Millennials Are Now As Wealthy as Baby Boomers Were at the Same Age

Almost a decade-and-a-half ago, I went through a period consistently writing about a handful of forces that I saw transforming society. At the time, it was clear what was occurring in the data and that we had only begun to feel the ramifications. The shoe has dropped, so to speak, and I think it’s important to highlight the thresholds we’ve crossed. Namely, an interesting economic milestone was passed recently. That milestone: The Millennial generation is now as wealthy as Baby Boomers were at the same age. The findings come from a study published in the American Journal of Sociology in September 2023 and based upon data from the National Longitudinal Survey of Youth, which is published by the U.S. Bureau of Labor Statistics.

Before we get into the details of this, a quick refresher. Here are the general guidelines sociologists use to define generations in the United States:

1. The Lost Generation are those born between 1883 and 1900. None remain alive.
2. The Greatest Generation are those born between 1901 and 1927.
3. The Silent Generation are those born between 1928 and 1945.
4. Baby Boomers are those born between 1946 and 1964.
5. Generation X are those born between 1965 and 1980.
6. Millennials are those born between 1981 and 1996.
7. Generation Z are those born between 1997 and 2012.

I also want you to remember that some generations have certain “micro-generations” within themselves, or, at times, spanning across generational boundaries, where the shared events are unique enough that they were transformative to overall life experience. This, in turn, shapes everything from personal political philosophy to the probability of wealth accumulation. For example, as someone born in the early 1980s, it is true that I am an elder Millennial. It is also true that I am part of a micro-generation known as the “Oregon Trail Generation” (1977-1983) made up of those who saw the rollout of the personal computing revolution and who had analogue childhoods but digital adulthoods, bridging the two worlds. The name comes from the famed game that seemingly all of us played on Apple II computers in school called “Oregon Trail”.

To illustrate: My membership in the Oregon Trail Generation means that on certain behavioral traits, I look much more like Generation X than I do younger Millennials. That group is distinctly different. Folks in my particular micro-generation were very fortunate in certain respects. While we experienced the rise of the internet firsthand, we had to learn the skill sets of prior generations so we could navigate our lives. For example, I’ve pointed out in the past that YouTube wasn’t invented until the year I graduated from university and that I had to spend the entirety of my undergraduate experience going to a library and checking out reference videos for research projects if I wanted to find a specific clip of something. Personal cell phones were not as ubiquitous, either. When I walked off into the sunset with my degree and started my professional life, roughly 35 out of 100 people didn’t have a mobile phone at all and almost nobody outside of those in certain specialty industries had a smartphone; it was just a flip phone you carried in your pocket and physically dialed numbers to reach people. (Like many, I still maintain that for most of us, the true end of my generation’s childhood, and the start of our adulthood, was September 11th. I remember having to go to a payphone in the freshman dorms to try to call my parents’ back in Missouri. It was the only way I could get in touch with them so they knew I was okay. They couldn’t make any incoming calls because the telecommunication switchboards were overwhelmed. You simply weren’t always available to people.) This meant even if you had a cell phone, if you wanted to take a roadtrip, you’d need to print off directions from MapQuest and try to follow them in the car hoping nothing had changed.

The Top Half of Millennials Are Doing Well But the Top 10% Are Knocking It Out of the Park

Okay, back to the main point of this post now that the ground definitions are established … the milestone we are discussing is the fact that the Millennial generation is now as wealthy as Baby Boomers were at the same age.

Giving up all that avocado toast and those lattes seems to have added up in the end.

However, that is not the entire story. You probably suspected as much. In truth, there is a major difference between the experience of Millennials and Baby Boomers in that the former grew up in what has been dubbed as the Knowledge Economy whereas the latter grew up in the post-World War II boom that was only possible because the United States emerged triumphant, the rest of the world had its factory base obliterated, and employment opportunities for the best jobs were restricted via an artificial, violence-backed social monopoly to one biological sex (men), one race (white), one sexual orientation (heterosexual), and one religion (protestant). These restrictions were often reinforced through legal violations of individual property rights; e.g., women not being permitted to open a bank account without their husband’s permission or black families being ineligible for government-subsidized mortgages on a primary residence.

This is not a small point. The primary economic consequence of the Knowledge Economy is that those with better skills (which tends to mean well-educated, higher intelligence folks as the jobs that generate this kind of economic success require above average literacy in both reading comprehension and mathematics) keep a greater percentage of their economic output rather than having to pay lower skill workers to do grunt work that can be automated, resulting in greater income inequality. Furthermore, opportunity was liberalized so that many former out-groups had barriers removed in material ways. In the decades following the election of John F. Kennedy, it became exceedingly unlikely you would be denied an interview at an investment bank for being Catholic; a thought that is absurd today. Racial redlining of mortgage approvals was made illegal in 1968. After 1974, a woman could open her own bank account, start a business, and get financing. After June 15th, 2020, it became illegal to fire a person from their job for being gay due to the Supreme Court ruling related to Altitude Express, Inc. v. Zarda. (This ruling, which governed the private markets, came after the United States Government officially ended its own policy of firing gay people, taking away their healthcare, and rescinding their pension benefits on September 20th, 2011.)

These forces are showing up in spades in the same data. While Millennials, as a generation, are wealthier than Baby Boomers were (as is Generation X, it should be pointed out), two other facts remain true:

• Millennials in the 90th percentile, or Top 10%, have 20% more wealth than similar Baby Boomers did at the age of 35. In present dollars, the Millennials in this group amassed $457,000 vs. $373,000 for similarly-ranking Baby Boomer.
• The median Millennial – the point at which half have more and half have less – has 30% lower wealth than the median Baby Boomer at the age of 35. In present dollars, these figures come in at $48,000 and $63,100, respectively.

Take a moment to appreciate this. Let the numbers sink in for a moment and before proceeding, try to contemplate what you think they mean for society. Also remember we are presently talking about wealth, not income, which was much more heavily influenced by the interest rate philosophy of the Federal Reserve before its recent return to sanity.

As you do, let me say there should be no surprise this happened. I warned back in 2011 (see here) and 2012 (see here) these forces had begun to become nigh unstoppable. As the liberalization of individual rights began to allow previously held down groups to succeed, and capitalism led to unrestrained growth that saw more people lifted from poverty than any system in all of recorded history, successful people went off to college, got married, and started their careers. They enjoyed the efficiency of two-person households, and prioritized accumulation of assets in their 401(k) or similar retirement plans. They wanted to be around others who could understand their life journey, their work commitments, and their values. As a result, up through the days before the pandemic, nearly all of the economic gains in society over the prior decade went to the top 20 to 50 metropolitan areas with the rest of the country left behind. Stated plainly, the smart kids almost always, with exceedingly rare exceptions, bailed on the farm towns and third-tier cities, opting instead to group with other smart kids post-university where they started their families and careers.

Now, a dozen years after I first began to really focus on this topic, those former kids have spent the near entirety of their adult lives living in these areas surrounded by others like them. They often don’t know anyone in their inner circle, save perhaps some family members left behind in the town of their upbringing, who aren’t doing well. In contrast, those who were left behind truly believe the best economy in American history by most objective measures is failing – that “everyone” is struggling because that is all they see in their world. They don’t understand they exist in a bubble and that their experience is not uniform; that it is not capitalism per se which is failing but they who are failing as more households in human history are doing better than at any other time. It is similar to how renters and new homebuyers do not realize that, despite the recent housing affordability crisis, a vast majority of the households in this country own their own property and have either no mortgage debt whatsoever or have locked in the lowest rates in history. The reason folks aren’t burning down the system is because most families are benefitting from it in profound ways.

(For those who are not familiar with the dynamics of the American middle class, one of the most important interviews you can read is the June 4th, 2020 piece called The U.S. Middle Class Isn’t Shrinking, But It is Getting Squeezed as Inequality Rises from the Stone Center on Socio-Economic Inequality at CUNY. Namely, by about 1985, the American middle class, as we knew it, essentially bottomed out, and between 1985 and 2016 inequality increased but the size of the middle class actually didn’t change. Instead, the increase in inequality was caused by the most successful becoming even more affluent. You should also check out The Exaggerated Death of the Middle Class, which does a good job summarizing some of the problems with the way the media uses data; e.g., it ignores changes in the size of households, government transfers, etc.) Related to those topics, you can see life is generally much better for most people despite the wealth disparities as median income continues to climb. Specifically, let’s take a look at inflation-adjusted (“real”) median personal income in the United States in recent generations. Going back the furthest the government has consistent data on this particular series we find that the long-term pattern of Americans doing better over time, albeit unevenly and with multi-year frustrating periods that sometimes involve setbacks, continues apace.

The risk here, as I’ve shared many times, is that the unrestrained mostly meritocratic system that was unleashed calcifies into a new neo-aristocracy. As it does, the reactions are likely to harm society as they will be well-intentioned but self-defeating. That first piece from CUNY does a good job explaining the reasons. As the newly affluent segregate themselves to be around others like them, they build essentially parallel super-star systems for their own kids rather than invest in ones that are shared with less successful families. This results in the systems and institutions that held the middle class together socially and politically being weakened. When the most brilliant doctor in town has his or her kids go to a school, it’s unlikely they will tolerate nonsense in the curriculum. That one parent carries a lot of weight, driving improvements as they complain and threaten to bring in attorneys, benefitting completely non-related children whose parents are either too busy trying to survive by working multiple jobs or who don’t care. In contrast, when our theoretical doctor can simply send his or her kids to a private school and money is no issue, they really don’t care much about what happens at the school down the road beyond general abstractions. It’s human nature; the proximity effect mental model writ large.

A perfect example comes from the San Francisco school district. There is a movement by certain educators to end honors classes because the students who meet the educational achievement levels required for admission are almost entirely white and Asian. Quite literally, the objective is to dumb down the curriculum so folks don’t feel bad. (As has been pointed out by military strategists, countries like China are not engaging in this stupidity, thus presenting a national security risk.) In other cases, topics such as algebra are removed entirely until high school. If left unchecked for too long, the inevitable result is that parents of better performing students pull their kids out of the school district and send them to private institutions, refusing to handicap their own children’s success, both economic and personal, to help some other family’s kid who is failing. This then causes the school enrollment figures to enter a death spiral as the only kids left are those who are performing significantly below average. Now, families who prioritize education won’t even consider enrolling their kids in the school as it’s become a non-starter, further exacerbating economic and racial segregation. What makes it worse is that even after destroying the education system, these policies don’t make a damn bit of difference because school districts are simply one part of the puzzle and educators cannot confront many of the root causes of the divergent outcomes. For example, read EdWorkingPaper No. 23-734, Ahead of the Game? Course-Taking Patterns under a Math Pathways Reform, Version 2023 [Source PDF]. When all was said and done, the racial gap in mathematical attainment was still present.

Meanwhile, perversely, the things that do make a huge difference in closing economic and racial gaps in educational outcomes, such as teaching phonics, are actively fought against in many school districts; an anti-science stance that defies logical explanation. I personally believe the preponderance of evidence suggests beyond question that Lucy Calkins at Columbia University did more to harm progress for black Americans in the present century than even the most ardent hate group because her ideas were not just implemented, but celebrated and spread like a disease, destroying the lives of innumerable children, disproportionately minority, as she was feted by academics in their ivory towers. It wasn’t until the pandemic when middle class and wealthy parents were home with their kids and overheard the absolute drivel she was pushing that it came to light and her institute was shut down decades after it began spewing its poison. (I imagine that if hell has a “Hall of Fame” museum celebrating the damage done to humanity without direct violence, she’s not quite in the Thomas Midgley Jr. category of destroying civilization – that man has his own wing – but, certainly, she gets an honorable mention.)

I don’t have much more to add on the topic at present, simply to observe that it seems we are entering another phase of this societal transition. I expect this next portion will last 15 to 18 years, give or take, but that is necessarily imprecise. By then, the youngest Baby Boomers will be in the 75 to 78 year old range with the balance of power having shifted all but entirely to Generation X or younger. The oldest members of Generation Z will be in their early-to-mid 40s. I think much of the dust will have settled and we’ll have a better idea of what society is going to look like.

I expect a strong movement back to phonics in education, and housing reform in some states that might serve to ease some of this as the affordability issue there is entirely related to the number of available units on the market with everything else being a distraction. Otherwise, I’m increasingly prone to believe this is simply the new normal. The problem is almost entirely cultural, not economic. The first step towards progress is accountability. We make it impossible for educators to hold kids, and their parents, accountable so why is anyone surprised the economic consequences decades down the road inevitably manifest? The United States lacks the political will to have the hard conversations about personal and family responsibility to really address the matter. When teachers are forbidden from failing students who don’t even show up, there is a problem that cannot be fixed absent comprehensive reform. When education is the main pathway to economic mobility and success, failure to engage in that comprehensive reform by definition means failing to solve the latter matters. I mean, let’s be real. California recently removed the requirement that students have the multiplication table memorized. That simple memorization serves a vital cognitive function, automating the calculation for the rest of their lives and letting them focus on higher-level thinking. Do you really think the children of the rich aren’t going to be able to tell you what 9×9 is in half a second without any processing whatsoever? Really? Good luck competing with that.

You can find a summary of the study here and here, both worth reading.