Millennials fall behind their boomer parents
Education better; income dips 20%
South Milwaukee — Baby boomers: Your millennial children are worse off than you.
With a median household income of $40,581, millennials earn 20% 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 34year-olds in 2013, the most recent year available, to 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% from 46% 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% 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 to white baby boomers, some white millennials appear stuck in a pattern of downward mobility. This group has seen its median income tumble more than 21% to $47,688.
Median income for black millennials has fallen just 1.4% to $27,892. Latino millennials earn nearly 29% 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% 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% chance of outearning their parents.
This decline has occurred even though younger Americans are increasingly collegeeducated. The proportion of 25- to 29-year-olds with a college degree has risen to 35.6% in 2015 from 23.2% 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 finance the Social Security and Medicare benefits that many boomers receive — programs that Trump has said won’t be subject to spending cuts.
“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.