

  6. Unamused says:

    When the only real goal is to enrich the wealthy millions are bound to get screwed. The trick is to find people to blame who aren’t wealthy so the policy can be preserved. This way, every demographic in the 99% can point fingers at every other and the rich can laugh all the way to the bank.

    It works in any country.

    • Frederick says:

      Canada seems to be one of the worst of all in that regard I’ve been reading about how well big business is treated there at the expense of the people Really horrible Evidently Canadians are too nice to act like the French

      • nick kelly says:

        If the US had the same limits on political ads as Canada, spending would drop by at least 90%.
        So would the price of insulin. Yes, by 90% which is mind boggling.

        Americans would be well advised to avoid comparisons to Canada. Every year the UN does a quality of life index. You have to be rich to place near the top, like it or not money counts. Every year the same five or so countries swap places for first, second, etc. Usually on the leader board are Canada, Oz, Denmark, Sweden, Norway and a very few others. The highest the US has ever scored is 14. Yes it is the richest but that only gets you so far.

        Not coincidentally, all the above are constitutional monarchies, i.e, the monarchy has EVOLVED from any executive role, which they still had circa 1790. Note the root word in monarchy: ‘mono’ meaning ‘one’.
        In none of the above is one person a co-equal branch of government, e.g., no one in the UK can pardon anyone on a personal whim.

        • freewary says:

          “If the US had the same limits on political ads as Canada, spending would drop by at least 90%.”

          regulating free speech will only increase the influence of people and corporations to hire lawyers to get around the regulations.

          A very good proposal to that would eliminate billions of political spending without limiting free speech is to repeal the 17th amendment. Senators would no longer stand for popular election they would be appointed by the state legislator. Candidates would no longer need corporate $$ to advertise to the masses and this would increase the power of the states. 17th amendment was very foolish.

        • NBay says:

          I love money saving, too. But why stop there? Eliminating the entire Senate would save over10X your proposal, and that whole side of the Capitol could be turned into a government run hotel for visiting foreigners and the proceeds would go right to the Treasury. Between our ideas, we could really make a big dent in the National Debt!

      • Faifo says:

        Take a look at Ireland. Foreign REITs are treated royally. Renters, potential buyers and, especially the homeless, are ignored.

  7. gorbachev says:

    When you rent a machine or an apartment the

    price for short term is always more than renting

    for long term.So why do we allow short term workers to be

    paid far less than long term workers.This is something

    we could fix.

    • Just Some Random Guy says:

      No this not something “we” can fix. “We” can’t fix the basics of supply and demand. A worker is worth what that workers contributes. If the worker is worth $10/hr he’s worth $10/hr whether he works 1 hour or 100 hours.

      But I’m sure govts somewhere will come up with a brilliant way to “fix” this “problem”. And when unemployment increases by 20%, they’ll be dumfounded why their brilliant “fix” didn’t work.

      • Unamused says:

        If the worker is worth $10/hr he’s worth $10/hr whether he works 1 hour or 100 hours.

        Wage slavery is popular, except among wage slaves.

  8. Iamafan says:

    I do remember Woodstock. In fact, I drove by it regularly going to grad school in upstate NY. Back then, they also thought the kids were useless drug using unkept hippies.

    • NBay says:

      I was one of those. Spr 66 to Spr 67 on Haight St. Then I went in the Army. We all still looked the same, still were all useless kids, but the drugs were cheaper.

  9. c1ue says:

    How is Spain different than the US?
    Oh, college debt.
    Then health care costs as they age.

    • Iamafan says:

      The US has the World’s Reserve Currency. Big difference. We are also very cool with iPhones and Teslas.

    • Javert Chip says:


      How is Spain different than the US?

      Couple things:

      o Years of 15% national unemployment
      o Almost impossible to fire older workers
      o Years of 20-30% unemployment for 20-30 year-old Spaniards

      • c1ue says:

        And so how does this law hurt or help the overall situation?
        Spain at least has a European safety net.

        • Javert Chip says:


          EU safety net? You need to look at how the EU safety net worked for Greece & Cyprus.

          With EU “assistance,” the Greek economy took a bigger hit than the US did in the 1929 depression.

          Greece is only 10M people; the EU (525M people) cannot even begin to save Italy or Spain if they experience the same problems.

  10. Cyclops says:

    Sounds like the young Spanish are reluctant to become debt slaves so they live at home with parents! The follies and gold plated politicians sleep with the 1% will ruin the young and middle class. We have become a nation of debt slaves! Sounds like us over in America?

    • Paulo says:


      Just different cultures, imho. Who wants to be mama’s boy living at home and riding a Vespa when you can be a broke cowboy? :-)

      A few years ago there was a funny commercial on tv with a shouting granny-aged mom yelling, “Kids won’t leave home? Quit buying cheese”!

      • NBay says:

        Have to admit those were my thoughts also when reading the article. No idea which bunch is worse off, Spaniards I’d guess.

    • Cobalt Programmer says:

      I am from India. Mostly Asian countries have a tradition to keep parents with them. Also grandmother will rise her grand-kids. Only in USA, kids are forced to leave the nest. For a while in India, if a women pressures her husband to leave the parents, she is a bad-DIL. I still do not understand why anyone would move away from parents and get in to huge debt and raise a family on his own and earn a big income to support the family?

      • freewary says:

        @ Cobalt Programmer

        I just read an interesting article about why people in the west are obsessed with moving out of their parents house even if it imporverishes them:

        • Cobalt Programmer says:

          I think during medieval period, a single family popped out kids in dozens. Few of them go to war, few die due to diseases and women will marry. Church must force the remaining few men to move and start afresh. There is no other choice. Even now, if a young man can afford a home, he can buy it. Debt and lifelong payments are a real burden in his finances. Also, mocking young people in troubled times is going to alienate them from society.

        • RagnarD says:

          That was an interesting read…
          Shines a big light on potential reason for big mafia in south Italy vs not so much in north.

  11. Just Some Random Guy says:

    “workers received as much as 60 days’ severance pay for each year worked, making it almost impossible for companies to lay off workers without putting themselves out of business.”

    If I read between the lines, it’s almost as if Wolf admits that socialist labor policies end up hurting the very workers they’re supposed to help. But that can’t be. I probably need more coffee or something.

    • Wolf Richter says:

      Just Some Random Guy,

      I think you would have been better off not reading between the lines here.

      1. Wolf doesn’t “admit” anything here because Wolf didn’t write the article. Nick did.

      2. It seems – now interpreting Nick’s intention – that this line was historical info for reference purposes to help you understand the difficulties and complexities of the Spanish labor market.

      3. Wolf never advocated for any such thing, or promoted it, or thought it was a good idea. Wolf spent many years of his life managing a company that he grew to 250 employees in an “at-will” flyover state, where employee costs were well over 50% of total costs, and he understands labor issues, both from the company-point-of-view and from the employee-point-of-view. Wolf dealt with the Labor Department and understands how that works. In the process, Wolf has learned that employees are a company’s most important assets, and that you have to pay them enough to attract and keep the best ones out there, and that you have to treat them well so that they remain productive.

      4. Wolf has an MBA in finance from the University of Texas at Austin; though its shelf-life expired years ago, the thinking processes he went through at the time formed the technical foundation for his understanding of how business, finance, accounting, and the broader economy function. Wolf was never once in his life a “socialist” but believes that a capitalist system needs to have a proper safety net (the US has such a safety net, but it has some issues and gaps) and appropriate regulations and enforcement of those regulations in order to avoid descending into mayhem and self-destructive chaos.

      Was that helpful?

      • Javert Chip says:


        Always interesting to see somebody egregiously mis-quote (among other faults) a third party to set up a straw-man argument…

        …especially when the “third party” didn’t even write the article.

      • HowNow says:


    • Petunia says:

      When I was working on my Economics major, they taught us companies had responsibilities, which included commitments to the local community and to the employees. I vaguely remember it being called social responsibility.

      • MarTi says:


        Speaking of commitments to local communities, here’s a story for you…

        During my high school years back in the 1970s, after turning 16, I worked at a privately held company named Simplex Time Recorder Company in Gardner, Massachusetts.

        My father, who worked as a data processing manager there, told me 10 years ago during a conversation were were having about outsourcing jobs in this country, that one day back in 1974 he and a payroll manager friend of his were talking to Simplex’s owner while the three of them were walking through the Electrical Harness Production department. He told me his friend the payroll manager mentioned to the owner that Simplex could make more money if Simplex outsourced the harness work being done by the workers of that department to some local companies in the area. The owner replied that he could do that, but he said that “I have a responsibility to the people of this town who work here. And I won’t outsource any department.”

        This sure isn’t the same country I remember back in the 70s. I myself was let go a year ago after 28 years at the high tech company I was with, as my entire department was outsourced to India. People still at the company tell me there are now four people in India trying to do what I did.

        Saving money/maximizing profits is the name of the game now, at the expense of production and quality.


      • HowNow says:

        The “social contract”. Long gone, now.

  12. Just Some Random Guy says:

    So the govt imposes ridiculous rules on employers, causing massive unemployment. Instead of getting rid of those rules, what does the govt do? Start imposing rules on housing, which as we all know will only make housing more expensive.

    A double whammy from the govt, no jobs and expensive housing.

    This is always the case, everywhere. Govt creates a problem and then solves that problem by creating another problem. Rinse and repeat forever.

    And still people want more and continually vote for more govt intervention. Madness.

    • Unamused says:

      With your government of the rich, by the rich, and for the rich, any benefit of government for the general population is going to get deliberately screwed up if it cannot be repressed.

      Governments are increasingly prevented from mitigating the destructive externalities of the corporate class, and eventually that will doom you.

      Enjoy it while you can.

      • Just Some Random Guy says:

        Doubt it. I work hard, invest wisely and am doing just fine. Govts represent people like me, the contributors to society. Which is how it’s supposed to work.

        • JBird4049 says:

          Good grief, what a nice fantasy for most people. Bluntly, it is almost impossible today in the United States to be financially successful unless your family was too.

          Pretending that the country is the same as it was fifty years ago is foolish and only ensures a future crisis.

        • cb says:

          What are you contributing, and how are you doing it?

  13. Iamafan says:

    The list of former Spanish Colonies are amazing. So many of them are basket cases. Thank goodness for the winner of the Spanish American War of 1898. A blessing, in my opinion.

    • Unamused says:

      Thank goodness for the winner of the Spanish American War of 1898.

      The Philippines and Puerto Rico may have a different opinion. Unless I missed the sarcasm.

      • Iamafan says:

        Ask the Philippines again. The dollar is very famous there. Especially during Christmas time when workers send money home. The only remnant of Spain there is the Catholic church (famous for child molestation). You will barely here anyone speaking Spanish there, but they have large call centers talking English. In fact, English (or the mighty American dollar) is the way to get understood there in many “provinces” (as they call them). Corruption is popular nonetheless.

        Puerto Rico? That’s Peter Schiff’s great tax haven (shelter). He moved there from here (Connecticut). Still a part of the US if I recall correctly. At least they have US passports and use da “dollah”.

      • Javert Chip says:

        1) Philippines gained full independence from the US by a popular vote of the Philippine people in 1946. No violent revolution, just a popular vote.

        2) Puerto Rico has he right to do exactly the same thing – leave the US umbrella with a simple, peaceful vote of the Puerto Rico electorate.

        So much for ascribing “different opinions”.

        • GrassRanger says:

          J., I suggest you update your knowledge of Philippine history during the 1900s to 1930s. There was a long and bloody conflict for independence with many atrocities by both sides. Following the Japanese occupation during WWII, there was a change of attitude by both the US and the Philipinos that produced their independence, a blessing for both nations.

  14. Jeff Relf says:

    “Health”, not “Money”, is the name of the game;
    and old (dying) rich people are incapable of imposing their
    ( job security ) ideals onto young (growing) poor people.

    They try, but all it does is
    remove the lower rungs of the ladder;
    adding to the income gap.

    Seattle does everything in its power to make it so
    that anyone-n-everyone can easily find an apartment,
    and never be evicted. . . but it’s the little people,
    like me, who pay the price, not the city.

    China kills “undesirables” (scofflaws) covertly;
    in the Philippines, it’s more overt;
    in New York, where jail costs 1’000$/day/person,
    professional scofflaws operate with impunity —
    i.e. random citizens, not taxpayers, pay the price.

    • Iamafan says:

      You said it, Jeff. My mom died 2 years ago and she could not take a cent with her. Her unmarried sister (my aunt) also died last year. Again everything they owned (a lot) was left on earth. I had a massive stroke in 2018 and survived with no paralysis. I would have left everything on earth, too. My priorities definitely changed. But I do understand why most people act the way they act until maybe they experience a little death. (Personal advice: I could not even log on with my password in the hospital. I could not transfer my money and investments. I was too disoriented. So the point is be ready, anytime.)

      There is a reason why there are many Chinese and Filipinos here (even in NYC). Just go to Downtown-East Broadway or Flushing and Woodside, Queens. Life for many foreigner is so much better in New York. Netflix’s comedian Ronny Chieng says it all. Since my business was in NYC, I paid NYC taxes for more than 30 years. I made money so, I have no complaints or regrets. My son was educated in NYU and lives in Brooklyn and we still help him pay the price of being in NYC. I would not exchange the NY/CT life for anything despite the craziness here. I continue to pay a lot.
      At least in the USA we have a choice. China decides where you can work and live. In the Philippines. the economy forces one to go to Manila, hopefully not the slums. SQUATTERS is a common word used in China and the Philippines. Here it’s just called homelessness.

  15. Just Some Random Guy says:

    Wolf, why are you embargoing my post about low income housing?

    • Wolf Richter says:

      I have limits on how much you can use my platform to promote your political opinions. And that’s what that was.

      • Just Some Random Guy says:

        It was related to low income housing that was brought up by Old School. Very relevant to the topic at hand related to real estate. I thought you were a “listen to every side” type of guy.

        • Wolf Richter says:

          If you had left politics out of it, OK. But it was full of politics. On the face of it, the primary purpose was to smear certain politicians.

  16. Iamafan says:

    I don’t live in Spain. But can a subprime borrower get a car (or a house) loan from Santander over there? WSJ has a great article on the fraud.

    Just google “An $809 Car Payment, a $660 Income: How Dealers Make the Math Work ” to get around the paywall.

  17. Just Some Random Guy says:

    Living at home past 25 is kinda loser-ish.

  18. Wisoot says:

    Thanks Nick for a caring article bringing the large picture into focus with boundaries.

  19. Calm Horizons says:

    Ah, nothing like screwing over the young. Who cares if they aren’t able to establish stable careers and households? I mean, it’s not like they’re the future of the country or anything…

    (Not like the U.S. is immune. I anecdotally know several co-workers whose kids can’t afford to move out, mostly because of education debt. Ironically, the kids without college degrees are the ones who have moved out and started families.)

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