Millennials Earn 20% Less Than Boomers Did at Their Age — Despite More Education
Baby boomers and millennials are seemingly always at odds with each other, but millennials may have a legitimate gripe when it comes to one thing: income inequality.
A recent study from the nonprofit think tank New America, titled “The Emerging Millennial Wealth Gap,” which found that millennials earn 20% less than boomers did during the same stage of life. The study looked at median earnings for anyone ages 18 to 34 and compared them to wages of the same group in the 1980s.
So what’s the cause? The country was rocked by the Great Recession, and the recovery period over the last decade has been plagued by lower wages and less job security. That goes hand in hand with the rise in freelance and contract work over more steady salaried work.
And education doesn’t seem to matter. The Pew Research Center found that around 40% of millennials ages 25 to 37 have acquired at least a bachelor’s degree, but only 25% of baby boomers could say the same when they were that age.
Experts like New America’s Reid Cramer believe the lower wages are setting millennials up for a rough time in the future because it is becoming harder and harder to accumulate even moderate wealth. It has increased the wealth gap between generations to “historic proportions,” Cramer said in an interview with CNBC.
“Millennials are going to be on a completely lower trajectory than previous generations,” he said in regards to retiring comfortably.
New America’s report shows average wealth for millennials between 23 and 38 in 2016 was 41% less than the same age group in 1989.
Recovery after the Great Recession wasn’t as great for some as it was for others, either.
“Even as the economy steadily added back jobs lost, the protracted recovery was experienced unevenly, with well-off households doing better at the expense of others,” Cramer said in the report.
It shows in the data that found almost 50% of the income generated in 2016 came from the top 10% of earners, which is a huge jump from 38% in 1992.
And it doesn’t help that things are getting more expensive, too. We recently ran a column from Bill Bonner that explored how the working man’s money — and time — isn’t worth as much anymore. Per Bonner:
While the average man’s wheels became twice as expensive, so did his lodging. It cost $23,000 in 1970 to put a roof over his head. Today, it’s $240,000. In time, it costs about twice as much. Is it a “better” house? It’s certainly bigger … with more gadgets.
And what about the average man’s medical care? From the National Health Statistics Group, we get a figure of $356 per person in 1970. Today, the number is around $10,000.
This is a little more complicated because in 1970, we tended to pay for what we got directly. Now, insurance and the feds muddy the water. But just using the numbers we’ve got, that’s an increase of 28 times. In time, it went from 91 hours to 424 hours … almost a five-times increase.
All of this combines to create an uncertain future for younger Americans who are already delaying what many boomers would consider key life moments: getting married, having kids and buying a house.
“Income is stagnant, relative to the past, it’s been more volatile relative to the past — that combination leads people to have a lot less and be really suspect about making commitments to the future,” Cramer says.
Trends Journal publisher Gerald Celente, as we reported on Money and Markets earlier Wednesday, thinks cheaper money created by central banks and lower earnings are only increasing the wealth gap and will eventually lead to “The Greatest Depression.”
“It’s signalling the people have had it. Again, the money’s gone to the 1%. When people lose everything and have nothing left to lose, they lose it, and they’re losing it,” Celente said. “This is part of The Greatest Depression, it’s Stage 1, it’s already happened.”