In 2016, Millennials became the largest cohort of the American workforce, defined as those who work between the ages of 16 and 64.
What is most striking about the demographic changes in the workforce is the amount of wealth accumulated between each successive generation. Participants in the labor force essentially span four generations: Gen Z, Millennials, Gen X and Baby Boomers. It turns out that Millennials – again, the largest of the four working cohorts – also own the least amount of wealth.
Common sense would dictate that the younger generation has the least amount of wealth because they are building their careers and starting at entry level positions. This plays out until everything is equal and you measure the wealth of each generation at their equal stage of development.
(By wealth we mean the amount of assets you have minus debts. So your 401 (k) bank accounts, stocks and bonds, your home equity and Dogecoin minus things like a student loan. , a credit card or medical debt, and your current mortgage. Income is different. It measures how much money your household brings in each year, regardless of the source.)
In 1989, when baby boomers were about the same age as millennials today, baby boomers owned 21.3% of the national wealth. Millennials today only own 4.6%. This means that at their same stage of income development, baby boomers proportionately owned four times as much total wealth as Millennials.
Mark Zuckerberg, with an estimated net worth of $ 97 billion, holds 2% of all the wealth of the millennium. This means that the concentration of wealth among the Millennial cohort is just as bad as the rest of the population, except that there isn’t much wealth to be done for Millennials in the first place.
Millennials have caught up a bit, especially between 2016 and 2019, but they still 11% behind previous generations wealth and expected income, according to the Federal Reserve of Saint-Louis.
As the economy continues to change, things look worse and worse for Millennials without a college degree. Race also plays an important role in wealth statistics. At the end of 2019, the Black Millennials had only $ 5,000 of family patrimony, compared to their white counterparts, who averaged $ 88,000. The same study also showed that not only do black millennials lag behind white millennials in wealth, but also lag behind previous ones. generations of average wealth of black families 52%.
Your parents got a mortgage; you have a student loan
Student debt is one of the main obstacles to wealth in the millennium. As the chart below shows, Millennials have an estimated $ 500 billion in student loan debt. Between 1964 – date of birth of the youngest baby boomers, and 2015 – the annual cost of a four-year public university grew by 3,700%, even after adjusting for inflation. This means that in 2019 dollars, when Baby Boomers entered college in 1982, they paid an annual tuition fee of $ 1,031; Millennials had to pay $ 9,970. Again, these two amounts are adjusted for inflation in 2019 dollars.
How does this impact wealth? Compared to the total wealth of Millennials, as the first graph shows, we get a wealth to student debt ratio of 10: 1. In comparison, Gen X has a wealth-to-student debt ratio of around 47.6: 1. Baby boomers have a 226: 1 ratio.
Of course, that doesn’t take into account the years the Baby Boomers and Xers were paying off their loans. It does, however, provide a snapshot over time, which shows how student debt impacts the wealth of entire generations.
The growth in student debt is a phenomenon in itself. Student loan debt is growing by almost 8% per year. Since 2003, student loan debt has increased by over 600%.
Almost 40% of Millennials aged 25 to 37 have a bachelor’s degree, while only 25% of baby boomers have this degree. This means that not only are Millennials proportionately more educated – and more in debt – but they also earn less than their baby boomer counterparts, despite promises that if they graduated they would share the American dream.
Bosses have been winning for decades
College debt aside, Millennials also suffer from the massive tilt of the US economy over the past decades away from labor for the benefit of capital.
From the 1980s onwards, a gulf widened between productivity growth and wage growth, as shown in the graph above. Part of this is due to automation – machines allow fewer people to do more work – but overall, workers haven’t realized much of the earnings gains that new technology has given us. brought. This means that when the economy grows, basic commodities like food, shelter, education and health care increase in cost, but wages have not kept pace. This is an important reason why recent generations like Millennials have seen their share of national wealth decline.
A penalizing political landscape, but how and why?
Both of these causes of the millennial wealth scarcity are the result of deliberate political and political choices: States reduced support for higher education, shifting the cost onto students, who in turn borrowed money to obtain university degrees that they were told were essential for survival. in today’s economy. Once in the economy, millennial workers faced a political economy in which unions were crushed and employers enjoyed maximum leverage.
So how did the Millennials get such a crude deal from national politics?
We would like to think that in the United States, one person, one voice decides our elections. We live in an electoral environment, however, in which money plays an important role in determining the voices that are heard. What happens then, when the largest generational workforce – the Millennials – also spends the least on political contributions?
In terms of overall spending, Baby Boomers manage to overtake all other generations, including their ancestors, the Silent Generation. Millennials only make up 5% of total spend in each category, as well as overall. Certainly, the disparity in household wealth plays a role in the amount each generation is able to spend on political campaigns. The result is that Millennials have a much smaller voice in an arena where money really matters.
The creation of wealth for the millennium is blocked by a series of government policies that benefit older and richer Americans. In addition to rapacious student loans, consider restrictive zoning policies that dull the supply of housing for first-time homebuyers but increase the value of existing real estate.
If you’re wondering why older politicians – even supposed progressives like President Joe Biden and House of Commons Speaker Nancy Pelosi – are so cool with ideas like student debt cancellation that would be a godsend for the Generation Y, you may have your answer.