Sooooooo, I need to nitpick. Over the weekend, Steven Rattner wrote a more or less reasonable op-ed in the New York Times arguing that today’s young adults have been dealt a crappy economic hand and that aging baby boomers ought to do more in order to help them out a bit. How? By accepting higher taxes in order to fund spending that might help the economy. (Less stellar: Rattner would also like to cut Social Security benefits on our account. Please don’t). Unfortunately, the piece recycles a misconception I’ve seen elsewhere—that millennials earn vastly less than the past couple of generations did at the same age.
“Americans between 18 and 34 are earning less today (after adjustment for inflation) than the same age group did in the past,” he writes. “A typical millennial averaged earnings of $33,883 (in 2013 dollars) between 2009 and 2013. That was down 9.3 percent (after adjustment for inflation) in just a decade and is the lowest since 1980.”
This isn’t wrong so much as it’s oversimplified. Men really do make less than in 1980. But women earn far more. And in the end, young adult incomes are basically right inside the range they’ve been in past decades. In other words, the story isn’t about decline but about stagnation.
One important note: In general, it’s sort of useless to talk about 18-to-34-year-olds as a single group. I mean, just think about the 18-year-olds you’ve met. Now consider the 30-year-olds you know. What do they have in common? Hopefully, very little.
That’s why I prefer to look at the 25-to-34-year-old contingent, who as a group have largely finished their educations and gotten a professional start in life. What do we find? Well, if you use 2000 as your benchmark, everybody looks like they’re doing terribly. And even over a longer time frame, the median young man is indeed earning 18.5 percent less than he did in 1980, adjusted for inflation, thanks to the not-so-slow erosion of high-paying blue-collar jobs. The median young woman, however, is earning 40.5 percent more. For both sexes combined, the median income is right about where it was in 1996. If you look at young adult households—that includes couples that are married or just live together—they’re in line with incomes circa 1995.
You see a similar pattern when you break wages down by education. For both young high school graduates and young college graduates just entering the workforce, hourly wages are roughly on par with 1998, according to an analysis by the Economic Policy Institute.
Of course, stagnation isn’t exactly something to celebrate, especially when the cost of rent and education are anything but static. Thanks largely to student debt, even middle class young adults have lower net worths than they did in 1989. Housing costs have almost certainly contributed to the historically large number of 25-to-34-year-olds living at home. And while median incomes haven’t necessarily fallen through the floor, Gen Y has had to deal with a longer period of high unemployment than anything the boomers or Gen X encountered. The kids aren’t exactly all right. But they’re not quite the lost causes Rattner might have you think.