Study: 30-somethings worse off than their parents' generation for the first time since the Great Depression
- Urban Institute study says younger generations don't build as much wealth
- Average net worth of 30-somethings has decreased 21% since 1983, but for 74 and older, average net worth has increased 149%
- Trend caused by stagnant wages, fewer jobs, shrinking home values and high loan burdens
Americans under 40 years old are worse off than their parents for the first time since the Great Depression.
Twenty and 30-somethings, also known as Generation Y and X, are the only age group in the country currently worse off than their parents three decades ago, according to a recent study by the Urban Institute titled 'Lost Generations? Wealth Building among Young Americans'.
Americans in their 30s have been hit particularly hard—their average net worth has decreased 21 per cent from what previous 30-somethings had in 1983, CBS reported.
Stagnation: A recent study by the Urban Institute found that younger generations are no longer better off than their parents. The average net worth of 30-somthings today has decreased 21 per cent since those in 1983
The grim study, published by a Washington, D.C., think tank, noted that Americans' wealth has 'grown significantly' despite the poor state of the economy. In fact, the average household wealth doubled from 1983 to 2010 and incomes have increased—but this is not the case for younger generations.
'For many, the American dream of working hard, saving more, and becoming wealthier than one's
parents holds true,' the study's authors write. 'Unless you're under 40.'
Typically, as society gets wealthier, children get richer than their parents, the study notes.
For instance, the average net worth of Baby Boomers aged 56 to 64 increased 120 per cent from their counterparts in 1983. Americans over 74 have an average net worth 149 per cent more than the oldest citizens three decades ago.
Line: Younger generations, shown at the bottom with turquoise and red lines, are not accumulating wealth over time like previous generations
This trend is no longer the case, partially because the Great Recession hit young homeowners in their 20s and 30s the hardest. But the study's authors say younger generations were in trouble even before the recession hit.
Stagnant wages, diminishing job opportunities and shrinking home values play an important role in younger American's harsh new reality. Lack of educational attainment higher than previous generations also factored in.
College debt stifles potential savings as well. Most jobs—even some with low hourly wages—require at least a four-year degree. Some 20 million Americans attend college each year and nearly 60 per cent borrow to pay for school, according to the nonprofit American Student Assistance.
All those loans amount to roughly $870 billion in outstanding student debt, according to the Federal Reserve Bank of New York. A quarter of 30-somethings have outstanding loan debt, but only 7.4 per cent of borrowers older than 40 have outstanding debt.
Because of these burdens, younger Americans can't imagine saving and building up a nest egg like their parents.
Myya Beck, a 33-year-old from Wellfleet, Mass., laughed when CBS asked her if she had any savings.
'My glass is always half full. I'm still day by day trying to something more. What else is there?' Beck said.
Beck runs her own fitness studio and works nonstop, but continues to struggle. Her earnings go directly to bills, college loans, rent and a car payment.
Changes: In the past, kids earned more than their parents as society became wealthier, but this is no longer the case
With a baby on the way, Beck is worried about her future. She owes over $15,000 in college loans.
'I mean, this is everything that I've ever wanted. I've always wanted to own my own business,' she said. 'I've wanted to be a mom and have a family most importantly, of my own, so I've gotten those things, but financially how do I do it?'
The study's authors suggest the government should pay more attention to the hardships of younger generations—or else.
'If current trends for younger generations are not reversed, within a few decades they may become more dependent than older Americans today, especially in retirement, upon safety net programs less capable of providing basic support,' the study concludes.
