Much is being written about “generation screwed,” the younger people in our slow-growth, high-debt, low-wage, winner-take-all new hard times. And the data are compelling. For example, according to the Pew Research Center, the median net worth of households headed by an adult under 35 was $3,662 in 2009, down 68 percent from 1984. For households headed by someone 65 and older, the net worth was $170,494, 42 percent higher than in 1984.
According to the Census, the median net worth of people under 35 fell 37 percent between 2005 and 2010, while for those over 65 it declined 13 percent. Younger people without college degrees are especially hard hit by unemployment. But college brings its own pain, with the average student carrying $27,000 in college debt, all as part of a record $1 trillion in student-loan debt (bubble). On top of that, according to Forbes, the average student also has amassed $12,700 in credit-card and other kinds of debt.
No wonder it’s so difficult for younger people to get started on the own. In 1980, only 11 percent of adults between 21 and 34 years old lived in “a multi-generational household” — essentially staying or moving back in with parents or grandparents. Now 21.6 percent do.
The U.S. birth rate is at its lowest point in 25 years. It would be lower if not for the higher birth rate of immigrants.
The big disparity between younger and old isn’t surprising. Those over 65 grew up in a different America: One with well-paying, secure jobs, pensions, employer-provided health care, unions and enormous economic mobility. They benefited from booms in the 1960s, 1980s and 1990s, including the long bull market. Much of the destruction of that America was done by powerful economic elites gaming policy to their advantage.
On the other hand, its tough all over. Many baby boomers are struggling. They are considered costly liabilities to many companies, whatever experience they bring. Caught in the era as pensions were going away, relatively few have enough money for retirement. As for the seniors, not all are so flush. According to one study, 46 percent die with less than $10,000 in assets. Far more would be in poverty without Social Security and Medicare.
So resentment among the generations is misplaced. A better target are the policies and plutocrats that encourage and continue rising inequality, and the Wall Street grifters that continue to evade and defile the rule of law.
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Today’s Econ Haiku:
The market pauses
Taking stock, ha ha! Fearing
That the Fed won’t act