It may be commonplace to compare millennials with other generations, but it’s not exactly fair. After all, they graduated into the financial crisis, are saddled with high levels of student debt, and have faced a tough job market for most of their adult lives. Also, they’re younger.
It’s the last point that prompted Yili Chien and Paul Morris, researchers at the Federal Reserve Bank of St. Louis, to compare millennials in 2016 to Gen Xers 15 years earlier, moments when each group was the youngest working generation. While it’s natural for a person’s assets and income to increase as they age—and more likely that someone in their 40s will have bought a home, married, invested in the market, and secured a well-paying job than someone in their 20s—Chien and Morris were curious whether, discounting for age, young Gen Xers were still better off.
What they found: Millennials today are worse off than Gen Xers were in 2001.
Contrary to stereotype, millennials’ leaner fortunes aren’t symptomatic of poor spending or lackadaisical saving habits. They actually have more squirreled away in retirement accounts than Gen Xers did in the past.
Chien and Morris also found that millennials have less credit-card debt than Gen Xers. In 2016, the average millennial had about $1,800 in unpaid credit-card debt. Back in 2001, the average young Gen Xer had racked up a whopping $2,700.
So why are millennials worse off? Chien and Morris think their poor asset-to-debt ratios reflect new economic and cultural priorities. Millennials were more likely to live at home, marry later, and delay entering the workforce by going back to school. These choices lead to more debt, such as student loans, and fewer assets, in the form of things like home equity.
One way to read these trends is that millennials are living bleaker financial lives because of the 2008 crisis. But they may also reflect changing life expectancies. “Society is in a state of transition as the life cycle continues to extend,” Chien and Morris write. “People have been living longer and retiring later, and with that has come a multitude of other demographic shifts.”