The Great Recession’s Ripple Effects: Millennials Are Poorer Than Generations Before Them

This is why they're not spending: Millennials are poor.
  • Individual incomes are lower for male millennials than they were for men of previous generations at a similar age.
  • Median levels of wealth have declined, potentially indicating more wealth concentrated among the richest millennials.
  • Average household incomes have remained steady due to higher levels of labor participation among women.

For years now, economists have lamented how millennials aren’t spending enough. But, according to a new study from the Federal Reserve Board of Governors, there’s a very simple reason for that: Millennials don’t have the money to spend.

The study reveals that, rather than a general shift in spending behavior, a lack of income and wealth goes much further to explain lower spending for the generation than changes in generational cultural norms. Keep reading to see how millennials are different from previous generations.

10 Years Later, Millennial Incomes Are Still Affected by the Great Recession

The Fed’s study compared the spending and borrowing habits of millennials in the context of past generations at the same age, but it corrected for some external factors like income level, employment and demographics. In doing so, it isolated the data a bit more to reveal that the timing of the housing crash has left many members of the generation scrambling to catch up with where their parents were at the same age.

“In the economic sphere, millennials appear to have paid a price for coming of age during the Great Recession: Millennials tend to have lower income than members of earlier generations at comparable ages,” the study said.

Also See: Ways 9/11 Impacted the US Economy

Millennial Men Now Earning $6,600 Less Than Young Men Were Earning in 1978

For men, young adults in 1978 earned a mean income of $56,100, but that declined to just $49,500 by 2014. The decline came even as the mean income for all male heads of household climbed from $67,200 to $74,100. All figures in the study are in 2016 dollars.

More Millennial Women Are Working Now — But Can’t Make Up for the Decline in Men’s Salary

Women did see wages advance somewhat — young women were earning an average of $35,400 a year in 1978 and $39,100 in 2014 — but it’s not enough to counterbalance the major decline for men. What’s more, these shifts in earnings come despite the fact that millennials have a higher level of educational achievement, on average, than generations past.

See Why: Married Men Earn $30K More Than Everyone Else

Household Incomes Remain Steady, Thanks to Millennial Women

The study revealed some other interesting insights. For instance, although individual incomes declined for men of this generation, household incomes are holding steady because millennial women are participating in the labor force at a higher rate.

What’s more, looking at net worth instead of income, millennials actually have a higher mean net worth than the baby boomer generation did at the same age. There’s a twist, though: The median net worth for millennials is lower,  indicating that a few wealthy individuals are seeing most of the gains. The mean level of household wealth for young adults in 1989 when baby boomers were a similar age was $173,200, slightly lower than the $176,300 for 2016. However, that increase in the mean comes even as the median slipped from $63,300 in 1989 to $55,000 in 2016.

Keep reading to find out how baby boomers might lose $11,011 a year to their millennial children.

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