Millennials are the poorest generation
My parents had two kids and a house before either turned 25. Neither had a college degree. While that’s possible today, it’s highly unlikely, and not because twenty-somethings don’t want it.
New research shows that the average twenty-something in the United States actually has less income than the average adult aged 65-79 (most of whom, you’ll note, are likely retired). This is the first time this has happened since these kinds of statistics have been tracked.
This isn’t limited to the United States. Millennials (however you wish to define that particular group) across the world are lagging desperately behind their generational counterparts. Per The Guardian:
Where 30 years ago young adults used to earn more than national averages, now in many countries they have slumped to earning as much as 20% below their average compatriot. Pensioners by comparison have seen income soar.
This shouldn’t be a surprise, especially considering the ways in which the economic landscape has shifted over the past 100 years. A large percentage of the kinds of “unskilled” jobs that fueled the post-war boom of the 50s and 60s have moved overseas, replaced by a smaller, more competitive collection of “skilled” jobs. As a result, young adults are now essentially required to begin their working life with a college degree and all the debt that entails, neither of which guarantees much success in the job market.
A generation adrift
Whatever you may think of Millennials/Generation Y, it’s important to realize that their financial struggles are not a result of coddling, self-indulgence, laziness, or any of the other traits often associated with them (fairly or unfairly).
Young adults are being shut out of the housing market, not because they don’t want to settle down, but because houses are prohibitively expensive for a generation whose income growth, as The Guardian puts it, “has lagged dramatically behind national averages over the past 30 years.”
And young adults are being shut out of the job market, not because they don’t want to work, but because there’s often no room for them.
Workers are holding on to the positions they have for longer, forcing new workers to either remain unemployed or take jobs below their skill level. And while taking a job below one’s skill level may not sound like a huge concession, new research indicates that doing so can severely limit your future job prospects. In fact, researchers found that – everything else being equal – job applicants who had recently taken jobs below their skill level were less than half as likely to get a call back from a potential employer.
This is the situation Millennials face – an economy that requires them to purchase a degree they can’t afford, then forces them to take a job below their skill level, which in turn makes it less likely they’ll ever end up making the money necessary to pay their debts and buy a home.
The road ahead
The point of this isn’t to feel bad for Millennials (which you’re free to do, if you want), but to highlight just how different the economy is today than it was a generation ago. Baby Boomers are not wrong for continuing to work through their theoretical retirement years. The problem is that they very often need to do so, and as a result there’s even less room for new workers to find a place.
What’s troubling is the question of where this leads if the cycle goes unbroken. As it is, the United States is on track to get older and older every year. Per the Bureau of Labor Statistics, the population in 1950 was 40.2 percent 34 and younger, and 23.6 percent 55 and older. By 2050 it’s predicted that those numbers will have flipped and the population will be 31.5 percent under 35 and 38.3 percent over 55.
There’s a very good chance that future generations will begin to shrink as young adults delay starting a family while they attempt to get their career and finances under control. It’s not necessarily catastrophic, but it’s important that we recognize how economic fluctuations today can lead to pretty significant cultural changes down the road. How one generation prospers or falters plays a big role in how future generations are shaped.
For now, it’s enough to simply say that young adults could use some help – help with student loans, help with credit, help finding work, and help saving money. So while it’s easy to blame the Selfie Generation for missing many of the milestones of previous generations, it’s much, much better for everyone if we help them reach their own version of success.