WASHINGTON, December 18 – Millennials are financially worse off than previous generations, and may not have the chance to do better than their parents, according to a new study by the Government Accountability Office (GAO). Commissioned by Senator Bernie Sanders (I-Vt.), the analysis paints a dire economic picture for millennial households: compared to previous generations’ economic status at the same age, millennials—despite higher levels of educational achievement—have lower median and average net worth, lower home ownership rates, higher student debt, and flat incomes.
“If we don’t fundamentally transform our economy, we are facing—for the first time in the history of this country—the possibility that our young people will suffer a worse future than their parents had. This report confirms my fears,” said Sanders. The GAO study provides a unique and comprehensive look at declining economic mobility across three generations: Millennials, identified as those born in the years spanning 1982 to 2000, Generation Xers (born from 1965 to 1981), and Baby Boomers (born from 1946 to 1964).
In 1970, a 30-year-old American had a 92-percent chance of earning more than their parents did at the same age, GAO found. A 30-year-old in 2010 only had a 50-percent chance of earning more than their parents. This dramatic decline in economic mobility over three generations is particularly stunning given that the economy produced double the income per person over those 40 years.
According to GAO, millennials had an estimated median net worth of $20,038 in 2016 dollars, $11,202 less than the average net worth of Generation Xers when they were 25 to 34 years old—a 36-percent decline over 15 years.
More millennials are likely to have student debt than previous generations and shoulder greater amounts of it. Forty-five percent of millennials aged 25 to 34 have student loans compared to 24 percent of Generation Xers and about 16 percent of Boomers at the same age. Millennials’ loan-to-income ratio is more than double that of previous generations, and they are far more likely than previous generations to have student debt that exceeds their entire annual income.
“Our young people did what they were told: they got an education and worked hard. But instead of being rewarded, millennials are now being punished with crushing student debt and low-paying jobs,” said Sanders. “It is about time we take a hard look at this research and stand up for our young people who dream of making it into the middle class. We must tell the economic elite who have hoarded income growth in America: No, you can no longer have it all.”
The economic outlook is particularly bleak for the bottom 25 percent of millennials: compared to the zero median net worth for the bottom 25 percent of Generation Xers and Baby Boomers at the same age, millennials were $19,470 in debt.
Millennials are not building wealth through homeownership at similar rates as previous generations, either. About 43 percent of millennials own homes, compared to 51 percent of Generation X households and 49 percent of Boomer households when they were the same age.
GAO also found that the economic status of one’s parents is a key determinant of a person’s economic future: between one-third and two-thirds of an individual’s income can be predicted simply by their parents’ income. The findings offer further evidence that the United States, far from being exceptional in offering opportunity, is one of the least economically mobile countries in the developed world.
GAO found that racial and geographic disparities also diminish economic mobility. Black families experience less upward economic mobility from one generation to the next than white families. A child’s neighborhood—including associated poverty rates, racial segregation, school quality and other factors—influence future earnings. Growing up in an affluent neighborhood, for example, can have almost the same impact on future earnings as obtaining a bachelor’s degree.
“In the richest country in the history of the world, we have an obligation to turn this around and make sure our kids live healthier and better lives than we do,” concluded Sanders.
Sanders is the author of wide-ranging legislation to reverse the America’s trend of downward economic mobility and income stagnation. He recently introduced the College for All Act, which guarantees tuition-free public college, university and trade school to all Americans, while canceling all $1.6 trillion in student loan debt by taxing Wall Street speculation. Sanders’ Raise the Wage Act boosts incomes for nearly 40 million workers by setting a $15-an-hour federal wage floor, and his Tax Excessive CEO Pay Act reduces the pay gap between CEOs and their workers.
Read the report here.