Young and Old Continue to Diverge in Many Ways

Young people, even the college educated, are struggling.

The Atlantic looks at the growing wealth gap between young and old:

Pew’s study this week adds an interesting wrinkle to the story. Even before the Great Recession, young families were already falling behind. The big loud statistic from the study is that household wealth for young families has fallen by 70 percent since 1984, while net worth for families with older heads-of-household is up 48 percent. As a result, the wealth gap between young and old families has quadrupled from 10X to 47X in the last 30 years.

generation1.pngSome of this yawning gap between old and young is demographic. The rise in single family households means that more young, poor households have one breadwinner instead of two. As more young people go to college and accumulate debt, they’re putting off marriage to work and pay down college loans. Partly as a result of these changes, under-35 poverty levels nearly doubled in the last four decades (see graph to right). Meanwhile, politics came to the aid of the old. The creation of Medicare helped to cut senior poverty levels in half. Social Security is still growing faster than low-income wages.

But much of this change has nothing to do with counting breadwinners per household. Something in the economy dragged down income for new entrants. In households headed by adults younger than 35, Pew reported, the typical adjusted annual income has grown by 27% — four times slower than for older households.

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