Millennials make 20 percent less than Boomers did at the same stage in life, according to a report published on Jan. 13 by research advocacy group, Young Invincibles. The report titled, Measuring Generational Declines Between Baby Boomers & Millennials, used a cross-generational analysis of millennials and Baby Boomers.
Along with the 20 percent decline in earnings, the group also found that millennials have amassed a net wealth that is half that of Boomers at the same age, and that when Boomers were young adults they owned twice the amount of assets as young adults today.
According to Robert Scott, a professor of economics and finance, these findings are a result of millennials facing an economic climate that differs greatly from that of their Boomer parents. “Millennials suffered the brunt of the Great Recession, starting around 2007, more than any other group,” he said.
“Those people trying to get their first real jobs were faced with one of the weakest labor markets in many decades. This likely had a ripple effect, leaving them unable to get better jobs and forcing them to settle for lower-paying jobs, or not working,” Scott added.
According to Scott, millennials entered an economy that was working against them. He explained, “You don’t have any control over what kind of labor market you enter, it’s all luck.”
“I’ve witnessed this effect over the years – in strong labor markets students get good high-paying jobs right out of college, but in weak labor markets even the best students struggle to get a good job at decent pay. This has nothing to do with the quality of the person, just where they fall on the business cycle,” he continued.
Student loan debt also plays a major role in the earnings gap according to Walter Greason, Ph.D., a professor of history and anthropology. He said, “the amount of college debt is much more severe then anything boomers have faced. You have to have extraordinary levels of high education to be eligible for entry level jobs, and to pay for it, we’re asking people to borrow mass amounts of money that will take years to pay off.”
Greason added that millennials have to show they bring a particular market edge to their employers – an edge that can only be sharpened by a college degree.
“We’re in debt before we even get the chance to start our careers,” said Nick Van Daley, a graduate student of anthropology. “Our parents had the opportunity to get skill-based, higher paying jobs without a college degree, so they can’t understand the financial challenges we face.”
While student loan debt can be overwhelming, another form of debt appears to be wreaking even more havoc on millennials, Greason explained, “The increasing reliance of credit card debt is a bigger issue for millennials, as it is more devastating than student loan debt.”
According to Greason, Millennials are struggling to manage and comprehend this debt partly due to “bad advice [they receive] from parents and older relatives who don’t understand the new economy,” he said.
“The unprecedented nature of having to work 2-3 part-time jobs out of school so it can turn into a quality full time job is one of the things folks in their mid forties to seventies have not had to endure. They don’t understand how big the scale is, or how quickly changing the current economy is,” Greason added.
According to Scott, although making less money and holding more debt may sound like total negatives, there is a positive side to it all. “It is possible that millennials place less emphasis on income and wealth-building. It may not be entirely negative that millennials are making less money and have less wealth if it affords them other freedom,” he said.
For example, Scott said that some millennials do not own homes, so they are free to move around. He also said that they may not be working at a job just for money, so they may take jobs they find more rewarding, or work for less pay because they value their free time more for friends and other interests.
“Some students would benefit greatly from traveling and exploring the world rather than being stuck in a job they hate so they can buy things they don’t really want,” said Scott.