Mil­len­ni­als beat boomers in money woes

Young adults have more ed­u­ca­tion but earn far less than their par­ents did at their age

Honolulu Star-Advertiser - - NATION - By Josh Boak and Car­rie Antlfin­ger

SOUTH MIL­WAU­KEE, WIS. >> Baby boomers: Your mil­len­nial chil­dren are worse off than you.

With a me­dian house­hold in­come of $40,581, mil­len­ni­als earn 20 per­cent less than boomers did at the same stage of life, de­spite be­ing bet­ter ed­u­cated, ac­cord­ing to a new anal­y­sis of Fed­eral Re­serve data by the ad­vo­cacy group Young In­vin­ci­bles.

The anal­y­sis re­leased Fri­day gives con­crete de­tails about a trou­bling gen­er­a­tional di­vide that helps to ex­plain much of the anx­i­ety that de­fined the 2016 elec­tion. Mil­len­ni­als have half the net worth of boomers. Their home­own­er­ship rate is lower, while their stu­dent debt is dras­ti­cally higher.

The gen­er­a­tional gap is a cen­tral dilemma for the in­com­ing pres­i­dency of Don­ald Trump, who essentially pledged a re­turn to the pros­per­ity of post-World War II Amer­ica. The anal­y­sis also hints at the is­sues of cul­ture and iden­tity that di­vided many vot­ers, show­ing that white mil­len­ni­als — who still earn much more than their black and Latino peers — have seen their in­comes plum­met the most rel­a­tive to boomers.

An­drea Ledesma, 28, says her par­ents owned a house and were rais­ing kids by her age.

Not so for her. Ledesma grad­u­ated from col­lege four years ago. Af­ter mov­ing through a se­ries of jobs, she now earns $18,000 mak­ing pizza at Clas­sic Slice in Mil­wau­kee, shares a two-bed­room apart­ment with her boyfriend and has $33,000 in stu­dent debt.

“That’s not at all how life is now, that’s not some­thing that peo­ple strive for and it’s not some­thing that is even at­tain­able, and I thought it would be at this point,” Ledesma said.

Her mother, Ch­eryl Ro­manowski, 55, was mak­ing about $10,000 a year at her age work­ing at a bank with­out a col­lege ed­u­ca­tion. In to­day’s dol­lars that in­come would be equal to roughly $19,500.

Ro­manowski said she en­vies the choices that her daugh­ter has in life, but she ac­knowl­edged that her daugh­ter has it harder than her.

“I think the op­por­tu­ni­ties have just been fad­ing away,” she said.

The anal­y­sis of the Fed data shows the ex­tent of the de­cline. It com­pared 25- to 34-year-olds in 2013, the most re­cent year avail­able, with the same age group in 1989 af­ter ad­just­ing for in­fla­tion.

Ed­u­ca­tion does help boost in­comes. But the me­dian col­lege-ed­u­cated mil­len­nial with stu­dent debt is earn­ing only slightly more

than a baby boomer with­out a de­gree did in 1989.

The home­own­er­ship rate for this age group dipped to 43 per­cent from 46 per­cent in 1989, al­though the rate has im­proved for mil­len­ni­als with a col­lege de­gree rel­a­tive to boomers.

The me­dian net worth of mil­len­ni­als is $10,090, 56 per­cent less than it was for boomers.

Whites still earn dra­mat­i­cally more than blacks and Lati­nos, re­flect­ing the legacy of dis­crim­i­na­tion for jobs, ed­u­ca­tion and hous­ing.

Yet com­pared with white baby boomers, some white mil­len­ni­als ap­pear stuck in a pat­tern of down­ward mo­bil­ity. This group has seen their me­dian in­come tum­ble more than 21 per­cent to $47,688.

Me­dian in­come for black mil­len­ni­als has fallen just

1.4 per­cent to $27,892.

Latino mil­len­ni­als earn nearly 29 per­cent more than their boomer pre­de­ces­sors at $30,436.

The anal­y­sis fits into a broader pat­tern of di­min­ished op­por­tu­nity. Re­search last year by econ­o­mists led by Stan­ford Univer­sity’s Raj Chetty found that peo­ple born in 1950 had a 79 per­cent chance of mak­ing more money than their par­ents.

That fig­ure steadily slipped over the past sev­eral decades, such that those born in 1980 had just a 50 per­cent chance of out-earn­ing their par­ents.

This de­cline has oc­curred even though younger Amer­i­cans are in­creas­ingly col­lege-ed­u­cated.

The pro­por­tion of

25- to 29-year-olds with a col­lege de­gree rose to

35.6 per­cent in 2015 from 23.2 per­cent in 1990, a re­port this month by the Brook­ings In­sti­tu­tion noted.

The de­clin­ing for­tunes of mil­len­ni­als could af­fect boomers who are re­tired or on the cusp of re­tire­ment. Pay­roll taxes from mil­len­ni­als help to fi­nance the So­cial Se­cu­rity and Medi­care ben­e­fits that many boomers re­ceive — pro­grams that Trump has said won’t be sub­ject to spend­ing cuts. And those same boomers will need younger gen­er­a­tions to buy their homes and in­vest in the fi­nan­cial mar­kets to pro­tect their own sav­ings.

“The chal­lenges that young adults face to­day could fore­cast the chal­lenges that we see down the road,” said Tom Al­li­son, deputy pol­icy and re­search di­rec­tor at Young In­vin­ci­bles.


An­drea Ledesma, 28, earns $18,000 mak­ing pizza at Clas­sic Slice in Mil­wau­kee, has $33,000 in stu­dent debt and shares an apart­ment with her boyfriend. She says that by her age her par­ents owned a house and were rais­ing chil­dren.

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