Some upbeat economic news for millennials
One of the more downbeat economic themes in recent years has been the calculation that millennials would be the first generation to be worse off than their parents. But recent research casts some doubt on that theory.
Marketplace’s senior economics contributor, Chris Farrell, has been taking a closer look at this, and he discussed it with “Marketplace Morning Report” host David Brancaccio. The following is an edited transcript of their conversation.
David Brancaccio: We know millennials have had it tough. We all went through pandemic, but for them: wage stagnation, Great Recession, unprecedented levels of college student loans to pay back, delays in buying a home. Am I missing anything?
Chris Farrell: No, those are the main reasons why millennials, they’ve been called the unluckiest generation and the lost generation. And, sure — life might be difficult for parents. Job setbacks and career disappointments. The reward for their struggle was the expectation that their children would surpass them when it came to jobs, income, wealth. That is, until the millennial generation came along.
Brancaccio: All right, but you have some recent research that calls this assessment into question?
Farrell: Yes, and there’s a growing, almost cottage industry of economic studies that are challenging this intergenerational gloom. And the latest that really grabbed my attention is by two economists. And it’s titled “Has Intergenerational Progress Stalled? Income Growth Over Five Generations of Americans.” And what I like about their research is both its historic scope and their broad measure of income.
Brancaccio: And these researchers have some upbeat findings about intergenerational progress.
Farrell: Absolutely. So they focus on the years 1963 to 2022. And they’re looking at the 36-to-40-year-old age group. And each generation, David, was better off than the previous one, including millennials. For example, by their calculations, millennials had a median household income in their late 30s that was 18% higher than the previous generation at the same age.
That said, their study says that progress for millennials and Gen Xers was noticeably slower than for earlier generations.
Brancaccio: Well, how come?
Farrell: The main reason? Fewer hours worked. And this mostly reflects the flattening in women’s labor force participation rate that started at the turn of the millennium. So, of course, I read that, and — I don’t know about you, David — but I couldn’t help thinking, well, maybe the quality of life has gone up with fewer hours on the job. At least maybe that’s something to consider.
Brancaccio: Yeah, it depends on what you measure. And what’d we see in there? More stocks, less homes?
Farrell: Yes, a real shift in the origins of generational wealth. So you’re absolutely right. You know, millennials, they don’t have high rates of homeownership compared to the previous generation. But, boy, they own a lot more stocks in the era of the 401(k) and similar retirement savings plans. Second, the economists’ data suggests that intergenerational gains are picking up. Now the slowdown may well reverse itself in coming years.
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