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A few years ago, as everyone focused incessantly on millennials' apparent obsession with avocado toast, a team of researchers at the Federal Reserve Bank of St. Louis got to work investigating something much more serious: millennial wealth. They found that the typical millennial household, as of 2016, had only about $28,000 in net worth — putting them 40% behind what previous generations had in wealth at the same age (in inflation-adjusted terms). The data suggested we millennials were becoming a "lost generation," destined to be poorer than the generations that preceded us.
Baby boomers and Gen Xers have faced their fair share of calamities — stagflation, the double-dip recession of the 1980s, disco — but millennials have had it really rough. Millennials who got college degrees exited school deep in debt and entered a job market ravaged by the Great Recession. Millennials who didn't get college degrees found it harder to get a well-paying, blue-collar job, after trade and automation closed avenues that past generations had used to get to the middle class. We saw our child-rearing and first-home-buying years — not to mention our ability to work face-to-face — interrupted by a pandemic. And all the while we've slogged through an economy muddied by growing inequality, stagnation and a fading American dream.
The research team at the St. Louis Fed recently got its hands on some fresher data, which the team crunched to reveal what had happened to millennials in the years since 2016. The team found shockingly different trends within our generation. Some of us have rebounded dramatically in recent years. Others have fallen further behind. Black millennials have had it worst of all: They aren't just falling further and further behind white millennials in building wealth for their families — they're falling further and further behind what previous Black generations amassed in wealth.
A millennial crunches the data
Born in 1991, Ana Hernández Kent is considered a young millennial: old enough to have friends who wear skinny jeans but young enough to have friends who spend too much time playing Fortnite and making videos on TikTok. She's a senior researcher at the Institute for Economic Equity at the Federal Reserve Bank of St. Louis, and she has been on the team of researchers at the St. Louis Fed studying trends in millennial wealth. (Note: We spoke with her on April 15, before the Fed's periodic media blackout.)
The data culled by Kent and her fellow researchers comes from the Federal Reserve's Survey of Consumer Finances, which has detailed information on American wealth going back to 1989. The Fed releases the survey every three years. It's based on extensive interviews of thousands of Americans about the minute details of their finances.
When the latest round of data from the survey was released last year, Kent and her colleagues got to work trying to figure out what had happened to millennials, since their previous study suggested millennials could be on their way to "lost generation" status. That study had data only until 2016, and the new survey gave them data up until 2019. The researchers focused on older millennials, who were born in the 1980s (we'll just call them "millennials" from here on out, but note we're not talking about younger millennials, who were born in the 1990s).
This time, the researchers found some surprisingly good news: Many millennials made dramatic progress after 2016. "What we found was pretty substantial: They had made wealth gains of over 80% in just a three-year period," Kent says. By 2019, the typical millennial household had increased its net worth to about $51,000. Millennials are still significantly behind in amassing wealth — about 11%, or about $6,400, behind previous generations — but they're way better off than they were just three years before.
Kent says there are various reasons for this rebound. About half of millennials are invested in stocks, so the recent surges in the stock market helped. Even more important, Kent says, is the effect of millennial homeownership. More than half of millennials now own homes, and home prices surged between 2016 and 2019. Lastly, many millennials made progress in paying off their student loans, which show up in the data as negative wealth.
But this generally positive snapshot of the typical millennial masks something troubling: Non-college-educated and Black millennials are still lagging way behind.
The lost millennials
Kent and her colleagues found that the typical millennial without a college degree has 19% less family wealth than what previous generations without a degree had when they were the same age. Millennials who graduated from college, on the other hand, have just 4% less wealth than their similarly educated equivalents in generations past had. This growing inequality between college and non-college-educated millennials fits into a ginormous amount of other research that shows that today's blue-collar and low-income workers have less upward mobility than they did in previous generations.
But the most disturbing finding in their data concerns Black millennials. While the typical white millennial family has about $88,000 in wealth, the typical Black millennial family has only about $5,000 in wealth.
It gets even worse when you look at the trends. White millennial families made huge strides between 2016 and 2019, and they now lag previous generations of white families by only about 5%. Between 2007 and 2019, however, Black millennials fell further and further behind — not just compared with white millennials, but compared with previous generations of Black Americans. While white millennials trail the wealth of previous generations of white Americans by only 5%, Black millennials trail previous generations of Black Americans by 52%. The typical Black millennial has $5,700 less in net worth than counterparts in previous generations.
"That's incredibly shocking, because Black Americans have made great progress in terms of political representation and other measures — but it doesn't seem to be translating into wealth gains," Kent says.
Kent singled out a few potential factors for this disturbing disparity between Black and white millennials. First, white millennials are more likely to benefit from having wealthy parents. Their parents have more resources, for example, to help them with down payments on their first house or to help them pay off their student loans.
About 80% of Black millennials with at least a bachelor's degree still have student loan debt, compared with about half of white millennials. White millennials are also more likely to own assets like stocks and homes, which have ballooned in value in recent years. While about two-thirds of white millennials own homes, less than a third of Black millennials own homes.
"I think it's clear in the data that there is a segregated America," Kent says. That has always been true. But the troubling story is that, despite racial progress in politics and culture, most Black Americans have yet to see tangible wealth gains. Moreover, we should highlight, this data was all collected before the pandemic, which has made racial inequality even worse.
Maybe it's time we stop talking so much about avocado toast, and more about bread and butter.
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