Are millennials really the first generation to do worse than their parents?
Are millennials really the first generation to do worse than their parents?
BY DAVE ROOS How Stuff Works
Economic Forces Working Against Millennials
"Kids these days ... " At some point in every adult life, we all utter this phrase. No matter how young and hip you think you are -- use of the word "hip" notwithstanding -- one day you will spot a pair of 20-somethings in skinny jeans furiously texting away on a turquoise bicycle built for two and you will mutter, "Kids these days are obnoxious/self-absorbed/technologically obsessed." And you will be right.
But you will also be participating in a glorious tradition of generation-bashing that dates back to the first clan of cavemen that scoffed at their spoiled, lazy kids who had no idea what it was like to live without fire or really sharp rocks.
The latest generation to suffer the scorn of their elders is the so-called millennial generation, aka Generation Y, aka "The Me Me Me Generation" according to a 2013 Time cover story. Born roughly between 1981 and 2001, this is the first generation to come of age in the new millennium [source: Pew Research]. In the popular press and blog rants, millennials are routinely described as narcissistic, lazy, overly entitled, addicted to social media, and coddled by their helicopter parents in whose basements they plan to live until their mid-30s.
Millennials also are widely predicted to become the first generation in U.S. history to do worse than their parents financially. There is a powerful temptation to equate the much-maligned personality traits of millennials with their high unemployment rate -- at 16.2 percent for young people 16 to 24, it's more than twice the national average -- and limited financial prospects [source: Ayres]. But the truth, as usual, is much more complicated.
If millennials indeed become the first generation to do worse than their parents, it's less about the generation gap than the wealth gap. It's less about entitled kids who can't stand hard work than a wholesale lack of jobs that offer a living wage for someone with limited experience. In other words, it's not just the "kids these days," but the "economy these days" that we really should be moaning about.
Let's start with a summary of the economic forces working against the success of Millennials, then see if we can salvage a small scrap of hope for their future.
Millennials are the most educated generation in American history. On the surface, that seems like a good thing. But college and grad school cost money -- increasingly insane amounts of money. The price of attending a public four-year college rose 54 percent from 1998 to 2008 while the typical American household earned less in 2008 than it did a decade earlier, adjusted for inflation [sources: College Board, Leonhardt]. Therefore, to pay for the education touted by parents, teachers and the government as critical to future success, millennials took on massive debt, a record-breaking $35,200 on average for each 2013 U.S. college graduate [source: Ellis].
Student debt isn't necessarily a bad thing if there are well-paying jobs waiting for college graduates. Oops! Millennials had the poorly timed misfortune of graduating in the middle of the worst economic collapse since 1929. The Great Recession forced companies to downsize or at least stop hiring. The U.S. unemployment rate went from 4.4 percent in 2007 to a crippling 10 percent in 2009 and remains more than 7 percent in 2013 [source: Bureau of Labor Statistics]. When jobs become scarce, competition gets fierce. Millennials fresh out of college have to compete with applicants who have 10 years of experience but are willing to take lower-paying jobs out of desperation.
But this is only a blip, right? Statistics show that the economy is slowly improving, and unemployment numbers are slowly falling. Can't millennials make up for lost income? Not according to the experts. Yale economist Lisa Kahn found that people who graduated from college during the deep recession of the early 1980s earned $100,000 less over the next 20 years than their older and younger colleagues [source: Thompson]. That early unemployment spike and wage decrease scarred them for life.
But perhaps the biggest economic forces working against millennials -- and younger Generation Xers, too -- are income stagnation and the wealth gap. From 1950 to 2000, the average household income of American families steadily rose. From 2000 to 2010, when many millennials entered the workforce, median household incomes fell for the first time since World War II [source: Leonhardt]. It's hard to make more money than your parents when jobs are paying less for the same work. (Insult to injury: Worker productivity is up 37.6 percent since 1995, but median real wages only rose 9.6 percent [source: Reeve]).
The wealth gap between older and younger people has also widened significantly over the past 30 years. A 30-year-old in 2013 is worth 21 percent less than a 30-year-old in 1983. Meanwhile, the net worth of the average 60-year-old today is more than twice as high as 1983 [source: Lowrey]. In other words, young people keep getting poorer, while old folks get richer. Demographers point to skyrocketing college tuition for younger generations, higher unemployment, sinking home values and middle-class income stagnation [source: Yen].
These broad economic trends have nothing to do with narcissism, entitlement or Twitter. But taken together, they add up to ballooning debt, fewer well-paying jobs for college graduates and bleak long-term career prospects for millennials. Wouldn't you move into your parents' basement, too?
Keep reading for a glimmer of hope.
Is There Hope for Millennials?
Millennials certainly think so. In its landmark 2010 survey of millennials, Pew Research found millennials in general to be an optimistic and confident bunch, even in the face of economic uncertainty. For example, even though 68 percent of millennials said they were not earning enough money to lead the kind of lives they wanted right now, a full 88 percent believed that they would earn enough in the future [source: Pew Research Center].
Key to this question, perhaps, is its wording, "Do you now earn enough money to lead the kind of life you want, or not?" The Pew survey found that the youngest generation is surprisingly old-school in its life priorities: Millennials chiefly want to be good parents, raise happy children and give back to society. How much money is "enough" to meet those admirable, but not necessarily expensive goals? That amount will likely be different for everybody.
Which brings us back to the original question: Will millennials be the first generation to do worse than their parents? While we're parsing sentences, maybe it's time to re-examine our definition of "worse." If income and personal wealth are our only metric for measuring success, there's a very good chance that millennials will fall short of the financial gains made by their parents.
But what if we follow the lead of several prominent global economists and change the success metric from Gross National Product to Gross National Happiness? When Columbia University's Earth Institute assembles its annual World Happiness Report, it considers much more than median household income, but also community trust, physical and mental health, and general life satisfaction [source: Helliwell et al.]. On that list, the United States came in 17th in 2013, slightly worse than Mexico (No. 16) and well behind our northern neighbor Canada (No. 6) [source: McCafferty]. In the Pew survey and others, millennials tend to prioritize happiness and personal satisfaction over job title and salary. Look out, Canada.
For lots more information about millennials and other generations, check out the related HowStuffWorks articles below
Author's Note: Are millennials really the first generation to do worse than their parents?
In my research for this article, I came across an interesting quote from an economist responding to a mother's horror at finding out that her son wasn't interested in pursuing the same "wealth-building path" as his parents. The mother feared for her son's future, but the economist said, "Maybe this generation won't have a worse life, but just a different life." Millennials have grown up in a time of tremendous change and flux. They have seen how disruptive technologies like the Internet and mobile devices can change the way we live, work, communicate and connect. As the Pew study showed, Millennials are very open to change. Maybe it's time to change the assumption that every generation should be wealthier than its parents. (We also used to assume that home prices should perpetually climb, and look where that got us.) Maybe millennials know a secret that can't be calculated or graphed: In the modern reality, things change, sometimes dramatically and often blindingly fast. When the unexpected opportunity arrives for this highly educated generation to get to work, I think we'll be amazed by the outcome.