COMMENTRY | It’s true: These young adults are faring worse than earlier generations
A lot has been written and said that is critical of millennials. The business press has been tough on their spending habits. As a recent Federal Reserve Board study of millennial economic well-being explained:
“In the fields of business and economics, the unique tastes and preferences of millennials have been cited as reasons why new-car sales were lackluster during the early years of the recovery from the 2007-09 recession, why many brick-and-mortar retail chains have run into financial trouble (through lower brand loyalty and goods spending), why the recoveries in home sales and construction have remained slow, and why the indebtedness of the working-age population has increased.”
Politicians, even some Democratic Party leaders, have tended to write millennials off as complainers. For example, while on a recent book tour, former Vice President Joe Biden told a Los Angeles Times interviewer: “The younger generation now tells me how tough things are. Give me a break. I have no empathy for it. Give me a break.” Biden went on to say that things were much tougher for young people in the 1960s and 1970s.
In fact, quite the opposite is true. For better or worse, the authors of the Federal Reserve Board study, titled “Are Millennials Different?” found that there is “little evidence that millennial households have tastes and preference for consumption that are lower than those of earlier generations, once the effects of age, income, and a wide range of demographic characteristics are taken into account.” More importantly, they also found that millennials are far poorer than past generations were at a similar age. This may explain why millennials are becoming more interested in promoting real political change and are active in the labor movement.
The study compared the financial standing of millennials (those born between 1981 and 1997), Generation Xers (those born between 1965 and 1980), and baby boomers (those born between 1946 and 1964). Its conclusion: millennials have lower earnings, fewer assets and less wealth, all despite being better educated.
For example, the authors of the study calculated the median or representative, inflation-adjusted labor earnings of males who were heads of household and no more than 33 years old in 1978, 1998 and 2014. While the median boomer male head of household earned $53,400 (in 1978) and the median GenX male head of household earned $44,200 (in 1998), the median millennial male head of household earned only $40,600 (in 2014). Young millennial female heads of household also earned less than either boomer or GenX female heads of household, although their earnings decline was not nearly as steep. The authors found the same millennial disadvantage when they calculated the median inflation-adjusted earnings of married couples headed by a young full-time worker: The median young boomer couple earned $73,600, while the median young millennial couple earned only $67,200.
The authors also compared the asset and wealth holdings of the three generations, this time using the years 1989, 2001, and 2016 and households headed by full-time workers that were younger than 35 years. Once again, the results highlighted the millennium disadvantage. For example, median inflation-adjusted total assets were $63,300 for boomer households (in 1989), $104,700 for GenX households (in 2001), and $55,000 for millennial households (in 2016).
Millennials also suffer from a decrease in holdings across most asset categories. Homeownership fell from nearly 50 percent for GenX households in 2001 to 34 percent for millennials in 2016. Holdings of financial assets such as stocks also declined. GenX households in 2001 held, on average, more than $52,000 financial assets, nearly $22,000 more than millennial households in 2016.
Finally, millennials also have substantially lower real net worth than either of the two earlier cohorts. In 2016, the average real net worth of millennial households was $91,700, some 20 percent less than baby boomer households and almost 40 percent less than GenX households.
Millennials have good reason to be concerned about their economic situation. What is encouraging is that there are signs that growing numbers see structural failings in the operation of the U.S. economy as the primary cause of their problems and collective action as the best response. A recent Gallup Poll offers one sign. It found a sharp fall in support for capitalism among those 18 to 29 years, from 68 percent positive in 2010 to 45 percent positive in 2018. Support for socialism remained unchanged at 51 percent.
A recent Pew Research poll offers another insight. Those ages 18 to 29 registered the strongest support of all age groups for unions (68 percent) and the weakest support for corporations (46 percent).
Of course, what millennials do rather than say is most important. And millennials are now boosting the ranks of unions. Union membership grew in 2017 for the first time in years, by 262,000. And three out of four of those new members were under 35. Given the strong and successful organizing work among education, health care, hotel and restaurant workers, the positive trend is likely to continue.
Millennials are now the largest generation in the United States, having surpassed the baby boomers in 2015. Hopefully, self-interest will encourage them to play an active role in building the movement necessary to transform the U.S. political-economy, improving working and living conditions for everyone.
Martin Hart-Landsberg is a professor emeritus of economics at Lewis & Clark College.
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