With every major economic report, whether it’s quarterly GDP or monthly unemployment, new op-eds churn about Millennials’ poor economic fortunes relative to older generations. Some insist that we are better off. Others go on the counter-attack. We were at war with Eurasia—or was it Eastasia?
David Brooks, writing last week about the onward movement of American capitalism, argues that Millennials are turning the corner on their collective economic hardship. Highlighting Jean Twenge’s research, Millennials are now making ‘considerably’ more money than older generations made at these ages, adjusting for inflation.
Good news, right? To an extent, yes. Despite our nostalgia for the ‘90s, Millennials are entering, or have entered already, middle age. Recently, a majority of us have become homeowners. For those of us lucky enough to have stable careers, we are ascending those career ladders, earning higher salaries, putting money away for retirement. Some of us are also coming into inheritances.
But like any polarized debate—are we doing better, or have we bought too much avocado toast—the truth is not straightforward. The truth is likely somewhere in the middle. Or maybe the whole debate presents false choices. In any case, I take issue with a few aspects of Brooks’ and Twenge’s arguments.
We first need to distinguish between income and wealth. Yes, it is true that Millennials are earning more than Gen Xers, Baby Boomers, and the Silent Generation when they were in their late 20s to early 40s. But Millennials are still behind in the proportion of wealth that they hold. In 1990, when the median-age Baby Boomer (born in 1955) was 35 years old, Baby Boomers held 21% of the nation’s household wealth. Contrast that with 2008, when the median-age Gen Xer was 35, Gen X held about 8% of the nation’s wealth, which was a decline from 10% due to the housing crash. In 2023, with the median-age Millennials turning 35, our generation holds 6% of the nation’s wealth.
As with any generational comparisons, we cannot just look at the broad averages: there is substantial variation within the age groups. Yes, some Millennials—especially those with college degrees and whose parents have college degrees—are more likely to be doing fine. But, as Twenge points out, there are substantial income differences between Millennials with and without college degrees. True: Millennials are the most educated generation, with 40% of us holding college degrees. But … 60% of our generation is obviously still a lot of people! And the cost of a college education is both a significant drag on those who carry that debt and a deterrent for those who might not be able to afford that debt.
Beyond income and wealth, everything around us has gotten more expensive. While any analysis of Millennial income should correct for inflation, several major expenditure categories have outpaced inflation. Since 1980, general inflation has averaged around 3.06% a year; however, housing price inflation specifically has averaged 3.21% a year. That might not sound like a big difference, but that $100,000 house in 1980 now costs around $389,000, approximately $25,000 more than if housing prices exactly tracked inflation. As scholars like Matthew Desmond have pointed out, rent has gone up even faster—around 3.73% a year since 1980. Rent of $1000 a month in 1980, would now be over $4,800 a month, more than $1,200 higher than if rent had exactly tracked inflation. And keep in mind: these are again averages. Housing and rent prices have gone up far faster in many cities.
While I tend to agree with the side arguing that younger generations are worse off relative to the older generations, this debate, if taken to extremes, threatens to distract us from the work that needs to be done. Assuming Millennials will, in time, become better off can lull us all into a false sense of security. Things will just get better! Conversely, dwelling on the notion that younger generations will always be worse off could lull us into a false sense of despair. Things will never get better! Why do anything?!
Nonetheless, I greatly appreciate the efforts of many in the older generations seeking to leave the world a better place. Groups like Third Act, for instance, seek to mobilize older Americans to take action against corporations that bankroll and benefit from climate destruction. In Germany, Omas (Grandmas) for Future are emulating Fridays for Future, changing their behaviors and raising awareness of living a more climate-friendly life. Many in the older generation are concerned about the future, and I think almost all of them want a better planet for their children and grandchildren. Instead of endlessly arguing across the generations about income and wealth, it’s time to work together.