While many Baby Boomers and Generation Xers may think Millennials have it easier than they did, a new report has found it might not be the case – and people are actually facing more debt now than some older generations did at the same age several years ago.
A new study by the Federal Reserve found that Millennials (people born between 1981 and 1997) have lower real incomes than members of Generation X (born between 1965 and 1980) and the Boomer generation (born between 1946 and 1964). And while Millennials have household debts similar to those of Gen X when they were younger, they actually have more than Baby Boomers did at that age.
One of the main reasons for the difference in earnings was the “unfavourable” labour conditions Millennials faced when first finding work, the study claimed, as many started job searching during the Great Recession when “new entrants to the labor market faced historically weak labor demand and unusually tight credit conditions”.
The study essentially found that earlier generations were making more money when they were younger and in similar demographics.
Meanwhile, the authors of the study explained that, because Millennials were still quite young at the time the report was published, it’s not yet known whether reaching adulthood during difficult years will have permanent impacts on their tastes and preferences.
Data gathered on household spending found little evidence to suggest that Millennial households have tastes and preference for consumption that are lower than the older generations. So, rather than spending on unique tastes and preferences, Millennials’ are likely spending money because of general technological changes, ongoing demographic evolution and economic cycles.
“For example, for spending on motor vehicles—which accounts for roughly 20 per cent of retail sales and is highly sensitive to the business cycle—we find little evidence that millennial 4 households have significantly different tastes and preferences than households of previous generations,” the authors of the study wrote. “We find similar results for spending on food and housing-related expenses.”
The study found Millennials also have fewer assets than the generations that came before them, and – while their household debts were similar to Gen Xers at the same age – their individual level of debt is actually less than that generation.
Finally, and possibly surprising for some, the report found many demographic attributes associated with Millennials may not be unique to that generation.
For example, higher rates of racial diversity, higher educational attainment and lower rates of marriage are actually consistent with secular trends in the population and can’t be linked to a single generation.
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