Are Millennials Poor?

Subject

Millennials

Location

The U.S.

The what

A new study (put out by a group called, unfortunately, Young Invincibles) says that Millennials are earning 20% less than their Boomer parents did at a similar life stage. The current median household income for 25-to-34 year-olds in the U.S. was $40,581 in 2013. In 1989, it was $50,910 for the same group. And that’s despite today’s young people being “better educated.”

The group that put out the study says that the data points to the need for policies that will strengthen Millennials’ financial security, including raising the minimum wage, expanding the Earned Income Tax Credit, and government support of financial aid.

Why it matters

There’s a lot to unpack with this one. For starters, the recent data is from 2013, which is 3+ years ago during a time of roughly 3% annual wage growth. That’s not a big number but given low inflation over that period, it’s something. And the baseline data is from 1989 — the tail end of nearly a decade of enormous job gains.

Then there’s the question of what Millennials’ $40,581 median household income actually represents. Over the past 25+ years, work habits have shifted. Today’s 25-to-34 year-olds are far more likely to work for themselves, make their own schedules, and be location-flexible. All of these factors have intangible value. Millennials are also more likely to seek out careers that they find enganging, interesting, and rewarding, regardless of pay.

Of course, there are a handful of culprits for why actual salaries have stagnated: inflation eating away at the minimum wage, the decline of domestic industry and labor unions, structural unemployment (to name just a few). And the burden of Millennials’ higher education costs/debt is undoubtedly immense and necessitates more take-home dollars. But median household income is no longer the best number to use to determine how well a generation is doing. The nature of work is changing rapidly, and we’ll need to adopt, or come up with, data that reflects more than just gross pay if we want to accurately track intergenerational progress…or the lack thereof.

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