Millennials are endlessly criticized as lazy, self entitled, and narcissistic. But as Steven Rattner makes soberingly clear in a 2015 New York Times article, young Americans are among the most hapless generations in a century, due more to the economic system they have inherited than to flaws of character and work ethic.
Americans between 18 and 34 are earning less today (after adjustment for inflation) than the same age group did in the past. A typical millennial averaged earnings of $33,883 (in 2013 dollars) between 2009 and 2013. That was down 9.3 percent (after adjustment for inflation) in just a decade and is the lowest since 1980. Older Americans have fared considerably better; earnings of all full-time workers were roughly flat between 2000 and 2011.
Still more striking is that millennials have endured falling earnings even though they have attended college in record numbers.
I think the visual data speak louder than words:
A major reason is the recession. Those who graduate in weaker economic times typically earn less than those who enter the work force during more robust periods. Starting behind often means never catching up.
Millennials who didn’t attend college have found their wages particularly squeezed, perhaps because of the decline of middle-skilled jobs in sectors like manufacturing, a clear consequence of globalization.
The wealth of millennials has been hit even harder than their incomes. Their median net worth was just $10,400 as of 2013, down 43 percent from the $18,200 that Gen Xers had in 1995 when they were under 35. With incomes squeezed, millennials are not only not saving much; they are dipping into whatever savings they do have.
That’s worrisome when combined with weak incomes and low net worths. Millennials also participate less frequently in 401(k) plans and, scarred by the recession, invest less and keep more than half their money in cash — not a great long-term strategy.
Another huge drag on the finances of younger Americans is the mountain of student debt that has been piled up in recent years. Members of this year’s graduating class left their campuses owing an average of $35,051, about twice the levels borne by their counterparts two decades earlier (after adjusting for inflation).
Indeed, as a college education becomes increasingly necessary to acquire a relatively better job, average tuition has risen by an incredible 234 percent since 1993, compared to an overall inflation rate of 63 percent. With all that debt and little income to show for it, it is no surprise that car and home ownership — once considered the staples of the middle class — are subsequently down as well.
While part of this trend can be attributed to changing tastes — for all the talk of their wanton materialism, young people today seem indifferent to acquiring luxuries — one has to wonder if such wariness of big purchases has been shaped by necessity. More to the point: young people are also holding off on marrying and having children, which are also expensive endeavors.
Most of these problems could be resolved by simply increasing the earning power of young people (and for that matter, most Americans). But that would require either government mandate, the initiative and goodwill of employers, or labor action on the part of workers. I wonder which, if any, will come first? All I know is that something will have to give, as tens of millions of young people around the world face an uncertain, unnerving, and unsustainable future.