Trendbook Excerpt: Millennial Families Are Less Financially Secure Than Previous Generations

This is adapted from the Demographic Outlook in the 2020-2021 Trendbook, available in the NAIS Bookstore.

By Amada Torres
As a group, millennials are the first generation to experience less upward mobility than the generations before them. A Stanford study found that only 44% of millennials were in jobs with higher socioeconomic status than their parents when both were age 30, and 49% had positions of lower status. The most recent U.S. Census Bureau data showed that the average annual salary for a millennial was $47,034. Adjusted for inflation, that is 20% lower than the salary of the average baby boomer at the same age.
Millennials who had at least a bachelor’s degree and a full-time job fared better. They earned $56,000, which is higher than boomers and almost equal to Gen Xers at the same age. The importance of a college degree becomes even more obvious when household income (including the income of all members of the household) is considered. Households headed by millennials with bachelor’s degrees or higher reported a median household income of $105,343. This is below the income of Gen Xers but higher than that of previous generations. (See the figure just below.)

Another economic hardship for young adults relates to student debt. Compared to previous generations, millennials didn’t just take out more and larger student loans. They also defaulted more frequently. In 2000, 40% of Gen X college graduates held student debt. In 2016, that percentage was 46% for millennials. Furthermore, in 1989, young families had $1,415 in education debt, on average; by 2016, that burden had soared to $13,039. (See the figure just below.)

The rise in education debt, at $1.51 trillion nationally in 2019, has contributed to lower rates of home ownership among millennials. About 43% of millennial households owned homes in 2016, compared to 51% of Generation X households and 49% of baby boomers when they were the same age.
Millennials are not only delaying homeownership. They are also living longer in their parents’ homes. Between 2000 and 2017, the share of young adults ages 25-34 living with their parents increased from 12% to 22%.
Given their lower homeownership rates and large amounts of student debt, millennial households have lower average and median net worth—defined as assets minus debt—than previous generations. In 2016, millennial households’ average net worth was $110,000, compared to $163,500 for Gen Xers and $126,500 for boomers. Similarly, millennials’ median worth was just $20,000, while Gen Xers’ was $31,000 and boomers’ was $27,000 at the same age. The sharp difference between the average and median is because the average is skewed by the nation’s super-wealthy. There are some households with very high net worth that drive up the average value. The median net worth, representing the middle point where half the households have more and half have less, shows that in general net worth is relatively low.
Although it is too soon to assess the economic impact of the COVID-19 crisis and its aftermath, the effects are likely to influence millennials’ ability to afford an independent school education for their children.

The Trendbook, NAIS’s annual guide to issues affecting independent schools, includes research, data, Strategic Questions, Action Steps, and Resources. Read about additional trends in enrollment, financial aid, leadership, teaching and learning, and more in the 2020-2021 Trendbook, available in the NAIS Bookstore.