Millennials are riding bumpy road to wealth

Siara Sellers, 28, owes almost $13,000 in student loans — money that has become a financial roadblock since she dropped out of community college.

Sellers, who lives in Detroit, has been working part-time for the past eight months at the UPS warehouse in Livonia, Mich., making about $11 an hour. She left school in 2013 after her grades plummeted when her older, now-retired husband became sick.

Now, she says she cannot afford to put any money toward paying off her college loans. Her federal loans are in deferment, which means she can temporarily stop making payments. “I can’t afford it,” she said. While many people are on a stronger financial footing after the economic recovery, many young people feel very much left behind, especially if they’re juggling low-paying jobs with high levels of college debt.

Young adults with college degrees and student debt are stuck in a financial ditch and unable to build wealth as quickly as their parents did when they were younger, according to a study by the Young Invincibles, a young adult advocacy group.

Millennials are bringing home significantly smaller paychecks, tend to be less likely to own a home and aren’t saving as much for retirement as young adults did in the late 1980s. They’re burdened with debt but not acquiring assets quickly.

Young adults with college degrees and student debt, for example, find themselves looking at a median, negative net wealth of $1,900 based on research by the Young Invincibles. Simply put, they owe more than they own.

That’s a sizable drop from a median net wealth of $9,000 for that age group in 2013.

The study looked at young adults ranging in age from

25 to 34 in 1989 and in 2013 respectively, as well as baby boomers at the same age.

“A college degree is still on average a very good investment for building financial security,” said Tom Allison, deputy policy and research director for the Young Invincibles.

On average, he said, college grads make more money than those without a degree. But young adults are taking on more debt to get those better-paying jobs.

“There’s no question it used to be much easier to build financial security 25 years ago with a college degree,” Allison said.

Many younger adults started their careers during the recession in 2008-09 when it was tough to get a job and they ended up taking lower-paying jobs along the way.

On average, a person starting work in 2010 is seeing much slower growth in real disposable income — money that’s available after income taxes and inflation — than someone who started working in the 1980s or 1990s, according to Paul Traub, senior business economist for the Federal Reserve Bank of Chicago.

“It is true that the standard of living is better today but overall, people are not experiencing the same opportunities as people from earlier generations,” Traub said.

Some of the blame goes to younger workers entering the market for a lower wage. But wages are stuck in a rut, too.

The recession “pushed wage growth down as the unemployment rate reached 10 percent,” Traub said. “Since then, wage growth has been very slow.”