CAMBRIDGE, United Kingdom — When it comes to money, the prevailing thought has been that millennials are worse off than baby boomers, but a new study is challenging that belief. Instead, international researchers say the younger generation is grappling with a widening wealth gap. This disparity arises from differences in financial rewards linked to diverse life and career paths, creating the perception that millennials are facing economic setbacks.
Conducted by researchers from the University of Cambridge, Humboldt University Berlin, and the French research university Sciences Po, the study analyzed the life and career trajectories of more than 6,000 baby boomers and 6,000 millennials in the United States. The primary goal was to assess and compare the impact of these trajectories on their wealth by the age of 35.
The question of whether Western millennials are faring better or worse than previous generations has been a topic of debate. Millennials are often portrayed as bearing the brunt of societal changes that have disrupted job stability and family life. Some argue that they are “the first generation that is worse off than their parents,” while others contend that millennials are thriving.
The study indicates that the answer may depend on which segment of millennials is under consideration. It reveals that millennials who worked in low-paying service jobs or continued living with their parents as they entered middle age generally experienced worse economic conditions at age 35 compared to baby boomers with similar career and life paths. In contrast, millennials with typical middle-class life journeys amassed significantly more wealth than their baby boomer counterparts.
The research describes this expanding wealth gap as a “fundamental moral and political challenge” that will shape the future of the U.S.
“The debate about whether millennials are worse off is a distraction,” says study lead author Dr. Rob Gruijters, of the University of Cambridge, in a media release. “The crucial intergenerational shift has been in how different family and career patterns are rewarded. The wealthiest millennials now have more than ever, while the poor are left further behind.”
“This divergence in financial rewards is exacerbating extreme levels of wealth inequality in the United States. Individuals with typical working class careers, like truck drivers or hairdressers, used to be able to buy a home and build a modest level of assets, but this is more difficult for the younger generation. The solution lies with measures such as progressive wealth taxation, and policies like universal health insurance, that give more people basic security,” Dr. Gruijters notes.
To compare late baby boomers (born 1957-64) with early millennials (born 1980-84), the study utilized data from the National Longitudinal Survey of Youth. Rather than relying on broad averages, researchers mapped the life trajectories of each individual from ages 18 to 35, considering changes in their work, family, and living arrangements. This approach allowed for the comparison of net worth between millennials and boomers with similar life experiences.
The data revealed significant shifts in career patterns and family dynamics between the two generations. At age 35, 17 percent of baby boomers had pursued paths leading from college to prestigious professional careers such as law and medicine, compared to only 7.3 percent of millennials. Conversely, millennials were more likely to work in other professional roles like social work and teaching or in service sector jobs like retail, waitstaff, and caregiving.
Moreover, millennials tended to postpone marriage and extend their stay in their parents’ homes. Early marriage and parenthood characterized the lives of 27 percent of baby boomers, whereas just 13 percent of millennials followed the same path.
In terms of financial security, the study underscored that wealth inequality is much more pronounced among millennials compared to baby boomers. For instance, while 62 percent of baby boomers owned homes at age 35, only 49 percent of millennials did. Roughly 14 percent of millennials had negative net worth, meaning their debts outweighed their assets, compared to 8.7 percent of baby boomers.
Researchers argue that this wealth gap is not solely driven by changing work and family patterns but rather reflects increased economic rewards for secure middle and upper-class lifestyles, while those following less stable, working-class paths have seen stagnation or decline in rewards.
Study authors contend that addressing these challenges is essential to mitigate intergenerational tensions and other social problems. It will require substantial solutions, such as wealth taxes and policies offering financial security to those less advantaged. These measures could include access to stable housing, universal health insurance, and a higher minimum wage.
“We need to make it easier for those who are currently being left behind to accumulate wealth in the first place,” notes study co-author Anette Fasang, professor at the University of Cambridge. “A slow and tentative approach won’t suffice. Significant action is needed to build a more equal society, where more people can experience some form of prosperity.”
The study is published in the American Journal of Sociology.
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