Americans born between 1981 and 1996, the most educated and most diverse generation in U.S. history, were once considered harbingers of economic progress and promise. But now, even well into their careers, most of them lag behind the financial and familial strides of previous generations.
By the time our parents (baby boomers, typically) were our age, most of them were already raising us. But the majority of millennials aren’t yet married, let alone having children. One reason, of course, is lack of money. They are contending with a student debt crisis and staggering racial wealth inequities. Kneecapped by the Great Recession, the average millennial in 2016 was earning about 20 percent less than baby boomers did at the same stage of life.
That wage gap casts a long shadow over what millennials can save and invest. By 2019, Americans born in the 1980s were 11 percent behind wealth expectations based on previous generations. (And that was good news; the deficit was 34 percent just three years earlier.) Meanwhile, loans rule their lives: The debt-to-income ratio of Americans born in the 1980s is higher than any other birth group, making them especially vulnerable to financial setbacks. Now that most millennials are in their 30s, a point when many of their parents were able to own homes, they’re squeezed between the worst inflation rates of their lifetimes, eye-watering housing prices and the precarious fallout of the pandemic.
I spent the past several months speaking to more than 30 millennials from around the United States about their finances. Their anxieties were palpable, and painfully familiar — many of them felt behind, indebted, unable to live up to the expectations placed upon them. Even those who were doing well were vigilant.
via Ezra Klein:
The numbers are startling. The median home price in 1950 was 2.2 times the average annual income; by 2020, it was six times average annual income. Child care costs grew by about 2,000 percent — yes, you read that right — between 1972 and 2007. Family premiums for employer-based health insurance jumped by 47 percent between 2011 and 2021, and deductibles and out-of-pocket costs shot up by almost 70 percent. The average price for brand-name drugs on Medicare Part D rose by 236 percent between 2009 and 2018. Between 1980 and 2018, the average cost of an undergraduate education rose by 169 percent. I could keep going.
We papered over the affordability crisis with low prices for consumer goods, soaring asset values that kept richer Americans happy, subsidies for some Americans at certain times and mountains of debt: housing debt and student-loan debt and medical debt that kept the working class semi-afloat. But none of this addressed the core problem. For far too long, the prices of the things we need most have been growing far faster than inflation.