The Generational Wealth Gap

If you graduated from college in the last few years, then you know how tough the job market is. Young adults have been among the hardest hit by the Great Recession. This generation, commonly referred to as “millenials,” have faced one of the worst job markets since the Great Depression. Many struggling graduates have been forced to take part- time jobs or jobs with uncertain futures. As a result, their ability to build wealth has diminished.

In recent years, there has also been a large increase in "boomerang kids" or young adults who live at home. Many are forced to live at home out of financial necessity. According to Pew Research Center as many as 3 in 10 young adults now live at home. In 1980, only 11% of young adults lived at home. Now, nearly 30% of 24 to 34 year old adults live at home.

All of these factors have contributed to the generational wealth gap: older Americans continue to gain wealth while the net worth of younger Americans is decreasing, which David Francis writes about in his article, “The Far- Reaching Effects of the Generational Wealth Gap.”

The Pew Social and Demographic Trends Report found that the average net worth of people under age 35 decreased from $11,521 in 1984 to $3,362 in 2009, a 68% drop. Compare that to an increase of 42% in average net worth among people 65 and older during the same time.

Paul Taylor, executive vice president of the Pew Research Center, says that the inability of young people to build wealth has resulted in a nationwide case of arrested development. Young adults who cannot find work are returning home and opting not to get married. “These are patterns that are decades in the making and they were accelerated by the bad economy,” Taylor says.

You may have heard the term “funemployment” used to described this time in young adults’ lives. Funemployment is defined as “a happy time in one’s life when one is not employed and not wanting to be employed.” However, this is not an accurate portrayal of the current economic climate. Most young adults would like to find a decent job but graduated during a time with a gloomy employment outlook. When they do find jobs, they are less willing to take risks, and they value security.

Can you see effects of the generational wealth gap in your household? What challenges have you faced as it has become more difficult to find employment?