Archive for Hillary Hoffower

There’s a wealth gap even between millionaires, and it says a lot about growing inequality

millionaires
The wealth gap even at the top shows just how bad wealth inequality is overall.
  • There's a wealth gap among very high net worth individuals, per a new Wealth-X report.
  • Those worth $15 million to $30 million make up just 16% of that cohort, but account for double the wealth.
  • It shows just how concentrated wealth really is at the top, and how stark inequality is.
  • See more stories on Insider's business page.

Even millionaires have a wealth gap.

One out of every 10 millionaires has a net worth between $5 to $30 million, which Wealth-X defines as "very high net worth" (VHNW) individuals in its annual report. But the wealth among this wealthy class is lopsided.

Two-thirds of the VHNW class (about 1.7 million people) comprise the cohort's lowest wealth tier of $5 million to $10 million, per the report. But those in the upper two tiers - the $15 million to $20 million range and the $20 million to $30 million range - represent just 421,170 people, less than 16% of the VHNW population. And they hold twice as much wealth, or 32% of the total.

The VHNW class is collectively worth $26.8 trillion, accounting for a quarter of millionaires' total global wealth of $105 trillion. Those worth $1 million to $5 million account for 40% of this total wealth, while those worth over $30 million account for 34%.

This means that across both the larger millionaire population and the VHNW cohort, vast amounts of wealth are held by an exclusive group.

The pandemic has widened wealth inequality

Pre-pandemic, wealth inequality was lurking underneath America's surface. As Insider's Andy Kiersz reported, there was a "two-track" economy: those who owned stocks, or were already firmly middle or high-income, were reaping the benefits of a booming economy. An increasing share of national income was going to the top 1%.

The pandemic has since exacerbated the economy's uneven dynamics, reported Insider's Juliana Kaplan. Inequality deepened with a K-shaped recovery, as the different tracks diverged.

The bottom of the K dragged downward, with lower-income individuals continuing to struggle with the economic fallout. The poor were financially vulnerable, with many on unemployment benefits or risking their health as an essential service worker. From June to November, about 7.8 million Americans fell below the poverty line.

Meanwhile, higher-income Americans were six times more likely to be able to work from home than lower-wage workers, according to research from the Economic Policy Institute. They were spending less and saving more, and the very richest have been growing their billions.

The wealth gap among VHNW millionaires, and millionaires overall, says a lot about the wealth gap among the rich and the poor. It shows just how concentrated wealth is at the very top.

Read the original article on Business Insider

There’s a wealth gap even between millionaires, and it says a lot about growing inequality

millionaires
The wealth gap even at the top shows just how bad wealth inequality is overall.
  • There's a wealth gap among very high net worth individuals, per a new Wealth-X report.
  • Those worth $15 million to $30 million make up just 16% of that cohort, but account for double the wealth.
  • It shows just how concentrated wealth really is at the top, and how stark inequality is.
  • See more stories on Insider's business page.

Even millionaires have a wealth gap.

One out of every 10 millionaires has a net worth between $5 to $30 million, which Wealth-X defines as "very high net worth" (VHNW) individuals in its annual report. But the wealth among this wealthy class is lopsided.

Two-thirds of the VHNW class (about 1.7 million people) comprise the cohort's lowest wealth tier of $5 million to $10 million, per the report. But those in the upper two tiers - the $15 million to $20 million range and the $20 million to $30 million range - represent just 421,170 people, less than 16% of the VHNW population. And they hold twice as much wealth, or 32% of the total.

The VHNW class is collectively worth $26.8 trillion, accounting for a quarter of millionaires' total global wealth of $105 trillion. Those worth $1 million to $5 million account for 40% of this total wealth, while those worth over $30 million account for 34%.

This means that across both the larger millionaire population and the VHNW cohort, vast amounts of wealth are held by an exclusive group.

The pandemic has widened wealth inequality

Pre-pandemic, wealth inequality was lurking underneath America's surface. As Insider's Andy Kiersz reported, there was a "two-track" economy: those who owned stocks, or were already firmly middle or high-income, were reaping the benefits of a booming economy. An increasing share of national income was going to the top 1%.

The pandemic has since exacerbated the economy's uneven dynamics, reported Insider's Juliana Kaplan. Inequality deepened with a K-shaped recovery, as the different tracks diverged.

The bottom of the K dragged downward, with lower-income individuals continuing to struggle with the economic fallout. The poor were financially vulnerable, with many on unemployment benefits or risking their health as an essential service worker. From June to November, about 7.8 million Americans fell below the poverty line.

Meanwhile, higher-income Americans were six times more likely to be able to work from home than lower-wage workers, according to research from the Economic Policy Institute. They were spending less and saving more, and the very richest have been growing their billions.

The wealth gap among VHNW millionaires, and millionaires overall, says a lot about the wealth gap among the rich and the poor. It shows just how concentrated wealth is at the very top.

Read the original article on Business Insider

Millennial homeownership is causing the US to run out of houses

house for sale
Millennial home demand is just beginning.

The housing market is screwing over millennials - unless builders get their act together.

A recent Jefferies note on housing highlighted that homeownership rates have increased among those ages 25 to 29, and especially accelerated for those ages 30 to 34, a clear indication that the millennial generation truly reached homebuying age during the pandemic. The 25- to 34-year-old population is 9% larger than 35- to 44-year-olds, so millennials are set to drive the sector for a long time to come.

Indeed, millennials led all generations in homebuying last year, according to Apartment List's Homeownership report, accelerating a five-year trend in millennial homeownership rates rising the fastest. The millennial homeownership rate has climbed to 47.9% from 40% just three years ago, according to the report. And 30% of millennials said in a recent survey by Clever Real Estate that the pandemic pushed them to house-hunting earlier than planned.

But there's a big problem: Millennials' push into homeownership has left America running out of homes.

Millennial demand is intensifying the starter home shortage that existed even before the pandemic due to things like rising construction costs, restrictive zoning rules, and real-estate investors snapping up starter homes in hopes of making a profit. In 2018, starter homes represented just 20.9% of available housing inventory in the US, according to Trulia.

Home builders haven't been producing enough homes since the Great Recession, per Jefferies, which said the housing shortage now stands at 2.5 million homes. The lack of inventory means that contractors need to ramp up newbuilds if they want to satisfy growing millennial demand - as many as 1.7 million to 2 million new homes per year, maybe even more to fully restore the imbalance.

This could end up being another chapter in the two-decade story of millennials' bad economic luck, as the homebuying generation is faced with the massive challenge of a huge shortfall in housing inventory.

Homeownership is suddenly unattainable for millennials - again

As the pandemic sent families rushing from the city to the suburbs in search of more space and historically low mortgage rates made homeownership more feasible, the housing market got too hot for its own good. The increasing demand for homes is outweighed by the number of homes for sale - they're flying off the market.

The National Association of Realtors estimated in March that existing housing inventory could run out in two months, Insider's Taylor Borden reported. Experts told Borden they expect inventory to stay tight as owners are wary of listing their homes for fear of being unable to find an affordable replacement to buy.

The cutthroat competition has made bidding wars ubiquitous, with desperate buyers resorting to all-cash offers, waiving inspections, or forgoing appraisals to win them. It's also sent prices soaring.

Home prices have been shooting up for years, at a steeper rate than they did ahead of the 2008-era Great Recession, Borden reported. The median price of homes sold increased by 15.8% year-over-year in February, hovering around $313,000, per NAR.

Although contractors plan to increase the number of builds, new-construction homes are expensive for buyers. A lumber shortage sent lumber prices jumping by almost 200% since April 2020. It led to an average unexpected price increase of $24,000 for new homes in the past year, on top of the general nationwide rise in housing prices, per NAR.

Homeownership has been largely elusive for millennials over the past decade. But now that they're finally buying homes, the all-at-once demand could end up creating an affordability crisis that makes homeownership unattainable yet again.

Read the original article on Business Insider

Gen Z is going to have a hard time getting rich

gen z
Gen Z is set to make less money on stocks and bonds.
  • Gen Z will earn a third less on stock and bond investments than past generations, Credit Suisse found.
  • They can expect average annualized returns of just 2%, according to the bank's investment returns yearbook.
  • Another obstacle for Gen Z: they've been the most unemployed during the pandemic.
  • See more stories on Insider's business page.

Gen Z is walking a rocky road to getting rich.

They're set to earn less than previous generations on stocks and bonds, according to Credit Suisse's global investment returns yearbook.

In fact, the generation can expect average annual real returns of just 2% on their investment portfolios - a third less than the 5%-plus real returns that millennials, Gen X, and baby boomers have seen. Credit Suisse's analysis took in average investment returns since 1900 and forecasted them going forward for Gen Z.

The yearbook acknowledges that marked deflation could increase bond returns, The Economist reported, but it said inflation is more of a concern. What the report calls a "low-return world" is yet another another financial obstacle for the generation, who may be on track to repeat millennials' money problems.

A December Bank of America Research report called "OK Zoomer" found that the pandemic will impact Gen Z's financial and professional future in the same way that the Great Recession did for millennials.

"Like the financial crisis in 2008 to 2009 for millennials, Covid will challenge and impede Gen Z's career and earning potential," the report reads, adding that a significant portion of Gen Z is entering adulthood in the midst of a recession, just as a cohort of millennials did. "Like a decade ago, the economic cost of this recession is likely to hit the youngest and least experienced generation the most."

Gen Z was hit hardest in the workforce

Gen Z been been impacted the most in the workforce, facing the highest unemployment rates.

They entered a job market crippled by a 14.7% unemployment rate in May - greater than the 10% unemployment rate the Great Recession saw at its 2009 peak. Those ages 20 to 24 had an unemployment rate of nearly 27% when the unemployment peaked last April according to data from the St. Louis Fed, more than any other generation.

Recessions typically hit younger workers hardest in the short-term, but can reap long-term consequences.

"The way a recession can really hurt people just starting out can have lasting effects," Heidi Shierholz, a senior economist and the director of policy at the Economic Policy Institute, previously told Insider. "There's a lot of evidence that the first postgrad job you get sets the stage in some important way for later."

Recession graduates typically see stagnated wages that can last up to 15 years, Stanford research shows. That was the case for the oldest millennials graduating into the Great Recession, who in 2016 saw wealth levels 34% lower than that of previous generations at the same age, per the St. Louis Fed.

A follow-up study showed that by 2019, this cohort had narrowed that wealth deficit down to 11%. Such financial catch-up could be an optimistic sign for Gen Z in terms of regaining any ground lost building wealth during the pandemic.

However, millennials have had a 5%-plus annualized investment return on their side. With a projected 2% annual return for Gen Z, building wealth may be even harder to do.

There's more to building wealth

Of course, stocks and bonds are just two asset classes. There are other ways Gen Z can build wealth, such as investing in real estate or by becoming successful entrepreneurs. Many Gen Zers have already embarked on an entrepreneurial path as early as their teen years, which could go a long way in wealth creation.

But the pandemic has caused a housing frenzy that led to depleted inventory and inflated housing prices, making it more difficult to buy real estate - and build wealth through it. And while more prospective new businesses were formed in 2020 than ever before, almost a third of existing small businesses were wiped out by the pandemic. Altogether, the pandemic could ultimately cause Gen Z to potentially lose $10 trillion in earnings.

Within the next decade, Gen Z's income will rise to such a point that they'll effectively take over the economy, but their wealth could well be far behind previous generations by the time they get there.

Read the original article on Business Insider

NFTs give artists the chance to reverse their extinction

beeple crypto art
Digital paintings by Beeple at a crypto art exhibition entitled Virtual "Niche: Have You Ever Seen Memes in the Mirror?," one of the world's first physical museum shows of blockchain art, ahead of its opening in Beijing on March 26, 2021.

The NFT craze continues, and it could change the art world.

The acronym, which stands for "non-fungible token," is a digital file that's tradable by blockchain. It shot to fame and prominence in March when a visual artist called Beeple sold "Everydays: the First 5000 Days," a digital collage of images, for $69.3 million at auction. It was the third-highest price ever paid at any auction for a work by a living artist, according to The Washington Post. Not even a Titian or a Raphael has sold for that much.

Now, more artists are trying to get in on the action, reported The Wall Street Journal's Kelly Crow. Everyone from well-known artists like Damien Hirst to lesser-known artists like Michah Dowbak are looking to sell NFT art. Most recently, Crow wrote, artist Urs Fischer, known for selling sculptures for as much as $6.8 million, has been planning to sell his first NFT, "Chaos #1 Human" with a starting bid of $1,000.

Meanwhile, museum trustees are adding cryptocurrency to their portfolios, art dealers are trying to uncover hot NFT artists, galleries are finding they might need to be become "NFT savvy," and auction houses are holding NFT classes, Crow wrote.

Even media brands are jumping on the bandwagon. Playboy is launching an NFT art gallery and auction hub via Nifty Gateway to showcase its art archive and to release original works, Rachel Webber, Playboy's chief brand officer and president of corporate strategy, told Insider's Kari McMahon.

So, too are comic-book artists. DC Comics has forbidden its freelance artists from selling NFTs featuring DC's intellectual property because the company itself is "exploring opportunities" to enter the NFT market, DC Comics' senior VP of legal affairs, Jay Kogan, wrote in a letter.

The move comes after some artists started using NFTs to cash in on their depictions of iconic DC characters, including Wonder Woman artist José Delgo selling a Wonder Woman-themed NFT collection. This could be the latest skirmish over IP in a decades-long war within the comics industry about who owns the art: the publisher or the artist.

If crypto art becomes something of permanence rather than fad, artists could see a rebirth.

NFTs offer another revenue stream for artists

In his 2020 book, "The Death of the Artist," William Deresiewicz traces the evolution of the artist since the Renaissance. He argues that capitalism has created a new paradigm in which artists have become more "creative entrepreneur" than artist, as they work to make a living in a digital age that has enabled anyone to create and share work online.

Such digital innovation has made art ubiquitous, Deresiewicz argues, which is demonetizing content. As a result, the book posits, most revenues have gone to the top 1% in their fields and the artistic middle class has essentially been wiped out.

But maybe the NFT could be a silver bullet, providing sorely needed new income stream for middle-class artists, far below the level of a Beeple.

For example, crypto art could expand the $11 billion US music industry market by becoming an independent revenue source for musicians. "NFTs could save the music industry," music industry expert Cherie Hu told Insider's Grace Kay. "We're just a year out from many artists losing their No. 1 source of income. Artists can't make enough on streaming alone. They need to find a better way to make money."

And there is a lot of money in NFTs. The NFT market has grown into a $250 million market with buyers vastly exceeding sellers, according to a 2020 report from L'Atelier BNP Paribas and nonfungible.com. More than $1 billion was spent on digital assets in March alone this year, according to data from CryptoSlam.

Whether the market lasts is an open question. NFT sales declined by 20% over the past 10 days, indicating a volatile market, Crow reported, citing industry tracker Nonfungible.com.

The American public seems convinced it's here to stay, as Insider's Isabelle Lee reported that a majority surveyed in late March thinks they are "the next big thing." The artistic middle class likely hopes so.

Read the original article on Business Insider

Millionaire New Yorkers could soon be paying the highest taxes in the country

wealthy new yorkers
The wealthiest New Yorkers might see their tax rates increase to the highest in the country.

New York City millionaires are about to fall under the highest tax rate in the country.

Gov. Andrew Cuomo and state legislative leaders are coming close to agreeing on a 2022 budget proposal that would create an extra $4.3 billion a year by raising income and corporate taxes, The New York Times' Luis Ferré-Sadurní and Jesse McKinley reported. The proposal calls for two new personal income tax brackets set to expire by the end of 2027, per exclusive details given to the Times.

Those earning between $5 million and $25 million would be taxed on 10.3% of their income. That increases to 10.9% for those earning over $25 million. And individuals raking in over $1 million and couples bringing in over $2 million would see tax rates climb from 8.82% to 9.65%.

These tax rates hit especially hard for New York City's highest earners. The city already has a top income tax rate of 3.88%. If the budget proposal is approved, they would be shelling out between 13.5% and 14.8% in both state and city taxes, per the Times. That exceeds the country's current marginal income tax rate high: 13.3% for top earners in California.

New York is dealing with economic pain

Cuomo said in January he planned on raising taxes if the White House didn't help the state recover from its $15 billion deficit, Insider's Grace Dean reported. It's the highest deficit in New York's history, she wrote. The state's biggest deficit prior to this was $10 billion, which Cuomo said was "very very hard" to manage.

In an address, Cuomo attributed New York's deficit to the state being "assaulted by the federal government" over recent years as well as to the cost of COVID-19, which caused the state's revenues to fall by $5.1 billion.

As the epicenter of the US' first wave of COVID-19, New York City was slammed with small business closures and saw many of its top-earning residents move to take advantage of taxes in other states. Urbanism expert Richard Florida told Insider the flight of the wealthy caused a lot of financial pain for superstar cities like New York.

Cuomo called for the federal government to provide New York with emergency pandemic relief. He said that if Washington only gave the state $6 billion in a "worst-case scenario," he would hike taxes to cover the difference.

"We have a plan in place, a strength that we have not had before and I believe our future is bright, but Washington must act fairly if we are to emerge on the other side of this crisis," he said.

While Democrats considered raising more than $7 billion in new revenue for the state, the Times reported, such discussions fell to the side when President Joe Biden's $1.9 trillion stimulus package was approved, which included $12.9 billion in direct aid for New York state. It also included $5.6 billion for New York City, which Insider's Juliana Kaplan reported may have saved catastrophic cuts to the city budget.

Cuomo has resisted raising taxes for years out of fear it would drive businesses and the wealthy to other states. If all of the wealthiest New Yorkers fled the city, they could take more than $133 billion with them. That's how much the top 1% of New Yorkers earned in income in 2018, a report from Bloomberg found.

The Times attributed Cuomo's change of mind to the economic fallout of the pandemic, a growing progressive influence in the legislature, and the governor's own "waning influence."

The budget proposal is due to be finalized as Biden reportedly gets even more serious about taxing the wealthy. He's said that Americans making over $400,000 will see a "small to significant" tax increase and high-earning Americans could see their top income-tax rate increase to 39%.

If both Biden and Cuomo's tax proposals are enacted, that means the richest New York City dwellers could be paying out more than half of their earnings in taxes.

Read the original article on Business Insider

How a 27-year-old founder created Gen Z’s defining sunglasses, on track to rake in $6 million in under 2 years

Zane Saleh_Lexxola
Zane Saleh founded Lexxola in late 2019.
  • Zane Saleh launched sunglasses brand Lexxola in 2019, now a staple among the Gen Z "it" crowd.
  • The unisex eyewear is designed for city life and breaks a mold in the eyewear market.
  • Saleh spoke with Insider on growing the brand during the pandemic and its community-led approach.
  • See more stories on Insider's business page.

If you want to see the world through the eyes of Gen Z, just put on a pair of Lexxolas.

The sunglasses' sheer tinted lenses have been spotted on everyone from Emma Chamberlain to Kaia Gerber to Sofia Richie. And beyond these members of Gen Z's "it crowd," many other members of the generation are taking to TikTok to share examples of affordable Lexxola dupes.

That's because you have to shell out designer prices for the London-based indie brand's ergonomically designed, sleek modern-meets-'70s vibe, which are priced from £190 to £220, or $200 to $260. The line continues to grow, with two new styles just launching, a cat-eye frame named "The Ally" and a more oval frame named "The August."

For the record, Lexxola's CEO and founder is a millennial, and the 27-year-old Zane Saleh told Insider that since launching less than two years ago, in late 2019, they've viewed everything as an experiment. "That freedom of thought to just say 'try everything' has really allowed us to figure out what's working quite quick and figure out what isn't and just push forward," he said.

Along the way, Saleh says he hit upon a Gen Z-friendly business model: direct collaboration with his customers. Instead of designing based off his own inspiration, Saleh said he uses a community-sourcing model to create styles - a creation process that has the potential to reshape fashion retail.

A post shared by emma chamberlain (@emmachamberlain)

It's a strategy that's worked, as Lexxola might be small and young, but it's growing. The company has evolved from just Saleh running the whole show to four employees working remotely. At time of publication, several styles were sold out, available only for pre-order, and with the US being its biggest market, Saleh said the company is planning to open a warehouse in Virginia and headquarters in New York City this year so it can offer domestic shipping rates to US customers.

Lexxola has operated under pandemic conditions for the majority of its existence, and the brand is growing at an unlikely time, as 2020 hit the retail industry harder than the Great Recession did. From February to April of last year, Deloitte found, retail sales plunged by 20%, with an 89% decline in clothes and accessories. By June, Insider Intelligence predicted that retail sales worldwide for the year would be down 5.7% from 2019.

But Saleh said that being a young, agile, and digital company at a time when brick-and-mortar stores were closing left it uniquely placed to grow and gather market share. A solely online presence speaks to a Gen Z community which often shares and expresses itself digitally, he said. According to screenshots of Lexxola's analytics dashboard that Saleh sent to Insider, Lexxola's sales grew by over 5,500% from February 2020 to February 2021, and annual revenues for this year are projected to exceed $6 million.

Saleh spoke to Insider about launching Lexxola, growing it through the pandemic, and his community-led approach. What's emerged is a brand made by a millennial for a Gen Z audience, with social media at its heart.

Made for the city

Saleh originally studied economics, but said he quickly realized finance wasn't for him. He found himself in the art world for five years, and he began getting Lexxola off the ground while he was working at Sotheby's. He ultimately left, his full-time job three months before Lexxola's official launch.

Growing up, he said he noticed that sunglasses marketing campaigns were always about summer. "It was the guy and the girl running down the beach," he said. "Whereas the eyewear experience that I knew was about wearing a product year-round, it was something for city life."

He long wondered why there wasn't a brand speaking to that concept, and decided to fill the gap himself. The year prior to Lexxola's 2019 launch, the global sunglasses market was valued at $14.5 billion and growing, thanks to an increase in disposable income. While sunglasses stores declined in revenue during the pandemic, IBIS World found, it predicts revenue to grow as the the economy rebounds. Americans are now sitting on more than $1.6 trillion in savings, some of which will likely be deferred disposable income.

ALLY Lexxola
'The Ally' is Lexxola's latest style.

Saleh described beginning Lexxola as "diving into the deep end," as he had no prior experience in the eyewear sector. He managed to source a factory in Italy and find a warehouse, both of which were hugely important, he said.

"When we first set up our warehouse, it was probably a bit early, but if we didn't have that we'd for sure be out of business," he said. "Putting the right building blocks into place in the first sort of six to eight months of the business, prior to the pandemic, really allowed us to springboard through it."

A community-led approach

Saleh said he did everything when first launching, from packing boxes to answering customer service. Now that the team has expanded to four, he said he still has touch points in all aspects of the business.

Lexxola's community-led creation process involves aggregating data on Gen Z consumers to create new styles for them. It's a contrast from many fashion companies, Saleh explained, which are typically headed by a singular figure creating a product, putting it to market, and hoping that people like it.

"What we do is speak with our community," he said. "We're almost in a position where we're a brand that actually acts as a service to create a product."

A post shared by Jude Taylor (@jude)

But Saleh said this strategy has some challenges, such as ensuring they have styles that meets everyone's needs. Continuous iterations of new sunglasses can also be quite labor and time-intensive, he said, but ultimately worthwhile. He cited a time when the team gathered product-return data, which helped it make specific changes to a product that led to 90% fewer returns.

The data process also enable them to design an upcoming frame named "The Antonio" combines the brand's two best-sellers, "The Jordy" and "The Damien," in what Saleh says is "almost a mathematical form."

Product evolution is "never finished," according to Saleh, "it's just something that can get better."

Speaking to Gen Z

Lexxola's community-led approach helped Saleh understand and cultivate a Gen Z community, Saleh said, along with strategically hiring full-time and part-time Gen Z employees.

Saleh said the company found its feet with influencers six months in. Since then, it's been a "knock-on" effect, as "People see other people wearing them and they become aware of the brand ... it just sort of balloons that way."

It helps, too, that Lexxola capitalizes on some of the things that matter the most to Gen Z when deciding where to spend their money. It's part of a growing genderless market that WWD considers the future of the fashion industry. In recent years, designers have been launching genderless collections and unisex lines to appeal to changing norms and the Gen Z consumer. Lexxola was a step ahead by launching a unisex brand from the start.

More than half (56%) of Gen Z consumers shop "outside their assigned gendered area," Phluid Project founder Rob Smith said at a 2019 WWD Culture Conference.

A post shared by Kaia (@kaiagerber)

Sustainability has also been a focus from the get-go. The sunglasses are produced in factories fueled by renewable energy, dispatched from LED-lit warehouses, transported via eco-integrated carriers, and delivered in recycled cardboard packaging. Lexxola also donates 1% of its annual sales to 1% For The Planet Organization.

That's a plus for the 62% of Gen Z who prefer to buy from sustainable brands, according to a consumer spending analysis by First Insight. They're more willing than any other generation (72%) to pay more for sustainable products.

There, too, is Lexxola's curated modern aesthetic. A quick scroll through its Instagram grid shows colorful close-ups and selfies of the fashion-forward artfully posing against a backdrop of city streets or nature, making it difficult to discern campaign shots from real-life photos.

Such an integrated feed is part of Lexxola's social strategy, according to Saleh, who said his audience loves to see real people wearing Lexxolas in real situations. Once the company began creating campaign content that visualized this and ran it alongside user-generated content, he said Lexxola's social platforms took off.

A post shared by Lexxola (@lexxola)

"Gen Z are mobile natives, they're digitally minded," Saleh said. "They want authenticity and they're extremely pragmatic."

Right now, Saleh is focused on improving the way Lexxola designs new products. His team is currently working to develop an online page where customers can suggest new styles or colors they want to see.

What they're really trying to do is build out more data points to inform future decisions for production, he said. "We try to build products that inspire confidence," he added.

"Everyone's still learning as we go," he said. "It's very much business as usual, and continuing to not rest on our laurels and improve."

Read the original article on Business Insider

Brooklyn has become so popular it now costs nearly as much to live there as it does in Manhattan

Brooklyn
Brooklyn has become the place to be in New York City.

Is Brooklyn the new Manhattan?

As Manhattanites flocked to Brooklyn over the past decade for more affordable living, the outer borough has become so popular that the once massive gap in rental prices between it and "the city" barely exists today.

"After the financial crisis, Brooklyn transformed from a cheaper alternative to Manhattan to something new," Jonathan Miller of appraisal company Miller Samuel told The New York Times' Michael Kolomatsky. "The Brooklyn brand became global."

He provided the Times with data on the Manhattan-Brooklyn rental gap, dating back to February 2008. At that time, the median rent in Manhattan cost $1,050 more than the rent in Brooklyn. By 2014, the gap narrowed to $210, jumping to $777 the following year after new developments in Manhattan skewed prices higher, Miller said.

From February 2016 to February 2020, right before the start of the pandemic, the gap averaged around $531. The rent drop in Manhattan since the pandemic began has caused the gap to further tighten, hitting a low point of $171 last November.

The pandemic made Manhattan living more affordable

Rents in Manhattan, Brooklyn, and Queens all had the largest year-over-year declines on record in 2020, dropping a whopping 15.5% in Manhattan and 8.6% in both Brooklyn and Queens, per StreetEasy's January Rental Report. The median asking rent in Manhattan was $2,750 - the lowest it had been since March 2010, when rents dropped during the Great Recession.

New Yorkers no longer had to escape sky-high Manhattan rents, and many young professionals seized the market drop as an opportunity to upgrade their living situation.

Iliana Acevedo, senior vice president of new development at MNS, told Insider in March that they've been seeing millennials "not only upgrading to more amenitized buildings but also upgrading in unit size and neighborhoods that they were priced out of pre-COVID."

Two real-estate experts also told Insider last month that the search for an upgrade has seduced some millennial Brooklynites back to Manhattan, where they're now finding the space and affordability they once left the island in pursuit of.

But that doesn't mean Brooklyn is losing the popularity it's spent a dozen years growing; some New Yorkers have swapped out roommates or studios for Brooklyn one-bedrooms for more than half off their pre-pandemic price.

Now that the economy is reopening and renters rush back to the city, the rental gap is slowly growing again. As of February, it stood at $370. But Insider's Libertina Brandt reported that rents are likely to continue falling throughout 2021, so what the real estate rebound means for the Manhattan-Brooklyn rental gap is still up in the air.

Read the original article on Business Insider

No longer a ‘lost’ generation: Millennials born in the 1980s are finally getting richer

millennial selfie
Older millennials are finally making financial strides.

Older millennials are finally getting richer.

Over the past three years, they've gained serious ground in building wealth, according to a new report by the Federal Reserve Bank of St. Louis that studied data from the Survey of Consumer Finances. As of 2019, those born in the 1980s have median wealth levels 11% below where they should be if the Great Recession hadn't occured.

While this indicates millennials are still afflicted by the lingering effects of the financial crisis, it's a far cry from where they stood in 2016, per a 2018 St. Louis Fed study that examined the topic. At that point, their wealth levels were 34% below where they should have been, causing the Fed to deem them at risk of becoming a "lost generation" for wealth accumulation.

"Not only is their wealth shortfall in 2016 very large in percentage terms, but the typical 1980s family actually lost ground in relative terms between 2010 and 2016, a period of rapidly rising asset values that buoyed the wealth of all older cohorts," the 2018 report read.

Millennials have since made such strides that the follow-up 2021 report sings a different tune. "It turns out that millennials may not be as 'lost' as we once thought," wrote the report's authors, Ana Hernández Kent and Lowell Ricketts.

An 'unlost' generation

The economic environment and aftermath of the Great Recession made it difficult for the 1980s cohort to initially build wealth. They graduated into a dismal job market with little prospects and stagnated wages for the jobs that did exist, coupled with rising living costs and heavy student-loan debt.

The 2018 St. Louis Fed report predicted that their higher education levels and time left to earn and save could put them on a steeper income and wealth trajectory, allowing them to eventually achieve their wealth goals.

The follow-up study shows these millennials are well on their way to fully catching up, although they now have fewer wealth-building avenues and less time to close the 11% wealth deficit now that the oldest members are turning 40. They also have the highest debt burden of any birth group in 2019, which could set them back economically.

However, the strides the 1980s millennials have made paints a promising picture for younger millennials. Those born in the 1990s currently have wealth levels 50% below where they should be, per the report, although they are still relatively young, at an average age of 25 in 2019.

But the report states it's likely that this cohort, also highly educated, will also have a steeper wealth life cycle and make up the difference. The share of millennials owning homes is now also similar to that of previous generations when they were the same age, per the report, an investment that can help them compensate for such shortfalls.

Too early to mark pandemic effects

However, the report doesn't take into consideration effects from coronavirus recession, as full data for this period isn't yet available. It's too early to tell whether the pandemic has set back some of these gains or further accelerated them, as it has deepened a wealth divide among the "millennial rich" and the "millennial poor."

Millennials fortunate enough to keep their jobs during 2020 have been able to tuck away discretionary income, pay off debt, and cash in on the stock market recovery. They've also been able to become homeowners for the first time as they fled cities for the suburbs and as interest rates hit historic lows.

Meanwhile, other millennials are struggling, particularly those who already had lower earnings prepandemic and millennials with children. Some mothers have dropped out of the workforce altogether to meet caregiving needs while schools were shut down, and other millennials have fallen victim to job loss or pandemic pay cuts.

"I would imagine a lot of people are burning through whatever savings they had as they experienced unemployment," Christine Percheski, demographer and associate professor of sociology at Northwestern University, previously told Insider.

The widening economic inequality could foster an uneven recovery for a generation that has now faced two recessions before age 40.

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The pandemic helped some millennials finally grow up

millennial
Economic forces have made adulthood seem long out of reach for many millennials.
  • For some millennials, a sense of adulthood has become more attainable during the pandemic.
  • Economic forces have long kept millennials from doing the things that used to define growing up.
  • Some took on more responsibilities in 2020, from buying houses to nesting to dealing with adult-sized stress.
  • See more stories on Insider's business page.

It wasn't until the pandemic that I started making my bed every day.

It seemed like a counterintuitive act before 2020. My bed was trapped by three walls in the tiny bedroom of my rented apartment, which meant I had to climb onto it to smooth out the sheets and duvet, creating as many new wrinkles as I erased. It was too much of a hassle in a world where getting ready for and commuting to work was still a thing. And what was the point, anyway, when I would just climb back into it at the end of the day?

But when my bedroom turned into my office and all my meetings moved to Zoom, I couldn't bear the sight of unprofessional disarray, one more stressful stimulus that would crowd my already cluttered brain.

It was a new beginning.

I also created a Sunday cleaning schedule, traded in box mac-n-cheese for chicken marsala recipes, and began purging my stuff in hopes of a more minimalist space.

"We're all thrown out of our normal way of doing things," psychologist Jeffrey Arnett, who coined the term "emerging adulthood," told me. He explained that some people could benefit from the creation of a routine that helps them feel that not everything is in chaos.

My effort to exert some semblance of control in an unraveling world also elicited, I came to realize, my first real taste of feeling like an "adult."

Millennials' struggles with "adulting" have been long documented, but their journey into adulthood has been a challenging one thanks to a relentless affordability crisis - a macroeconomic trend more compelling than one person's laziness when it comes to bed-making. (Or maybe not - exhaustion with such domestic tasks is at least partially symptomatic of burnout, another issue afflicting the millennial generation).

The definition for adulthood is subjective, especially for such a diverse group that spans the ages of 25 to 40. But the pandemic has, ironically, brought the traditional view of adulthood - think independence and responsibility - within sight for some millennials, particularly the smaller cohort on the wealthier side of the millennial wealth gap.

Many have taken the next step in their living situation, whether as first-time homeowners or venturing into living on their own. Like me, some have turned to "nesting" activities like organizing and cooking for the first time. And most are grappling with adult-level stress that ages them both mentally and physically.

The pandemic created a new world and a new economy, and maybe also a newly "adult" generation.

Suburban and solo living scream independence

Some millennials who weren't hit by job losses or salary cuts in 2020 were able to play catch-up by tucking away disposable income during the pandemic.

For this group of well-off millennials, adulthood has become more attainable, said Clare Mehta, an associate professor of psychology at Emmanuel College who has been studying established adults ages 30 to 45 during the pandemic. "If you have a partner and you're thinking about having a family, now there's a real impetus to move out of the city," she told Insider.

Many have fled big cities for the suburbs, as historically low interest rates and the option to work remotely made more types of homes viable for the generation. Mehta cited one 30-something married father in her study who had previously told her he wouldn't feel like an adult until he owned property - he just bought his first house.

House for sale, Texas
The pandemic pushed homeownership within reach of some millennials.

Millennials led all generations in homebuying last year, according to Apartment List's Homeownership report, accelerating a five-year trend in millennial homeownership rates rising the fastest. And 30% of millennials said in a recent survey by Clever Real Estate that the pandemic pushed them to house-hunting earlier than planned.

US Census Data found that homeownership rates increased by 4 percentage points from the second quarters of 2019 to 2020, and younger generations saw the greatest the leaps. Those under age 35 saw a 4.2 percentage point increase and those ages 35 to 44 saw a 4.9 percentage point increase, compared to older age groups who all hovered around an increase of 2 percentage points.

Even for urban renters, those who stayed in cities are embarking on solo living for the first time amid rent drops, finding new lifestyles and a new sense of independence. These urban and suburban upgrades are both a sign of financial independence, which many young adults deem a marker of true adulthood.

The turn to nesting

The onset of social distancing sidelined the experience economy and birthed the solitary leisure economy, in which Americans spent more time entertaining themselves, well, alone. Among other things, it has pushed many Americans into a nesting mindset.

That would explain my sudden desire to organize and clean, and I may be solitary in doing this, but I'm not alone. A life relegated indoors and Netflix organizing shows like "Tidying Up with Marie Kondo" and "The Home Edit" have provided a foundation for a decluttering boom in America.

"People are feeling their spaces right now," Gretchen Rubin, author of "Outer Order, Inner Calm" told Jura Koncius of The Washington Post. "Some people feel like nesting and just want to paint everything. Others feel claustrophobic. Many have figured out they need more elbow room."

For many millennials, such nesting activities are new. Consider cooking. Many Americans began cooking at home more as restaurants temporarily shuttered, but it was the first time doing so for many millennials, Krishnakumar Davey, president of strategic analytics at IRI, told CNBC.

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Some millennials turned to nesting activities like cooking for the first time in quarantine.

Millennials also happen to be leading the way in some nesting activities, such as home improvement projects. More than 80% of millennials tackled a home renovation during the pandemic, according to a OnePoll survey, more than any other generation. Spending on home improvement overall increased by 7% in the latter half of 2020 and early 2021, per a February Bank of America note.

Many of these DIY renovators are young females trading in travel and dining for at-home experiences, The Atlantic's Amanda Mull wrote on the rise of nesting among shut-in Americans back in November. These renovations have been both a coping mechanism for the unemployed, a means to control one's space, and a way to wile away quarantine days.

As Mull wrote, "What else is there to do?"

The toll of stress

There's also the emotional burden of dealing with an unprecedented crisis. Research shows that abnormally stressful events not only physically age your brain, but make emerging adults feel at least a year older.

Mental health was generally worse for younger generations pre-pandemic, when diagnoses for major depression in the US were rising at a faster rate for millennials and teens than for any other age group. Since 2013, millennials have seen a 47% increase in major-depression diagnoses. A more recent study by Blue Cross Blue Shield finds that the pandemic has further accelerated the decline of millennial health, including a 12% increase in major depression.

Given the wide age range of millennials, the emotional burden is coming in different forms. For millennials living alone, Mehta said, the stress comes in having to manage their own isolation. Meanwhile, women in their 30s are dealing with increased stress as they juggle working from with unusual childcare arrangements.

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The pandemic showed millennials their parents are aging.

Millennials responsible for others and the emotional wellbeing of their family "have a huge emotional burden, trying to keep everything and everyone together," Mehta said.

The pandemic also showed many millennials how old their parents are. They've had to reckon with the fact that their parents are aging and could be considered at-risk individuals, some having adopted the role of adult themselves in an attempt to convince their parents to take precautions early on in the pandemic.

A little bit older

Now, this isn't all to say millennials are an immature bunch, unable to get their act together until a world crisis hits. Some millennials had achieved typical adult milestones like buying a house and having kids pre-pandemic, and those who didn't may have felt like adults regardless.

And not every millennial now feels more adult-like. The pandemic is the latest in a series of economic challenges millennials have faced. Arnett said it has really scrambled and delayed things for the younger cohort, the most likely to have lost their jobs. A halted career and no income stream, which makes goals like homebuying seem out of reach, likely pushed any sense of adulthood further away for those affected.

There's also the 52% of young adults who were quarantining with their parents as of July, which could lead to feelings of regression. "Most people expect to be able to stay on their own," Arnett said. "They get used to paying their own bills and doing their own laundry and buying their own groceries. And then to come home, it feels like a defeat."

Much like the growing millennial wealth gap, the pandemic may therefore be exacerbating a millennial adulthood gap, as some move into the trappings of adulthood with all its responsibilities and stresses, and others stand still in extended adolescence or even move backwards. It's another manifestation of the K-shaped recovery, which has benefited those with means and hurt nearly everyone else.

And, when it comes to nesting, a married woman with kids probably feels a lot differently about picking up chores at home than a single woman like me does, considering it's setting back gains in gender equality.

Because the pandemic is ongoing, it's too soon to exactly determine its long-term effects on millennials. But there's something to be said about the strides made and burdens faced during the pandemic for a generation in the precarious stage that straddles emerging and established adulthood.

Now that the US is readying for a booming "roaring 20s" economy, some millennials are set to come out of the pandemic a little bit older and wiser, both literally and metaphorically.

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