Why young Americans are getting poorer

Folks ages 29 to 37 have watched their net worth plummet over the past few decades, and there are several reasons.

By Kim Peterson Mar 18, 2013 3:34PM
Even after a damaging economic crisis and recession, some American households are recovering nicely. If you're 47 years old or older, you've actually done pretty well in the past few decades.

But younger generations are just getting poorer, according to a new study from the Urban Institute. People younger than 47 just haven't been able to accumulate much money or build up their net worth through homebuying or other investments.

The authors looked at how Americans' average net worth has changed from 1983 through 2010 and found a dramatic difference between older and younger generations.

Those 56 to 64 and those older than 74 more than doubled their net worth, with gains of 120% and 149%, respectively. The picture was still rosy for those 47 to 55 and 65 to 73, with a rise in net worth of 76% and 79%.

But all that progress comes to a halt with younger generations. Those 38 to 46 saw their net worth rise by just 26%, and those 29 to 37 saw their net worth drop by 21%.

Why are young people getting left behind? One of the study's authors, Gene Steuerle, says there are several factors:

The housing bubble. Younger homeowners were more likely to have the steepest mortgage balances and the least home equity built up. Consider a home that fell in value by 20%, Steuerle writes. A younger owner with only 20% equity would see a 100% drop in housing net worth, but an older owner with the mortgage paid off would see only a 20% drop.

The stock market. Older investors were more likely to invest in bonds and other assets that have recovered or gone up in value since the Great Recession.

Lower employment. Younger Americans are seeing higher unemployment rates. They're also seeing lower relative minimum wages.

Less savings. Younger people are seeing a bigger cut of their pay taken out to pay for Social Security and health care.

"Maybe, more than just maybe, it's time to think about investing in the young," Steuerle writes.

More on moneyNOW

Mar 18, 2013 11:54PM
I am so worried for my kids in this great nation of ours. I've owned a 4 unit apartment building in the Bay Area for 12 years now. I bought this property in mind that SS will not be there for me when I retire and my pension is questionable with my union do to all of the financial crises that we've had. All they have to say is we took a loose on these mortgages and that's gone. I've had a tenant in that 4 plex that gets free section 8 housing from the government for nine years now. This person is only 32 years of age, why would she ever go to work when she's getting free housing and food stamps and unemployment. So far we the tax payers have paid just in housing $1450.00 per month so far that's almost $160,000.00 that this person has bilked the system and counting. There's something wrong here, there's nothing wrong with this person; she only works when she has to and lives off of us hard working folks to pay for her to stay home. These social services have got to stop and these people will work for anything at that point.  
Mar 19, 2013 8:45AM
Why is this demographic poor?  Because they've been sold a bill of goods that isn't worth a damn!  They've been taught the only two ways to build wealth are through investments in the stock market and home ownership, and that participating in these activities is guaranteed to produce wealth.  They've also been taught that a college degree will guarantee success and riches.  They've been convinced to rack up student loans and car loans and crazy mortgages and credit card debt and by the time they figure out that debt makes them a slave, it's too late and they owe too much.   Throw smart phones and tablets and data plans into the mix and you have a recipe for financial failure.
Mar 18, 2013 11:11PM
 well, look what baby boomers went through. when i was a kid i thought everybody was just getting by financially. after wwII everybody scrounged what ever they could because times were tough. there was no government food stamps only commodity food that was given out such as powdered milk, cheese, ... and only to the really poor. you had to work in order to get past living taking government food. that made us strong and gave us a sense of independence. now 48% of americans are on some kind of government entitlement and we have an obesity problem. what do you think is wrong here? IF YOU GET GOVERNMENT ENTITLEMENTS, WHO ARE YOU GOING TO VOTE FOR?
Mar 18, 2013 5:45PM
Production jobs moved out of the USA. Our government does not levy a huge tax on those goods produced by American companies on goods imported. Thus, our government supports this loss of jobs. An increase in taxes on U.S. imports could pay for real job training here at home. College is out of range for  most people unless they want dept for life. No guarantee of a job once you graduate. More people intering the country here, thus competition for service jobs or demand for resources driving cost up. People that worked all there lives, those lucky enough that had the opportunity, are now told the safety net they paid into, and the so called entitlement programs are being cut-gee, where did the money go that hard working people paid? Government sucked it up thats where it went. So, why do younger people have less opportunity? Please re-read this paragraph, and hope, just hope, one day government will do what the people want, and not elect self pay raises and hand out jobs to family and kin.
Mar 19, 2013 9:30AM
There are responsible young people that are doing just fine.  They spend less than they earn and have been investing, while the market has been down.  They've purchased foreclosures and fixed them up in order to build wealth and equity.  They've understood the concept of a "starter home."

The vast majority of them, however, like to spend above their means.  They want everything their parents have, but lack the income to achieve it.  They also want everything NOW and refuse to accept, their parents worked decades for what they have.  Years ago, you didn't go out or take elaborate vacations, unless you had the cash to pay for it.  Today, many young people simply charge it.  They choose to overlook the fact that the bill needs to be paid eventually.  Those with the entitlement mentality are not going to fend well long term.  But then again, many have enabling parents that will bail them out financially.
Mar 19, 2013 9:52AM
Don't forget that they are too busy looking at their iphones to work.
Mar 18, 2013 11:12PM
Gee, Do you think it might be more likely they've run up high credit card debt because of I want it all now mentality, or that they have huge student loans to pay back. And yes if you have a mortgage and few assets you will have a negative net worth.  That's just a fact of life.  When I bought my first house, it did go from a positive net worth to a negative net worth.  But as I paid off a 30 year loan in only 13 years and I started seriously saving for retirement, my net worth went very positive very fast.
Mar 19, 2013 9:09AM
Larger tax burden and more **** to spend money on. Our parents did not have cable and cell phone bills. But mostly, they don't know how to save.
Mar 19, 2013 12:16PM
They're not poorer, they just save less and spend more on designer clothes, smartphones, big screen tv's, go out more often.  
Mar 19, 2013 12:19PM
They voted for Obama.  Their poverty fate is sealed.
Mar 19, 2013 9:58AM
The high cost of living has a lot to do with it.  Our politicians and the rich care less about us.  There are jobs out there for people who want to work.  Live within your means.  Don't have kids, don't smoke, go out to eat, drink in bars, use credit cards for gas or booze, buy cars with bad mileage, etc.  I worked 2 jobs for 17 years, they can do the same.
Mar 19, 2013 9:52AM
The answer is obvious. The amount that the government takes is to much. Foreign aid, Entitlements (they should be for people who paid in to them )the poor,( no one in this country is poor. ( that is compared to most other countries) ,Government salaries ( on average 25% more than is paid for the same work in the private sector)Government waste and Fraud, couple that with this BS about Social Justice and Wealth redistribution and there you have it.....the comie pinkos are doing their best to suck the life out of us and the Dumb A-- of this country are to stupid to recognize it ...Oh and try to buy Amo ...call Wal-Mart and try to buy 22 ammunition ...there isn't any in the country.
Mar 18, 2013 6:26PM

Yep, keep the average workers wage flat for decades and let the corporations, CEO's and all the "1%" income climb year after year.


Evidently the conservatives today that support keeping average workers wages flat while the rich get richer don't remember the 50's, 60's, 70's when a family lived quite well with dad working and mom staying home to raise the children, that state colleges and university education was virtually free, the health insurance was affordable and covered everything and medical costs were appropriate and doctors even made house calls.  Companies were expanding, workers were treated with respect and usually had paid health insurance, pensions were fully funded and the CEO still made a nice living, took fabulous vacations, and was happy to simply live in the biggest house on the block and was satisfied with his standard of living. 


Then the 80's arrived Reagan was voted president and since then the tables have turned.  Workers and unions have been demonized, CEO's have demanded obscene income, benefits, and golden parachutes just in case, corporations wanted more profits so factories were closed and moved off shore, corporate welfare grew, politicians owed the "1%" for contributing to their re-election campaigns and now the propaganda machine has convinced a whole bunch of Americans to trust the **** is spews on Fox News and PAC.  Americans have been "hoodwinked" and they can't even see that. 


Look out Serfdom, here we come.

Mar 19, 2013 8:37AM
Of course younger people have less money and net worth, they haven't had as much time to save.   This isn't rocket science.  
Mar 19, 2013 11:51AM
Investing means getting a benefit back from a contribution.  I love how these left wing loons have adopted this "Investing" word.  Like when Obama "invests" into these green companies that WILL go bankrupt in a year or two.  Now it's called an "investment".
Mar 19, 2013 11:58AM
Mar 19, 2013 12:04PM
How about fewer life wage jobs in the USA due to outsourcing to other countries?? You liberal spin doctors ever consider that? The money shakers and the lawgivers, who are often the same folks have sold America's future offshore for a few dollars more on their quarterly dividend checks.  This is pretty clear. How is it that at a time in America that taxpaying Americans are scraping to make by, the the Stock market is reaching new heights daily?
Mar 19, 2013 10:31AM
I have 4 grandkids, ages 24 to 29, and all are doing great with good paying jobs. None have faced unemployment and in fact they are receiving job offers from "head hunters" on a regular bases. Why is this so? Because they planned for their future by getting engineering degrees.
Mar 19, 2013 9:55AM
Bankster capitalism booms and busts the socioeconomic system every few generations. The banksters thank you for your time and your money.
Mar 19, 2013 10:19AM
The same Job Security and Wages aren't there for young folks of today as it was for the last generation. These things go through ever changing cycles. So when posters state how they did this or that back then, you might not have been so lucky, NOW!

Folks want to complain about food stamps but now about the massive outsourcing of jobs and lower wages of this era. Pay folks a living wage and most of these problems would simply vanish.

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