Younger Generations Lag Parents in Wealth-Building
Annie Lowrey, New York Times, 14 March 2013 (hat tip MR)
A new study from the Urban Institute finds that Ms. Brady and her peers up to roughly age 40 have accrued less wealth than their parents did at the same age, even as the average wealth of Americans has doubled over the last quarter-century.
Because wealth compounds over long periods of time — a dollar saved 10 years ago is worth much more than a dollar saved today — young adults probably face less secure futures for decades down the road, and even shakier retirements....
A broad range of economic factors has conspired to suppress wealth-building for younger American workers; the trend predates the Great Recession. Younger Americans are facing stagnant pay — the median income, when adjusted for inflation, has declined since its 1999 peak — as well as a housing collapse and soaring student loan debt.
Note that averages tend to overemphasise the input of oversized outliers, like Bill Gates, and the rest of the 1%.
The article is focusing on younger people, but they are not the only ones being hammered
The Changing Wealth of Americans (pdf)
Eugene Steuerle, Signe-Mary McKernan, Caroline Ratcliffe, and Sisi Zhang, The Urban Institute, March 2013 (hat tip: above noted article)
Today, those in Gen X and Gen Y have accumulated less wealth than their parents did at that age over a quartercentury ago. Their average wealth in 2010 was 7 percent below that of those in their 20s and 30s in 1983. Even before the Great Recession, younger Americans were on a strikingly different trajectory.
The article is focusing on younger people, but they are not the only ones being hammered. Most of the blue collar work force, and the new black middle class, have not been doing particularly well. The main difference is that the youth are (hopefully) going to live longer with the the new reality if it continues (hopefully not).
It is also of note for those who like the idea of preparing for future "downturns." Studies of "preparedness" folks have generally put them predominantly in the "some college" category - a very common category for the blue collar types (the "some" is generally some type of trade-based, or skill-based education) who are getting hammered. Trying to build a personal safety net is difficult when your own economic situation is becoming more difficult.