- Millennials make more money than any other generation at their age.
- But they still hold much less wealth, in large part because the cost of living has exceeded salary increases.
- Two recessions before the age of 40 and student debt did not help matters.
Contrary to the popular tale, millennials actually make a lot of money. At least, more than any other generation has ever had at its age.
Business blogger Kevin Drum recently highlighted Inflation-adjusted median household income data from the US Census Bureau for Millennials, Gen Xers, and Baby Boomers. It reveals that millennial to 40-year-old households – the oldest of the generation – earn $ 85,000. This is more than what Generation X was making at that age, $ 77,000, as well as Baby Boomers, who were making $ 70,000.
Drum points out that household income may have increased due to a slight increase in dual income families. But an examination of median personal income in the same age range for all three generations shows that millennials still earn more. The typical 40-year-old millennial earns $ 49,000, which is 25% more than the 40-year-old baby boomer who earned $ 39,000. (Gen X at age 40 typically earned $ 43,000.)
But despite their higher incomes, millennials still hold less wealth than previous generations at their age. When baby boomers were roughly the same age as millennials today, they owned around 21% of America’s wealth, compared to 5% of millennials today, according to recent data from the Fed.
This is because the economy has overturned many millennials once too often.
An affordability crisis
Increases in the cost of living have exceeded wage increases. Some services and goods have become much more expensive than others over the past 21 years, with costs for things like tuition, health care, and childcare far exceeding hourly wage increases. .
The most recent Pay Scale Index found wages have increased 19% in the United States since 2006. But when inflation is factored in, “real wages” have fallen 8.8%. This means that workers have less purchasing power than before.
This is especially a problem for millennials, who have faced one economic blight after another. Two recessions before age 40 and staggering student debt, coupled with soaring cost of living, have created an affordability crisis for the generation that has left even six-figure millennials feeling broke.
“Living from paycheck to paycheck sometimes carries connotations of barely scratching and poverty,” said one. June report by PYMNTS and LendingClub, who found that many high-income millennials barely manage. “The reality of a paycheck-to-paycheck-to-paycheck lifestyle in the United States today is much more complex, and the current economic environment has made it even more complicated.”
The good news is that older millennials have gained ground in creating wealth. In 2016, they had a wealth deficit of 34%; in 2019, they reduced this figure to 11%, for Federal Reserve Bank of Saint-Louis report. But it’s not yet clear whether the pandemic has rolled back those gains, and their wealth levels are still lower than they should be.
It’s no wonder, then, that the generational wealth gap continues to look bleak, even though the economy rewards the work of millennials more than any other generation. It just hasn’t been enough so far.