Studies are showing that millennials are earning 20 percent less than baby boomers at the same stage of life, despite being an overall better-educated group, with more opportunities for further education. At $10,090, the median net worth of millennial is also 56 percent less than it was for boomers. The advocacy group Young Invincible released a new analysis of Federal Reserve data that gives concrete details about this generational gap. The analysis of the Federal Reserve data compares 25 to 34 year-olds in 2013 to the same age group in 1989, adjusted for inflation.
Millennials, with a median household income of $40,581, have half the net worth of boomers. Their student debt is much higher, while their home ownership rate is much lower.
President-elect Donald Trump, who essentially pledged to return to an era of prosperity like that of post-World War II America, will have to confront this dilemma. The data also shows that white millennials earn much more than their black and Latino peers. However, the income of white millennials has plummeted over 21 percent to $47,688. Still, the legacy of discriminatory practices for jobs, education, and housing continues in the drastically different wages between whites and any other group.
The median income for black millennials has fallen 1.4 percent to $27,892. Latino millennials, on the other hand, have seen an increase to $30,436—almost 29 percent more than their boomer predecessors.
The report also shows that while education does help to boost income, the average college-educate, student debt laden millennial ears only slightly more than a baby boomer with no college degree in 1989. A report by the Brookings Institution noted that the proportion of college educated 25 to 29 year-olds has risen 35.6 percent in 2015 from 23.2 percent in 1990. Still, it is less likely that millennials will out-earn their parents. A study last year by economist Raj Chetty found that people born in the 1905s has a 79 percent chance of out earning their parents, while that percentage dropped to 50 percent for people born in 1980.
This generational divide could still affect boomers. The taxes collected from millennials paychecks help finance the Social Security and Medicare benefits that many boomers, retired or about to, receive. Therefore, these boomers need millennials to buy houses and invest in financial markets in order to protect their own savings.
Originally published on Biznob and Rush Hour Daily on Jan 16, 2017.