Are millennials really worse off than their parents?

One of the common themes emerging from the slate of 2020 Democratic candidates who are struggling to play down the current, booming economy, is that prosperity isn’t being spread around evenly. This so-called “prosperity disparity” is allegedly evident in the fact that some workers today, particularly millennials, don’t have the same chance at the American Dream as previous generations. It’s a common claim made by Bernie Sanders, found right on his website, where he proclaims that the millennials may be the first generation to not be able to exceed the success of their parents.

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Millennials are financially worse off than previous generations, and may not have the chance to do better than their parents, according to a new study by the Government Accountability Office (GAO). Commissioned by Senator Bernie Sanders (I-Vt.), the analysis paints a dire economic picture for millennial households: compared to previous generations’ economic status at the same age, millennials—despite higher levels of educational achievement—have lower median and average net worth, lower home ownership rates, higher student debt, and flat incomes.

The media has been more than happy to pick up this ball and run with it. One recent example is found in this CNN analysis from Tami Luhby. She claims that not only is this bad news, but it’s unprecedented in modern American history.

Even though the US economy is growing — according to a recent CNN poll, 76% of Americans think it’s doing better than it has in decades — not everyone is prospering. Millennials are on track to be the first generation not to exceed their parents in terms of job status or income, studies show…

Millennials — which the Pew Research Center classifies as the generation born between 1981 and 1996 — have faced challenges. They came of age at the worst possible moment — when the economy collapsed in the Great Recession, said Michael Hout, a sociology professor at New York University. The US economy is not supporting a continuing increase in occupational status to the extent it once did. Compounding the problem is that millennials’ parents did benefit from an upward shift in job status, making it even harder to surpass their accomplishments.

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There are two factors to consider when evaluating this argument. First, is it true? And second, if this reflects current realities… why?

Only recently I was engaged in an email exchange on this exact subject with a friend who is from my generation. (Actually several years older.) He was born in the early fifties and grew up during what are frequently called the original “happy days.” He was also familar with the tales of our parents and grandparents, describing what life was like for them. He made some good points I’d like to share with you today.

Let’s think about the lives of the grandparents of the baby boomers. Most of them were born when there was hardly any rural electrification. Most of them had outhouses. The majority of the people lived in rural areas, frequently on small family farms that were only a bit better than subsistence level businesses. There were hardly any cars. Medicine was barely into the antibiotic phase, let alone micro-surgery. Hardly anyone went to college unless you came from a very wealthy family. And also, oh, yeah… they lived through two world wars separated by the Great Depression.

So, really, what were the odds, following WW2, that the children of that generation would end up with a “lower standard of living” as tracked by relative income than their parents and grandparents?

Even with the improving standards of living for those coming into adulthood in the seventies and eighties, the chance for their kids to do better also had many baked-in enhancements. We went through a few rough patches in the eighties, but anyone making it into the nineties lived through the massive technology boom that increased wages and drove a thriving economy. The housing bubble was still over the horizon so home ownership continued to grow. Also, while tuition rates were rising, the growth was nowhere near what it would become in the 2000s, and more and more financial aid programs became available.

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But at some point, all bubbles burst and growth, both in terms of technology and the economy, hits a pause or at least slows significantly. That’s the world that the millennials born in the early nineties were facing when they graduated high school and college. The great recession is finally over and we’re back to a higher growth era, but those millennial workers came into adulthood in dark economic times. And too many of those college financial aid programs pushed lower-income students into crippling loan programs that endorsed an attitude of, “don’t concern yourself with all that. You can worry about it after you graduate.”

Coming out of college into a struggling jobs market with stagnant wage growth, high unemployment and carrying massive student debt, is it any wonder that this generation wasn’t facing the same escalator to greater prosperity than their parents enjoyed? So yes, in many cases what Bernie Sanders and other candidates are discribing is at least partially true, particularly for millennials.

But that’s not some new phenomenon that can be blamed on Trump, the GOP, the 2017 tax cuts or any other recent events. This is a challenging situation that’s been growing for decades, and there’s plenty of “blame” to go around. And yet economic and employment trends are still heading in the right direction. We’re on a path to a brand new “happy days” era if we manage to not blow it, and we don’t need some massive socialist overhaul of our system to ensure that the next generations will once again have the chance to exceed the accomplishments of their parents.

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Beege Welborn 5:00 PM | December 24, 2024
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