22 ms·

Net worth of Americans aged 18 to 35 has dropped 34 percent since 1996: study

337 points by joeyespo 7y ago

lettergram 7y ago
I suspect that a large part of that has to do with student loans, which have grown by a huge multiple since 1996. With compounding interest it takes longer to recover from school. I know I graduated with $75k loans at 8% interest. Even with say, a $100k salary, just the interest eats ~7% of the income. With the total payments being somewhere around 12% of your income. Combine that with increased taxes over the same time and a 34% reduction in worth seems about right (if we account for the loss in compounding interest from buying a home, 401k investments, etc)
- kartan 7y ago
  > I suspect that a large part of that has to do with student loans I think that this is not just a USA issue but it is also happening in all Occident. Student loans are just one of the reasons. But, it is bigger than that. e.g. UK: https://www.ft.com/content/81343d9e-187b-11e8-9e9c-25c814761640 https://www.ft.com/content/81343d9e-187b-11e8-9e9c-25c814761...
  - akerro 7y ago
    Can't compare UK here, education is free in Scotland, £9k/annually in Wales (Welsh government can provide 67% grant every year, so it goes down to £3.3k), in England it's the most expensive, over £9k/ann and Student Loan Company has highest interest rates there.
    - isostatic 7y ago
      Those loans don’t need to be repaid, they’re a graduate tax - 9% above £25k for 30 years. Most people won’t earn enough to pay a penny off the tuition - only the cost of living loans. Only the highest paid graduates actually pay tuition
      - akerro 7y ago
        That's not correct! If at any point in your life you make more than £25k they will add this tax on you, and your interested on the student loan is still growing, even when you're under £25k.
        DanBC 7y ago
        You're charged interest only from the day of your first repayment. https://media.slc.co.uk/repayment/qsg/how-much-do-i-repay.html https://media.slc.co.uk/repayment/qsg/how-much-do-i-repay.ht...
  - aries1980 7y ago
    > In fact, this chart understates how badly things have gone for millennials, because it shows incomes before housing costs. No, it does not, because the chart is weighted with CPI, which contains the housing cost. According to that chart, the millenials have the best living standards, but I seriously question the quality of the source, where the young adults take-home salary is above £15K, UK-wide.
- momokoko 7y ago
  Consumer loans with compounding interest should be illegal. The human brain is incapable of conceptualizing it and it results in inescapable debt once a person starts to fall behind on payments.
  - tracker1 7y ago
    I wouldn't say all consumer loans, but probably student loans... given that they are prevented from bankruptcy dismissal.
    - Falkon1313 7y ago
      Also they specifically target people who've never had to deal with such things in practice, and lock them into a multi-year commitment (another thing they've never had to deal with) that they can never get out of while all of society tells them that if they don't do it they'll be a failure. Even if you understand the abstract math as a teen, it's a bit much to expect someone to make an informed choice about the reality of resolving it over years which they have no experience with, and in a job market that they have no experience with. It's a high-pressure predatory system with long-lasting consequences that targets the vulnerable.
  - madengr 7y ago
    Maybe only for those who are bad at math.
  - leetcrew 7y ago
    > The human brain is incapable of conceptualizing it speak for yourself. I understand geometric growth quite well.
  - bdcravens 7y ago
    I don't think the human brain is incapable. We just don't teach it. Perhaps it should be a required course to obtain such a loan?
- sysbin 7y ago
  Could also be that young people have very little representation when it comes to laws, policies and regulations.
  - onlyrealcuzzo 7y ago
    As in their taxes have been in increased to keep unsustainable pension programs humming along?
  - dev_dull 7y ago
    The counter argument to this is that their representation is arguably higher now than any other time in history, so more representation (falsely) equates to less wealth by your supposition.
  - Alex3917 7y ago
    Millennials are the largest voting block in the US. They have more representation than any other demographic.
    - sjg007 7y ago
      They just need to actually vote..
      - lbotos 7y ago
        According to Pew, They did: https://www.pewresearch.org/fact-tank/2017/07/31/gen-zers-millennials-and-gen-xers-outvoted-boomers-and-older-generations-in-2016-election/ https://www.pewresearch.org/fact-tank/2017/07/31/gen-zers-mi...
        sjg007 7y ago
        Right, but not in the same proportion as the other groups.
      - tamaharbor 7y ago
        “If voting made any difference, they wouldn’t let us do it.”
- aries1980 7y ago
  > only 20 percent of consumers were meaningfully better off in 2017 than they were in 2007, with precious little income left to spend on discretionary retail Reading this I assume it is rather caused by housing and food cost in metropolitan areas.
  - dmix 7y ago
    Every city job I’ve seen outside of the minimum wage service jobs pay better than all the surrounding small cities and towns. Which helps offset costs. But certainly many urban areas have been very slow to match the right level and type of housing development for the needs of a growing population. The effects of building laws, zoning, political influence, rent control (particularly how it was done in 70s/80s), etc has a long recorded negative pressure on supply vs demand. So it’s very likely the wage differences aren’t sufficient for most people.
    - aries1980 7y ago
      Above a given paygrade, yes, it offsets, but for most people, especially people working for public services, a fiver per hour more won't offset the extra thousands per month. Note: one of my former landlord said he bought the property in the '70s we lived in for £25K, when he worked as delivery postman for £500/month. With living on his own in London, he bought the property after 6 years working for Royal Mail. Today, the median RML postman salary https://www.payscale.com/research/UK/Job=Postman/Salary https://www.payscale.com/research/UK/Job=Postman/Salary is £18K (take-home pay is £1315/m), a 1-bedroom flat rental in the outskirts according to Numbeo (https://www.numbeo.com/cost-of-living/in/London https://www.numbeo.com/cost-of-living/in/London) is £1215, without the utilities and council tax (which was £92/mo for me) The remaining £100 is enough for nothing. But even if let's say share the flat with an SO and split the costs, it is unlikely you can ever afford a 1-bedroom flat. The same for my parents' case in Hungary ('90s). My mom was a PA, my dad a factory worker. They were able to buy a flat when they were 20, a year after my sister born. My wife parents (factory workers) bought a small house in a village when they were 19. Both family needed no financial aid from their parents. Both properties had an interest-free mortgage around the 30% of the property value. I wouldn't compare that era with the current one , because neither my landlord, nor our parents could afford holidays abroad or a car. But neither had to worry about where will you sleep or whether your family can afford fresh, quality food if you have to find an other job.
- deleted 7y ago
  [deleted]
- dev_dull 7y ago
  Couple this along with the fact that millennials are largely choosing to live in cities which have seen the most dramatic cost of living/rent inflation.
  - lotsofpulp 7y ago
    Which is the economically optimal choice considering the increased volatility in labor markets.
  - ryanSrich 7y ago
    Not sure it’s a true choice. It’s either live in the city and earn a 6 figure salary or literally go jobless. Small towns and cities don’t have jobs. If they did we’d see less people living in cities.
    - dev_dull 7y ago
      I think they do have jobs, just not jobs suited for the typical degrees/training that millennials are obtaining.
    - bdcravens 7y ago
      Yes but not all cities are equivalent. I can sling code in Houston the same as in San Francisco or New York. While someone always calls out the extremes (as if everyone in SF is a $400k engineer), in general the economics work out in my favor in a cheaper city.
    - lazyjones 7y ago
      > Small towns and cities don’t have jobs. The unemployment rate in the USA is at 3,6%. Small towns and cities would be deserted if they had no jobs.
    - burfog 7y ago
      They sure do have jobs, but you can't land in a random small city and expect to find a specific pair of specialist jobs. Small cities work great for single-income families that aren't picky about which particular city they end up in. Non-specialist second income is fine too. Example: There are lots of small cities with openings for librarians, and lots of cities with openings for CNC programmers. It is far more difficult to find a small city with both, so insisting on that sort of two-income situation in a small city isn't going to go well. The same goes for nearly any kind of skilled employment. The jobs are there, but you can't throw a dart at a map of America and expect to find two very specific job openings in one spot. This may be one factor driving the urban-rural political split. Single-income families are different from two-income families.
- philwelch 7y ago
  Especially if your measurement is net worth. A new college graduate today isn't just broke, she's personally insolvent and will be for the next few years.
- 88840-8855 7y ago
  I have read the new wealth of nations by Surjit Bhalla recently. He describes this phenomenon and also includes the reasons of educational and international mobility. Education has been as accessible as never before in the last decades. Further, emancipation (rated "good" by the author") has contributed to more women studying and entering the white color workforce. And globalisation has contributed towards people moving globally to where the jobs are. This has lead to an oversupply of highly qualified people and the stagnation of real wages worldwide. Exceptions are developing countries where demand is still higher and yet is leading towards increasing wages.
- badpun 7y ago
  The 8% interest on the loans seems high to me. Around here (Poland), a standard credit card is at 10% interest, and student loans should be much safer for the bank.
  - tehlike 7y ago
    In the us, credit card interest is around 25% or more.
    - deleted 7y ago
      [deleted]
  - joehandzik 7y ago
    It's true. I may have actually been higher for some loans until I got a couple of promotions and had enough of an income increase to be able to refinance to a 5 year 4.75% loan at SoFi. Which itself still feels high as you watch DAILY interest compounding happen. I lean fairly liberal, but I think we can make significant strides with this issue in the US by simply changing what max interest rates are and how this interest compounds. The way things work right now truly feels like robbery when you're in the thick of it.
    - burfog 7y ago
      We could limit max interest rates. If that had been in place, your loan would have been denied. Would that have been better for you? Might you have then chosen to get an illegal loan at an even higher interest rate from organized crime, with a risk of violence for non-payment?
  - tdfx 7y ago
    Just checked my direct federal loans (the first source of loan funding for most US college students -- the second is private banks). Interest rate is 4.41%. I was lucky because federal direct loans covered my tuition, but many other students need to take private loans, as well.
    - 7y ago
- deleted 7y ago
  [deleted]
- bsanr2 7y ago
  This is certainly a factor, but I think HN's main demographic tends to overestimate the effect of college-related issues on the fortunes of the general population, where college graduates are still a minority. I imagine that the most important factor is the lowered rate of home-ownership.
  - dd36 7y ago
    Due to what?
  - godelski 7y ago
    [0]: 2017: 33.4% of Americans (25+) have a Bachelors or higher 2007: 28% of Americans have a Bachelors or higher 1940: 4.6% of Americans had a 4+ year education (post high school) You're right, college graduates are still a minority, but there is definitely a largely increasing. There's definitely more people enrolling than that. 70% of Americans will enroll in a 4 year degree but <2/3 of them will get a degree and 56% will drop out by year 6.Also Full-time students are 55% less likely to drop out of college than students who go to school exclusively part-time.[1] So while college graduates are still a minority, it doesn't look like Americans who enroll in college are. They are clearly in the majority, and just because they don't graduate doesn't mean they haven't gathered debt. [0] https://thehill.com/homenews/state-watch/326995-census-more-americans-have-college-degrees-than-ever-before https://thehill.com/homenews/state-watch/326995-census-more-... [1] https://www.collegeatlas.org/college-dropout.html https://www.collegeatlas.org/college-dropout.html
    - rayiner 7y ago
      Even if they don’t have debt, while they’re enrolled in college they’re not building net worth.
    - brandonmenc 7y ago
      > just because they don't graduate doesn't mean they haven't gathered debt ...and end up even worse off - they have the debt, but not the degree that could get them the higher paying job.
    - 7y ago
- godelski 7y ago
  I just did some quick math[0]. At that 75k loan, 8% interest, and 100k salary, if you pay 10% of your salary it takes you 11.5 years to pay off (and you pay almost 40k in interest >50% of principal). Same numbers, but a 100k loan that goes to 20.25 years to pay off and you pay >100k in interest. Though to be fair, if we put in the average student loan ($29800) and the average US household income (60309) we bring it down to 6.33 years and ~8k in interest (28% of principal). But it is unlikely that many college graduates are making the median household income as a fresh graduate. If we go to 40k/yr salary then it jumps to 11.5 years and 15k in interest (53%). This also doesn't take into account that most of these loans are variable interest rates. Considering that, these numbers would put us on the lower side (of someone starting with an 8% interest rate). Edit: spelling [0] https://www.bankrate.com/loans/student-loans/how-long-to-pay-off-student-loan/ https://www.bankrate.com/loans/student-loans/how-long-to-pay...
  - MagicPropmaker 7y ago
    What do you mean by “50% of principle”?
    - skookum 7y ago
      The OP simply misspelled 'principal'. By ">50% of principal" they meant that the interest paid over the life of the loan is more than 50% of the original loan amount.
    - deleted 7y ago
      [deleted]
- adatavizguy 7y ago
  I've had three careers the latest writing software earning 6 figures without having gone to school.
- burfog 7y ago
  The college dropouts, and the people with truly useless majors, have a real problem. For you, there is an obvious path forward. The 40th percentile household income is $50k. Live on that. You can thus put the extra $50k toward the loan, paying it off in less than 2 years.
  - SomeOldThrow 7y ago
    > The 40th percentile household income is $50k. This mostly depends on where you live.
- IkmoIkmo 7y ago
  Not just that, but educational attainment in general, demographic changes, economic changes etc. We've shifted from a population that does not die old, starts working early, stops education early, and does most of its work in the primary/secondary (agri/manufacturing) economy where its most productive when young. To automating those jobs and shifting to a world where we grow old, stay in school longer, have high returns on education in our tertiary service-based economic productivity levels, which gets us to be most productive in middle age, which also coincides with most of our investments in personal housing equity, retirement funds and paying down debt. Not a huge surprise that if you take a few age cohorts, that a young one will drop in wealth, while an older one will grow in wealth. Our society lives and works longer, and prepares longer for this work in school, which has more individual-benefits and thus higher individual educational debts at a young age. As such, I wouldn't be surprised if the wealth-hump didn't just move over a few years. Losing 1/3rd wealth within a certain age cohort (18-35) would be no surprise if half the wealth of 18-35 year olds was generated at 32-35, and this shifted to 35-38. I'd be most interested in seeing a graphical wealth distribution by age, for different generations, then you'd know if this was a story of decline, or a story of shifting the 'prime productivity' age by a few years. That having been said, my post was mostly on a 100-year historic scale. Things haven't changed quite as much since 1996, but I think it's still mostly linked to the same forces.
- mnky9800n 7y ago
  I don't want to think about all the money lost in paying student loans that could have been put into investments instead. It's a travesty.
war1025 7y ago
Note that in the article it says the avg net worth is now around $8000, which means 34% more is only ~$11,000. That's noticeable, but still not really as a big of a drop as 34% makes it sound.
- onlyrealcuzzo 7y ago
  Is that inflation adjusted? If not, the $11k, probably should've been higher than $18k. Still not a huge drop in absolute terms, but the percentage is a lot worse.
- Retric 7y ago
  Averaged across 10’s of millions of people and even 100$ is quite significant. It’s not that everyone has X$ less, some people have more and others have significantly less.
- anextomp 7y ago
  The percentage is very misleading because you can have a negative net worth. The average could be $1, in which case you get a 500% increase by giving everyone $5. That doesn't discount the article entirely, but I wish people would stop using misleading statistics for completely valid points. It really ruins your argument.
- ibarea277 7y ago
  I'd almost be more interested in the change in variance across time. If education costs are the main factor, and the top 10-20% (? estimate) have parent's who pay for college, you'd think this might be yet another factor exacerbating inequality.
  - war1025 7y ago
    I'd also be much more interested in a more detailed net worth distribution over time. Reminds me of the quote Nassim Taleb is fond of, "Never cross a river that is on average 4 feet deep".
- ajmurmann 7y ago
  With the student debt I honestly expected the average net worth to be negative.
jddj 7y ago
The bank shown in the article's photo is (somewhat lazily) Australian. To clarify a bit: The photo doesn't seem to appear in the article itself, but in RSS feeds and on the article index.
freejulian85 7y ago
Thank you, arbitrary and inaccurately measured 2% inflation targeting.
posbehsf 7y ago
I sometimes wonder what it would take for “yellow vest” type protests to happen in the US. It seems like there’s a combination of shame in talking about money, in being made to feel personally responsible for being in precarious financial situations (e.g. too much avocado toast!), and relatively easy access to consumer credit to numb things over. Or it’s just the “boiling frog” phenomenon where things get slightly worse every year due to everything getting a little more expensive but never sharply enough that it’d create a mass revolt.
- JumpCrisscross 7y ago
  > what it would take for “yellow vest” type protests to happen in the US The solution is simpler. If 18 to 34 year olds simply voted at the frequencies 45 to 64 year olds did [1], our views would form a block worth pandering to. Running as a candidate reducing pensions and alleviating student debt doesn't work because the former will vote you out of office in greater numbers than the latter will vote you in. [1] https://www.census.gov/library/visualizations/2017/comm/voting-rates-age.html https://www.census.gov/library/visualizations/2017/comm/voti...
  - deogeo 7y ago
    > alleviating student debt Universities will just raise tuition to compensate. As they've been doing so far: https://www.forbes.com/sites/camilomaldonado/2018/07/24/price-of-college-increasing-almost-8-times-faster-than-wages/ https://www.forbes.com/sites/camilomaldonado/2018/07/24/pric... Edit: Unless you mean allow that debt to be discharged through bankruptcy. Which probably would put downward pressure on tuition..
    - philwelch 7y ago
      I would make student debt dischargeable through bankruptcy and I would also favor the federal government no longer providing, subsidizing, or guaranteeing student loans. The "cost" of higher education is a sham; with no incentive to ever reduce costs, the cost will always rise to match incoming revenues. Meanwhile, student loans are a predatory mechanism where teenagers are encouraged to take on tens of kilodollars of undischargeable, unsecured debt. This combination has allowed the cost of higher education to grow out of control, backed by the cheap, subsidized credit of millions of Americans. Very reminiscent of the housing bubble, in fact.
ahmaman 7y ago
These numbers makes me wonder if the gap among young people also is growing. Meaning we have more poorer and richer young people than "middle-class" young people!
- bduerst 7y ago
  I would also like to see the distribution, since the metric in the article is average. My guess is that it's flatter or more spread, like you say. It's not that the average worth has dropped, but the worth gap has also grown.
challenger22 7y ago
https://www.statista.com/statistics/184272/educational-attainment-of-college-diploma-or-higher-by-gender/ https://www.statista.com/statistics/184272/educational-attai... The percent of people who have completed a 4 year degree has been on a continual increase. This will drag down the net worth of young folks who give up working years and take on a debt load.
- jessriedel 7y ago
  Another, more optimistic way to describe it is that students are spending more of their wealth to invest in their own human capital, which isn't measured in statistics.
  - rukittenme 7y ago
    Reminder to those down voting this comment. Down votes are for people not contributing to the discussion in a meaningful way. They are not for expressing disagreement. Use the reply button if you disagree with the parent comment.
    - novok 7y ago
      Comment systems should have 2 voting pairs, a I agree/disagree button and insightful/non-meaningful comment button.
    - gnicholas 7y ago
      Is downvote the opposite of upvote? It seems that people upvote comments that are helpful/insightful and that they agree with. Because upvote and downvote seem like they would be opposites, it's not surprising that people might focus on the negative of "I agree with this comment" instead of the opposite of "this comment is helpful/insightful". The former is easier to measure than the latter.
      - jessriedel 7y ago
        pg has in the past explicitly endorsed the idea that votes should, to some extent, reflect agreement/disagreement, but he's making a mistake. He has also correctly said the votes should answer the question "do we want more of this on HN?" since that's functionally what they are used for. If anything, we should err on the side of upvoting thoughtful things we disagree with, rather than agree with, since we learn more from that.
hprotagonist 7y ago
I am simultaneously feeling privileged and horrified. My net worth is substantially above $8k, i have a reasonable income, and i’m feeling stressed about money most days and will remain unable to buy property in the city that has the best and most jobs for my profession for the foreseeable future.
- glitchc 7y ago
  There is nothing preventing you from exploring. You can be a big fish in a small pond. And because they know your worth, they won’t treat you as disposable.
  - hprotagonist 7y ago
    True enough, but i’ve made a home and a life here, and my niche is small enough that network effects matter a great deal.
  - qes 7y ago
    Find the right pond and it's great.
- Tade0 7y ago
  I can't afford real estate in the area I grew up in, even though my parents weren't high earners.
m3kw9 7y ago
Money that went to the corps that is constantly improving their targeted advertising and increasing converting them.
crisdux 7y ago
Along with older retirees, younger generations seem to be supportive of distributive policies that are going to tax them more during their highest earning years and shift more wealth to other groups. I don't see this trend changing anytime soon without more fundamental change.
User23 7y ago
This is highly misleading, the demographics of the USA were quite different 23 years ago which means that 18-35 cohort of today isn't comparable to the 18-35 cohort of 1996 in any coherent way. These changes can only be understood in the larger context of a dynamic system, not just comparing static snapshots.
- ajmurmann 7y ago
  Can you elaborate more on how you see the demographics to be different?
austincheney 7y ago
I have much greater income security and compensation than my parents achieved and at a far younger age despite having less education. The biggest difference is a practiced skill. It takes lots of time, often without compensation, to build a desired skill.
armenarmen 7y ago
It’s almost like giving 18 year olds unlimited access to debt for unmarketable degrees was a bad idea!
- 4ntonius8lock 7y ago
  It's almost as if guaranteeing loans to for for profit institutions which receive the money that is printed out of thing air is going to exacerbate social inequality! Don't get me wrong, 18 year olds are generally stupid (I was at that age), but blaming them seems like the kind of thing the profiteers from this mess would want. It's also not a very logical position. It's almost as if this type of idea would be something a propagandist would want to disseminate.
  - armenarmen 7y ago
    I think we’re on the same page here. To really stretch an analogy, if I were to leave a taser with a small child they shouldn’t taser themselves, but I’m clearly (and Unironically) the asshole for giving them the taser.
losvedir 7y ago
First, "dropped" is sort of a misleading term since it's not saying anyone actually has lost money. Rather, the cohort of Americans in that age group has less money than previous cohorts did at that age. Second, 18 to 35 is sort of a crazy range, it seems to me, since the net worth of the group is likely going to be dominated by those in their 30s who are mid-career. Lastly, it's unsurprising that those who began their career in the throws of the 2008 collapse were stunted, relative to basically any other group.
- baron816 7y ago
  >Second, 18 to 35 is sort of a crazy range Agreed. The data can be skewed by more people going to college or grad school. Those people tend to not have much or any net worth.
- eganist 7y ago
  > Second, 18 to 35 is sort of a crazy range, it seems to me, since the net worth of the group is likely going to be dominated by those in their 30s who are mid-career. And yet, it still > has dropped 34% If you break it down to two sub-demographics, I suspect there'd be an even larger disparity within e.g. 18-25 than there is with 26-35 for reasons such as student loans, but 18-35 would seem appropriate for what's perhaps an overgeneralized view of when most career trajectories and preferences plateau/harden. Not sure if it's at all related to the key TV demographic of 18-34, but that wouldn't surprise me either for largely the same reason (hardening of preferences). But I think that's kinda the point. People were previously building more wealth at a time in their lives when said wealth would have a more profound impact as they approached retirement age some number of decades later. The current generation occupying that demographic has been tragically stunted by stagnation in wage growth + inflation of education charges, and here in the United States, this may well impose a cascading detrimental impact on the health of the economy as a whole.
  - losvedir 7y ago
    > If you break it down to two sub-demographics, I suspect there'd be an even larger disparity within e.g. 18-25 than there is with 26-35 for reasons such as student loans, but 18-35 would seem appropriate for what's perhaps an overgeneralized view of when most career trajectories and preferences plateau/harden. My point is exactly that I don't think it's likely that 18-25 would show an even larger disparity, since my suspicion is that the disparity is driven entirely by those who began their career during the Great Recession. 18-25 year olds, who began their career as the economy was heating up, wouldn't show the same. But I'd love to see the data to know if that's the case.
narnianal 7y ago
On one side it's depressing, but on the other side it's not as harsh as media wants us to believe in recent years. -30% is not "one house and 2 cars less than the parents", as many articles claimed over at least 2018.
- pojzon 7y ago
  It just shows how extremely hardworking those young people are. Its effectively harder to earn good money now than 25 years ago. And thats after two major economy collapses. Despite all odds against them, they dont give up, yet still get shorter stick.
  - JimiofEden 7y ago
    And the media rails on them nonstop for no particular good reason other than 'That darn younger generation!'
ronnier 7y ago
There's a huge demographic shift in America. Do we expect things to remain the same?
readhn 7y ago
UNREALISTICALLY HIGH REAL ESTATE PRICES. Single biggest purchase and wealth building instrument is buying REAL ESTATE / HOUSE. Most millennials are not leaving on the streets homeless. They are paying high rent prices = money wasted = money that could have been going towards building their wealth long term, towards their homes. High education costs prevented them from buying homes early which in turn impacted their net worth long term. Simple example: If you buy a house in an average area when you are 30 - by 35 you have at least $50,000 that you paid towards your net worth (assuming very budget 1000/month mortgage). Whats happening instead today? High housing costs and debt load from education prevent younger generation from bulding their wealth early through real estate. Something previous generations enjoyed. We need more affordable housing, we need to change building codes and zoning laws to allow construction of affordable homes easily (that younger folks/families/singles can afford to buy). We need to build out infrastructure!
- simplecomplex 7y ago
  A home is not necessarily an asset or wealth. For the vast majority of homeowners their home is their largest liability (it costs them money). The idea that spending money to buy a home is “building wealth” is incredibly stupid. It’s bad advice for everyone but a real estate agent.
  - readhn 7y ago
    "A home is not necessarily an asset or wealth." a home IS an asset and wealth. it is only a liability on volcano's path on big island/Hawaii.
    - simplecomplex 7y ago
      What kind of backwards finance is that? A house costs money, it doesn’t earn money. An asset it something that makes you money, like rental income from rental properties, profit from a business or investment, stocks, or bonds. A liability is something that costs you money. A house to live in, apartment, a car, healthcare, food, etc.
simplecomplex 7y ago
Not a surprise when you consider that more people are spending money to go to college, where they are mostly taught to be poor (spend money on school, rely on a job for income, spend your money on a house, do what you love, etc.)
spaceflunky 7y ago
Why even bother including 18-22 year olds? Almost all of them have zero to negative net worth.
YeahSureWhyNot 7y ago
Here in suburbs of New York, if you have no college degree, most of jobs will pay you $12/hr, some decent employers will pay $15/hr but if you get lucky and have some useful experience you can find something for $18/hr which result in around $2400 paycheck every 4 weeks of work. Most 1br apartments are around $1500/mo. Car (Lease+Insurance+Gas) is $500/mo roughly. After groceries there is literally no money left to go out. How the fuck are we supposed to build up net worth?
- jogjayr 7y ago
  Why would someone making $2400/monthly after taxes rent a $1500/mo apartment on their own? I'm not sure they'd even qualify because most landlords require at least 2-2.5x gross income. Renting a room with other housemates, or splitting rent on a 1-bedroom with a partner/SO is probably a better idea in that situation.
  - YeahSureWhyNot 7y ago
    you dont think a human being with a full time job in the first world country deserves basic privacy of 1br apartment? why dont we triple the property taxes so that entire middle class cant afford living in a house and start living in dorms?
    - aerovistae 7y ago
      Are you using flawed social policy to justify a bad decision? Yes, people do deserve that. but the system is messed up and that's the reality and it's going to take till long time to change that, like all societal shifts. In the meantime, you can't just make decisions as if you lived in a perfect world. Unless you like fucking yourself over.
      - YeahSureWhyNot 7y ago
        im not asking for advice how to save money. if you read the article its about not being able to build up net worth. I dont want to be living a pathetic life in shared apartments to build up net worth? what is that net worth good for if I didnt get a chance to afford a decent life? to take it to the grave with me?
MagicPropmaker 7y ago
Is there a solution to this "problem" that doesn't involve taking the hard-earned wealth away from people 55 and older who carefully planned and saved so they can enjoy themselves?
- b_tterc_p 7y ago
  You say that, but the reality is that the 55 year olds are largely doing the opposite, taking from the young and healthy to support their Social Security benefits, their insurance, etc.
  - Falkon1313 7y ago
    The 55 year olds aren't taking from the young via Social Security and Medicare, they already payed in and are still paying in. The 65+s also already payed in and they're just getting back what they paid for.
  - fuzzfactor 7y ago
    It's getting bad over here in the USA. We have propaganda about things like this, but direct observation has been made over a number of decades and today's 55 year olds who will one day start collecting Social Security Retirement and/or begin benefitting more from their health insurance than they are paying in, are still not behaving very differently than 55 year olds at the time going back quite a bit into the previous century. These are the 55 year olds who are still paying in to their respective Social Security and insurance plans, otherwise they would not be the ones that will receive significant benefits later. Of course eventually as each individual reaches 65 and is eligible for full benefits, the true actual worth and buying power of those benefits has always been gradually declining. To the point where you might have been better off without having these earnings immediately removed from your pay right off the top all along by the enforcing authorities. And without having any need for a Social Security number. The fundamental flaw with our Social Security is that the entire bureaucracy, infrastructure, business cash flow, collections & distributions is based on taxes on income rather than commerce. Like a lot of things, but with SS it's even worse since only the lowest-income workers have their entire income taxed. As higher-earning pay levels are achieved, a decreasing percentage of earned income is taxed for SS purposes. Regardless, with SS as one of the UBI systems with proven long-term functionality, it's too bad the full untaxed BI is still only universal for the 65 & over paid members in good standing, and only if they actually quit earning other income and truly retire. And too bad it's not enough for a senior citizen to live on, so it's not up to quite basic levels but it's something. This is because there are bigger tentacles that have been reaching into your pockets during your working years starting decades earlier in the 20th century than the FICA has been doing it. If you do the math considering these resources, there is no excuse for not having gradually extended full benefits to much younger ages in a direct march toward full UBI. These have been the most highly productive hard working people in the most prosperous country in the modern history of my home planet. Same with Medicare, it could have gradually reduced age of eligibility and achieved higher levels of health coverage for a more universal portion of the citizens far ahead of any less propsperous nation. This all would have only required that an affordable portion of the resources were invested wisely to the advantage of the citizens from the outset, and only somewhat wisely at that. Markets can do amazing things, enough wealth was removed from working citizens before Nixon to have been leveraged to full UBI sometime between then & now, even using a no-brainer approach. And when there's no excuse, you tend to get a lot of propaganda. Even if you work for Apple, be careful about reality distortion effects.
pablooliva 7y ago
College debt is one of the reasons that decided to leave the U.S. After I saw the injustice of the federal gov't bailing out morally corrupt banks and Wall St. institutions circa 2008 while leaving me to hang by my college debt, I said enough. One of the best decisions I ever made. Gave me perspective, gave me freedom. The U.S. is giant penal colony.
- Waterluvian 7y ago
  Did you pay it off or was leaving the country a form of abandoning your debt responsibility? Don't get me wrong. I think it's insane to have an education system this dysfunctional. I think some people get institutionalized and just kind of see college debt as how the universe works.
  - pablooliva 7y ago
    I have partially repaid my loans, but now I have been postponing the repayments while I struggle with the idea of defaulting. I feel guilty doing so, but I also think that when I took on the loans I was too young to understand the implications and, as you mention, was "brainwashed" into thinking this was the only way to go. My family was too poor to pay for my college, so this was my only "choice." So while large corporations and the rich can privatize gains and socialize their costs, we peons are on the hook 100%, with a large predatory capitalist system stacked against us.
tracker1 7y ago
Most financial growth comes from home ownership/equity. The debt from student loans has also skyrocketed in line with tuition rate increases since around that time. Those to factors probably account for all of the difference. Starting off deeper in debt with debt that doesn't lead to equity gains for most people.
sytelus 7y ago
TLDR; Education expenses have climbed 65 percent in the past decade. Food costs have jumped 26 percent, health care is up 21 percent, housing jumped 16 percent and transportation rose 11 percent. And there are now expenses that most consumers didn’t have to account for 20 years ago, including smartphones and data plans. Better link: https://www.washingtonpost.com/business/2019/05/31/millennials-have-an-average-net-worth-thats-significantly-less-than-previous-generations/ https://www.washingtonpost.com/business/2019/05/31/millennia...
- isostatic 7y ago
  Smart phone rubbish again. Kids today don’t need to pay for a landline. Or cable. Or cigarettes
mensetmanusman 7y ago
This is all about the rise of China. Who would have thought competition would have lowered wages for the majority of workers? Guess our politicians should have been asking why it was cheaper to manufacture in China (oh the just dump the output in that river there...).
- dang 7y ago
  Would you please stop posting nationalistic flamebait to HN? You've done it repeatedly already. It's not what this site is for. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
diveanon 7y ago
I am interested to know how much of that is voluntary. I willing left the tech scene in order to pursue my passions and my net worth has significantly decreased. It was the best decision I have ever made.
- l8nite 7y ago
  I'd love to hear more, have you blogged about it? :)
  - diveanon 7y ago
    Not really, but the short of it is that I gave up my career as a successful software dev in the bay area and sold everything I own to work in diving. I used to hate getting up in the morning and was consumed with stress about trivial work bullshit. These days I work in the South Pacific and split my time between environmental projects and training new divers. It's not going to make me rich, at all, but I honestly don't care. I would trade the decade I wasted in front of computer screens to have started doing this a few years earlier.
nojvek 7y ago
It blows my mind away that in America student loans have a higher interest rate than car loans and housing loans. That’s a country intentionally ruining the next generation’s chance of making the county better. Coming from Australia, this really makes me cringe.
- IkmoIkmo 7y ago
  Just cause of collateral. You can impound a car, foreclose on a mortgage, sell it and get back much or most of your money, which is why rates can be a lot lower. You can't compound on a college dropouts partial knowledge. And given there are various ways to get the loan forgiven, and with college dropout rates being as high as they are, and given the (popularity and) volume of degrees with low financial returns... Fact is, most studies show that the returns on education in the US are quite high, higher than much of the rest of the world. Where I am from (EU), you're not dissuaded to pursue a degree with low financial returns. My college fees are 10k in total for the entire bachelor+master's programme, and you can borrow 50k during those 4 years currently at 0% interest. I love it, but our returns on education are quite a bit lower than in the US because we subsidise things that don't work, or prevent it from failing, and incentivise people to study things they don't need or have no economic value. And it doesn't necessarily make the country better off. I'm not saying economic value is the only metric that counts, there are other reasons why I'm in favour of pretty strong educational subsidies. But there's also benefits to the US system too that we don't have. And it's too easy to say the US is intentionally ruining the next generation, that's just not true.
  - samhain 7y ago
    >Just cause of collateral. You can impound a car, foreclose on a mortgage, sell it and get back much or most of your money, which is why rates can be a lot lower. If it follows that the interest should be higher on a more risky investment, then why are student loans (that are unforgivable) not essentially free? As they should be basically a zero risk investment since they follow the person around forever, through bankruptcies etc.
    - 7y ago
newshorts 7y ago
34% is a lot of a avocado toast. I suspect there are other economic forces at work to cause such a drop. I just can’t think of what they might be.

337 points by joeyespo 7y ago

I suspect that a large part of that has to do with student loans, which have grown by a huge multiple since 1996. With compounding interest it takes longer to recover from school. I know I graduated with $75k loans at 8% interest. Even with say, a $100k salary, just the interest eats ~7% of the income. With the total payments being somewhere around 12% of your income. Combine that with increased taxes over the same time and a 34% reduction in worth seems about right (if we account for the loss in compounding interest from buying a home, 401k investments, etc)

kartan 7y ago
> I suspect that a large part of that has to do with student loans I think that this is not just a USA issue but it is also happening in all Occident. Student loans are just one of the reasons. But, it is bigger than that. e.g. UK: https://www.ft.com/content/81343d9e-187b-11e8-9e9c-25c814761640 https://www.ft.com/content/81343d9e-187b-11e8-9e9c-25c814761...
- akerro 7y ago
  Can't compare UK here, education is free in Scotland, £9k/annually in Wales (Welsh government can provide 67% grant every year, so it goes down to £3.3k), in England it's the most expensive, over £9k/ann and Student Loan Company has highest interest rates there.
  - isostatic 7y ago
    Those loans don’t need to be repaid, they’re a graduate tax - 9% above £25k for 30 years. Most people won’t earn enough to pay a penny off the tuition - only the cost of living loans. Only the highest paid graduates actually pay tuition
    - akerro 7y ago
      That's not correct! If at any point in your life you make more than £25k they will add this tax on you, and your interested on the student loan is still growing, even when you're under £25k.
      - DanBC 7y ago
        You're charged interest only from the day of your first repayment. https://media.slc.co.uk/repayment/qsg/how-much-do-i-repay.html https://media.slc.co.uk/repayment/qsg/how-much-do-i-repay.ht...
- aries1980 7y ago
  > In fact, this chart understates how badly things have gone for millennials, because it shows incomes before housing costs. No, it does not, because the chart is weighted with CPI, which contains the housing cost. According to that chart, the millenials have the best living standards, but I seriously question the quality of the source, where the young adults take-home salary is above £15K, UK-wide.
momokoko 7y ago
Consumer loans with compounding interest should be illegal. The human brain is incapable of conceptualizing it and it results in inescapable debt once a person starts to fall behind on payments.
- tracker1 7y ago
  I wouldn't say all consumer loans, but probably student loans... given that they are prevented from bankruptcy dismissal.
  - Falkon1313 7y ago
    Also they specifically target people who've never had to deal with such things in practice, and lock them into a multi-year commitment (another thing they've never had to deal with) that they can never get out of while all of society tells them that if they don't do it they'll be a failure. Even if you understand the abstract math as a teen, it's a bit much to expect someone to make an informed choice about the reality of resolving it over years which they have no experience with, and in a job market that they have no experience with. It's a high-pressure predatory system with long-lasting consequences that targets the vulnerable.
- madengr 7y ago
  Maybe only for those who are bad at math.
- leetcrew 7y ago
  > The human brain is incapable of conceptualizing it speak for yourself. I understand geometric growth quite well.
- bdcravens 7y ago
  I don't think the human brain is incapable. We just don't teach it. Perhaps it should be a required course to obtain such a loan?
sysbin 7y ago
Could also be that young people have very little representation when it comes to laws, policies and regulations.
- onlyrealcuzzo 7y ago
  As in their taxes have been in increased to keep unsustainable pension programs humming along?
- dev_dull 7y ago
  The counter argument to this is that their representation is arguably higher now than any other time in history, so more representation (falsely) equates to less wealth by your supposition.
- Alex3917 7y ago
  Millennials are the largest voting block in the US. They have more representation than any other demographic.
  - sjg007 7y ago
    They just need to actually vote..
    - lbotos 7y ago
      According to Pew, They did: https://www.pewresearch.org/fact-tank/2017/07/31/gen-zers-millennials-and-gen-xers-outvoted-boomers-and-older-generations-in-2016-election/ https://www.pewresearch.org/fact-tank/2017/07/31/gen-zers-mi...
      - sjg007 7y ago
        Right, but not in the same proportion as the other groups.
    - tamaharbor 7y ago
      “If voting made any difference, they wouldn’t let us do it.”
aries1980 7y ago
> only 20 percent of consumers were meaningfully better off in 2017 than they were in 2007, with precious little income left to spend on discretionary retail Reading this I assume it is rather caused by housing and food cost in metropolitan areas.
- dmix 7y ago
  Every city job I’ve seen outside of the minimum wage service jobs pay better than all the surrounding small cities and towns. Which helps offset costs. But certainly many urban areas have been very slow to match the right level and type of housing development for the needs of a growing population. The effects of building laws, zoning, political influence, rent control (particularly how it was done in 70s/80s), etc has a long recorded negative pressure on supply vs demand. So it’s very likely the wage differences aren’t sufficient for most people.
  - aries1980 7y ago
    Above a given paygrade, yes, it offsets, but for most people, especially people working for public services, a fiver per hour more won't offset the extra thousands per month. Note: one of my former landlord said he bought the property in the '70s we lived in for £25K, when he worked as delivery postman for £500/month. With living on his own in London, he bought the property after 6 years working for Royal Mail. Today, the median RML postman salary https://www.payscale.com/research/UK/Job=Postman/Salary https://www.payscale.com/research/UK/Job=Postman/Salary is £18K (take-home pay is £1315/m), a 1-bedroom flat rental in the outskirts according to Numbeo (https://www.numbeo.com/cost-of-living/in/London https://www.numbeo.com/cost-of-living/in/London) is £1215, without the utilities and council tax (which was £92/mo for me) The remaining £100 is enough for nothing. But even if let's say share the flat with an SO and split the costs, it is unlikely you can ever afford a 1-bedroom flat. The same for my parents' case in Hungary ('90s). My mom was a PA, my dad a factory worker. They were able to buy a flat when they were 20, a year after my sister born. My wife parents (factory workers) bought a small house in a village when they were 19. Both family needed no financial aid from their parents. Both properties had an interest-free mortgage around the 30% of the property value. I wouldn't compare that era with the current one , because neither my landlord, nor our parents could afford holidays abroad or a car. But neither had to worry about where will you sleep or whether your family can afford fresh, quality food if you have to find an other job.
deleted 7y ago
[deleted]
dev_dull 7y ago
Couple this along with the fact that millennials are largely choosing to live in cities which have seen the most dramatic cost of living/rent inflation.
- lotsofpulp 7y ago
  Which is the economically optimal choice considering the increased volatility in labor markets.
- ryanSrich 7y ago
  Not sure it’s a true choice. It’s either live in the city and earn a 6 figure salary or literally go jobless. Small towns and cities don’t have jobs. If they did we’d see less people living in cities.
  - dev_dull 7y ago
    I think they do have jobs, just not jobs suited for the typical degrees/training that millennials are obtaining.
  - bdcravens 7y ago
    Yes but not all cities are equivalent. I can sling code in Houston the same as in San Francisco or New York. While someone always calls out the extremes (as if everyone in SF is a $400k engineer), in general the economics work out in my favor in a cheaper city.
  - lazyjones 7y ago
    > Small towns and cities don’t have jobs. The unemployment rate in the USA is at 3,6%. Small towns and cities would be deserted if they had no jobs.
  - burfog 7y ago
    They sure do have jobs, but you can't land in a random small city and expect to find a specific pair of specialist jobs. Small cities work great for single-income families that aren't picky about which particular city they end up in. Non-specialist second income is fine too. Example: There are lots of small cities with openings for librarians, and lots of cities with openings for CNC programmers. It is far more difficult to find a small city with both, so insisting on that sort of two-income situation in a small city isn't going to go well. The same goes for nearly any kind of skilled employment. The jobs are there, but you can't throw a dart at a map of America and expect to find two very specific job openings in one spot. This may be one factor driving the urban-rural political split. Single-income families are different from two-income families.
philwelch 7y ago
Especially if your measurement is net worth. A new college graduate today isn't just broke, she's personally insolvent and will be for the next few years.
88840-8855 7y ago
I have read the new wealth of nations by Surjit Bhalla recently. He describes this phenomenon and also includes the reasons of educational and international mobility. Education has been as accessible as never before in the last decades. Further, emancipation (rated "good" by the author") has contributed to more women studying and entering the white color workforce. And globalisation has contributed towards people moving globally to where the jobs are. This has lead to an oversupply of highly qualified people and the stagnation of real wages worldwide. Exceptions are developing countries where demand is still higher and yet is leading towards increasing wages.
badpun 7y ago
The 8% interest on the loans seems high to me. Around here (Poland), a standard credit card is at 10% interest, and student loans should be much safer for the bank.
- tehlike 7y ago
  In the us, credit card interest is around 25% or more.
  - deleted 7y ago
    [deleted]
- joehandzik 7y ago
  It's true. I may have actually been higher for some loans until I got a couple of promotions and had enough of an income increase to be able to refinance to a 5 year 4.75% loan at SoFi. Which itself still feels high as you watch DAILY interest compounding happen. I lean fairly liberal, but I think we can make significant strides with this issue in the US by simply changing what max interest rates are and how this interest compounds. The way things work right now truly feels like robbery when you're in the thick of it.
  - burfog 7y ago
    We could limit max interest rates. If that had been in place, your loan would have been denied. Would that have been better for you? Might you have then chosen to get an illegal loan at an even higher interest rate from organized crime, with a risk of violence for non-payment?
- tdfx 7y ago
  Just checked my direct federal loans (the first source of loan funding for most US college students -- the second is private banks). Interest rate is 4.41%. I was lucky because federal direct loans covered my tuition, but many other students need to take private loans, as well.
  - 7y ago
deleted 7y ago
[deleted]
bsanr2 7y ago
This is certainly a factor, but I think HN's main demographic tends to overestimate the effect of college-related issues on the fortunes of the general population, where college graduates are still a minority. I imagine that the most important factor is the lowered rate of home-ownership.
- dd36 7y ago
  Due to what?
- godelski 7y ago
  [0]: 2017: 33.4% of Americans (25+) have a Bachelors or higher 2007: 28% of Americans have a Bachelors or higher 1940: 4.6% of Americans had a 4+ year education (post high school) You're right, college graduates are still a minority, but there is definitely a largely increasing. There's definitely more people enrolling than that. 70% of Americans will enroll in a 4 year degree but <2/3 of them will get a degree and 56% will drop out by year 6.Also Full-time students are 55% less likely to drop out of college than students who go to school exclusively part-time.[1] So while college graduates are still a minority, it doesn't look like Americans who enroll in college are. They are clearly in the majority, and just because they don't graduate doesn't mean they haven't gathered debt. [0] https://thehill.com/homenews/state-watch/326995-census-more-americans-have-college-degrees-than-ever-before https://thehill.com/homenews/state-watch/326995-census-more-... [1] https://www.collegeatlas.org/college-dropout.html https://www.collegeatlas.org/college-dropout.html
  - rayiner 7y ago
    Even if they don’t have debt, while they’re enrolled in college they’re not building net worth.
  - brandonmenc 7y ago
    > just because they don't graduate doesn't mean they haven't gathered debt ...and end up even worse off - they have the debt, but not the degree that could get them the higher paying job.
  - 7y ago
godelski 7y ago
I just did some quick math[0]. At that 75k loan, 8% interest, and 100k salary, if you pay 10% of your salary it takes you 11.5 years to pay off (and you pay almost 40k in interest >50% of principal). Same numbers, but a 100k loan that goes to 20.25 years to pay off and you pay >100k in interest. Though to be fair, if we put in the average student loan ($29800) and the average US household income (60309) we bring it down to 6.33 years and ~8k in interest (28% of principal). But it is unlikely that many college graduates are making the median household income as a fresh graduate. If we go to 40k/yr salary then it jumps to 11.5 years and 15k in interest (53%). This also doesn't take into account that most of these loans are variable interest rates. Considering that, these numbers would put us on the lower side (of someone starting with an 8% interest rate). Edit: spelling [0] https://www.bankrate.com/loans/student-loans/how-long-to-pay-off-student-loan/ https://www.bankrate.com/loans/student-loans/how-long-to-pay...
- MagicPropmaker 7y ago
  What do you mean by “50% of principle”?
  - skookum 7y ago
    The OP simply misspelled 'principal'. By ">50% of principal" they meant that the interest paid over the life of the loan is more than 50% of the original loan amount.
  - deleted 7y ago
    [deleted]
adatavizguy 7y ago
I've had three careers the latest writing software earning 6 figures without having gone to school.
burfog 7y ago
The college dropouts, and the people with truly useless majors, have a real problem. For you, there is an obvious path forward. The 40th percentile household income is $50k. Live on that. You can thus put the extra $50k toward the loan, paying it off in less than 2 years.
- SomeOldThrow 7y ago
  > The 40th percentile household income is $50k. This mostly depends on where you live.
IkmoIkmo 7y ago
Not just that, but educational attainment in general, demographic changes, economic changes etc. We've shifted from a population that does not die old, starts working early, stops education early, and does most of its work in the primary/secondary (agri/manufacturing) economy where its most productive when young. To automating those jobs and shifting to a world where we grow old, stay in school longer, have high returns on education in our tertiary service-based economic productivity levels, which gets us to be most productive in middle age, which also coincides with most of our investments in personal housing equity, retirement funds and paying down debt. Not a huge surprise that if you take a few age cohorts, that a young one will drop in wealth, while an older one will grow in wealth. Our society lives and works longer, and prepares longer for this work in school, which has more individual-benefits and thus higher individual educational debts at a young age. As such, I wouldn't be surprised if the wealth-hump didn't just move over a few years. Losing 1/3rd wealth within a certain age cohort (18-35) would be no surprise if half the wealth of 18-35 year olds was generated at 32-35, and this shifted to 35-38. I'd be most interested in seeing a graphical wealth distribution by age, for different generations, then you'd know if this was a story of decline, or a story of shifting the 'prime productivity' age by a few years. That having been said, my post was mostly on a 100-year historic scale. Things haven't changed quite as much since 1996, but I think it's still mostly linked to the same forces.
mnky9800n 7y ago
I don't want to think about all the money lost in paying student loans that could have been put into investments instead. It's a travesty.

war1025 7y ago

Note that in the article it says the avg net worth is now around $8000, which means 34% more is only ~$11,000. That's noticeable, but still not really as a big of a drop as 34% makes it sound.

onlyrealcuzzo 7y ago
Is that inflation adjusted? If not, the $11k, probably should've been higher than $18k. Still not a huge drop in absolute terms, but the percentage is a lot worse.
Retric 7y ago
Averaged across 10’s of millions of people and even 100$ is quite significant. It’s not that everyone has X$ less, some people have more and others have significantly less.
anextomp 7y ago
The percentage is very misleading because you can have a negative net worth. The average could be $1, in which case you get a 500% increase by giving everyone $5. That doesn't discount the article entirely, but I wish people would stop using misleading statistics for completely valid points. It really ruins your argument.
ibarea277 7y ago
I'd almost be more interested in the change in variance across time. If education costs are the main factor, and the top 10-20% (? estimate) have parent's who pay for college, you'd think this might be yet another factor exacerbating inequality.
- war1025 7y ago
  I'd also be much more interested in a more detailed net worth distribution over time. Reminds me of the quote Nassim Taleb is fond of, "Never cross a river that is on average 4 feet deep".
ajmurmann 7y ago
With the student debt I honestly expected the average net worth to be negative.

jddj 7y ago

The bank shown in the article's photo is (somewhat lazily) Australian. To clarify a bit: The photo doesn't seem to appear in the article itself, but in RSS feeds and on the article index.

freejulian85 7y ago

Thank you, arbitrary and inaccurately measured 2% inflation targeting.

posbehsf 7y ago

I sometimes wonder what it would take for “yellow vest” type protests to happen in the US. It seems like there’s a combination of shame in talking about money, in being made to feel personally responsible for being in precarious financial situations (e.g. too much avocado toast!), and relatively easy access to consumer credit to numb things over. Or it’s just the “boiling frog” phenomenon where things get slightly worse every year due to everything getting a little more expensive but never sharply enough that it’d create a mass revolt.

JumpCrisscross 7y ago
> what it would take for “yellow vest” type protests to happen in the US The solution is simpler. If 18 to 34 year olds simply voted at the frequencies 45 to 64 year olds did [1], our views would form a block worth pandering to. Running as a candidate reducing pensions and alleviating student debt doesn't work because the former will vote you out of office in greater numbers than the latter will vote you in. [1] https://www.census.gov/library/visualizations/2017/comm/voting-rates-age.html https://www.census.gov/library/visualizations/2017/comm/voti...
- deogeo 7y ago
  > alleviating student debt Universities will just raise tuition to compensate. As they've been doing so far: https://www.forbes.com/sites/camilomaldonado/2018/07/24/price-of-college-increasing-almost-8-times-faster-than-wages/ https://www.forbes.com/sites/camilomaldonado/2018/07/24/pric... Edit: Unless you mean allow that debt to be discharged through bankruptcy. Which probably would put downward pressure on tuition..
  - philwelch 7y ago
    I would make student debt dischargeable through bankruptcy and I would also favor the federal government no longer providing, subsidizing, or guaranteeing student loans. The "cost" of higher education is a sham; with no incentive to ever reduce costs, the cost will always rise to match incoming revenues. Meanwhile, student loans are a predatory mechanism where teenagers are encouraged to take on tens of kilodollars of undischargeable, unsecured debt. This combination has allowed the cost of higher education to grow out of control, backed by the cheap, subsidized credit of millions of Americans. Very reminiscent of the housing bubble, in fact.

ahmaman 7y ago

These numbers makes me wonder if the gap among young people also is growing. Meaning we have more poorer and richer young people than "middle-class" young people!

bduerst 7y ago
I would also like to see the distribution, since the metric in the article is average. My guess is that it's flatter or more spread, like you say. It's not that the average worth has dropped, but the worth gap has also grown.

challenger22 7y ago

https://www.statista.com/statistics/184272/educational-attainment-of-college-diploma-or-higher-by-gender/ https://www.statista.com/statistics/184272/educational-attai... The percent of people who have completed a 4 year degree has been on a continual increase. This will drag down the net worth of young folks who give up working years and take on a debt load.

jessriedel 7y ago
Another, more optimistic way to describe it is that students are spending more of their wealth to invest in their own human capital, which isn't measured in statistics.
- rukittenme 7y ago
  Reminder to those down voting this comment. Down votes are for people not contributing to the discussion in a meaningful way. They are not for expressing disagreement. Use the reply button if you disagree with the parent comment.
  - novok 7y ago
    Comment systems should have 2 voting pairs, a I agree/disagree button and insightful/non-meaningful comment button.
  - gnicholas 7y ago
    Is downvote the opposite of upvote? It seems that people upvote comments that are helpful/insightful and that they agree with. Because upvote and downvote seem like they would be opposites, it's not surprising that people might focus on the negative of "I agree with this comment" instead of the opposite of "this comment is helpful/insightful". The former is easier to measure than the latter.
    - jessriedel 7y ago
      pg has in the past explicitly endorsed the idea that votes should, to some extent, reflect agreement/disagreement, but he's making a mistake. He has also correctly said the votes should answer the question "do we want more of this on HN?" since that's functionally what they are used for. If anything, we should err on the side of upvoting thoughtful things we disagree with, rather than agree with, since we learn more from that.

hprotagonist 7y ago

I am simultaneously feeling privileged and horrified. My net worth is substantially above $8k, i have a reasonable income, and i’m feeling stressed about money most days and will remain unable to buy property in the city that has the best and most jobs for my profession for the foreseeable future.

glitchc 7y ago
There is nothing preventing you from exploring. You can be a big fish in a small pond. And because they know your worth, they won’t treat you as disposable.
- hprotagonist 7y ago
  True enough, but i’ve made a home and a life here, and my niche is small enough that network effects matter a great deal.
- qes 7y ago
  Find the right pond and it's great.
Tade0 7y ago
I can't afford real estate in the area I grew up in, even though my parents weren't high earners.

m3kw9 7y ago

Money that went to the corps that is constantly improving their targeted advertising and increasing converting them.

crisdux 7y ago

Along with older retirees, younger generations seem to be supportive of distributive policies that are going to tax them more during their highest earning years and shift more wealth to other groups. I don't see this trend changing anytime soon without more fundamental change.

User23 7y ago

This is highly misleading, the demographics of the USA were quite different 23 years ago which means that 18-35 cohort of today isn't comparable to the 18-35 cohort of 1996 in any coherent way. These changes can only be understood in the larger context of a dynamic system, not just comparing static snapshots.

ajmurmann 7y ago
Can you elaborate more on how you see the demographics to be different?

austincheney 7y ago

I have much greater income security and compensation than my parents achieved and at a far younger age despite having less education. The biggest difference is a practiced skill. It takes lots of time, often without compensation, to build a desired skill.

armenarmen 7y ago

It’s almost like giving 18 year olds unlimited access to debt for unmarketable degrees was a bad idea!

4ntonius8lock 7y ago
It's almost as if guaranteeing loans to for for profit institutions which receive the money that is printed out of thing air is going to exacerbate social inequality! Don't get me wrong, 18 year olds are generally stupid (I was at that age), but blaming them seems like the kind of thing the profiteers from this mess would want. It's also not a very logical position. It's almost as if this type of idea would be something a propagandist would want to disseminate.
- armenarmen 7y ago
  I think we’re on the same page here. To really stretch an analogy, if I were to leave a taser with a small child they shouldn’t taser themselves, but I’m clearly (and Unironically) the asshole for giving them the taser.

losvedir 7y ago

First, "dropped" is sort of a misleading term since it's not saying anyone actually has lost money. Rather, the cohort of Americans in that age group has less money than previous cohorts did at that age. Second, 18 to 35 is sort of a crazy range, it seems to me, since the net worth of the group is likely going to be dominated by those in their 30s who are mid-career. Lastly, it's unsurprising that those who began their career in the throws of the 2008 collapse were stunted, relative to basically any other group.

baron816 7y ago
>Second, 18 to 35 is sort of a crazy range Agreed. The data can be skewed by more people going to college or grad school. Those people tend to not have much or any net worth.
eganist 7y ago
> Second, 18 to 35 is sort of a crazy range, it seems to me, since the net worth of the group is likely going to be dominated by those in their 30s who are mid-career. And yet, it still > has dropped 34% If you break it down to two sub-demographics, I suspect there'd be an even larger disparity within e.g. 18-25 than there is with 26-35 for reasons such as student loans, but 18-35 would seem appropriate for what's perhaps an overgeneralized view of when most career trajectories and preferences plateau/harden. Not sure if it's at all related to the key TV demographic of 18-34, but that wouldn't surprise me either for largely the same reason (hardening of preferences). But I think that's kinda the point. People were previously building more wealth at a time in their lives when said wealth would have a more profound impact as they approached retirement age some number of decades later. The current generation occupying that demographic has been tragically stunted by stagnation in wage growth + inflation of education charges, and here in the United States, this may well impose a cascading detrimental impact on the health of the economy as a whole.
- losvedir 7y ago
  > If you break it down to two sub-demographics, I suspect there'd be an even larger disparity within e.g. 18-25 than there is with 26-35 for reasons such as student loans, but 18-35 would seem appropriate for what's perhaps an overgeneralized view of when most career trajectories and preferences plateau/harden. My point is exactly that I don't think it's likely that 18-25 would show an even larger disparity, since my suspicion is that the disparity is driven entirely by those who began their career during the Great Recession. 18-25 year olds, who began their career as the economy was heating up, wouldn't show the same. But I'd love to see the data to know if that's the case.

narnianal 7y ago

On one side it's depressing, but on the other side it's not as harsh as media wants us to believe in recent years. -30% is not "one house and 2 cars less than the parents", as many articles claimed over at least 2018.

pojzon 7y ago
It just shows how extremely hardworking those young people are. Its effectively harder to earn good money now than 25 years ago. And thats after two major economy collapses. Despite all odds against them, they dont give up, yet still get shorter stick.
- JimiofEden 7y ago
  And the media rails on them nonstop for no particular good reason other than 'That darn younger generation!'

ronnier 7y ago

There's a huge demographic shift in America. Do we expect things to remain the same?

readhn 7y ago

UNREALISTICALLY HIGH REAL ESTATE PRICES. Single biggest purchase and wealth building instrument is buying REAL ESTATE / HOUSE. Most millennials are not leaving on the streets homeless. They are paying high rent prices = money wasted = money that could have been going towards building their wealth long term, towards their homes. High education costs prevented them from buying homes early which in turn impacted their net worth long term. Simple example: If you buy a house in an average area when you are 30 - by 35 you have at least $50,000 that you paid towards your net worth (assuming very budget 1000/month mortgage). Whats happening instead today? High housing costs and debt load from education prevent younger generation from bulding their wealth early through real estate. Something previous generations enjoyed. We need more affordable housing, we need to change building codes and zoning laws to allow construction of affordable homes easily (that younger folks/families/singles can afford to buy). We need to build out infrastructure!

simplecomplex 7y ago
A home is not necessarily an asset or wealth. For the vast majority of homeowners their home is their largest liability (it costs them money). The idea that spending money to buy a home is “building wealth” is incredibly stupid. It’s bad advice for everyone but a real estate agent.
- readhn 7y ago
  "A home is not necessarily an asset or wealth." a home IS an asset and wealth. it is only a liability on volcano's path on big island/Hawaii.
  - simplecomplex 7y ago
    What kind of backwards finance is that? A house costs money, it doesn’t earn money. An asset it something that makes you money, like rental income from rental properties, profit from a business or investment, stocks, or bonds. A liability is something that costs you money. A house to live in, apartment, a car, healthcare, food, etc.

simplecomplex 7y ago

Not a surprise when you consider that more people are spending money to go to college, where they are mostly taught to be poor (spend money on school, rely on a job for income, spend your money on a house, do what you love, etc.)

spaceflunky 7y ago

Why even bother including 18-22 year olds? Almost all of them have zero to negative net worth.

YeahSureWhyNot 7y ago

Here in suburbs of New York, if you have no college degree, most of jobs will pay you $12/hr, some decent employers will pay $15/hr but if you get lucky and have some useful experience you can find something for $18/hr which result in around $2400 paycheck every 4 weeks of work. Most 1br apartments are around $1500/mo. Car (Lease+Insurance+Gas) is $500/mo roughly. After groceries there is literally no money left to go out. How the fuck are we supposed to build up net worth?

jogjayr 7y ago
Why would someone making $2400/monthly after taxes rent a $1500/mo apartment on their own? I'm not sure they'd even qualify because most landlords require at least 2-2.5x gross income. Renting a room with other housemates, or splitting rent on a 1-bedroom with a partner/SO is probably a better idea in that situation.
- YeahSureWhyNot 7y ago
  you dont think a human being with a full time job in the first world country deserves basic privacy of 1br apartment? why dont we triple the property taxes so that entire middle class cant afford living in a house and start living in dorms?
  - aerovistae 7y ago
    Are you using flawed social policy to justify a bad decision? Yes, people do deserve that. but the system is messed up and that's the reality and it's going to take till long time to change that, like all societal shifts. In the meantime, you can't just make decisions as if you lived in a perfect world. Unless you like fucking yourself over.
    - YeahSureWhyNot 7y ago
      im not asking for advice how to save money. if you read the article its about not being able to build up net worth. I dont want to be living a pathetic life in shared apartments to build up net worth? what is that net worth good for if I didnt get a chance to afford a decent life? to take it to the grave with me?

MagicPropmaker 7y ago

Is there a solution to this "problem" that doesn't involve taking the hard-earned wealth away from people 55 and older who carefully planned and saved so they can enjoy themselves?

b_tterc_p 7y ago
You say that, but the reality is that the 55 year olds are largely doing the opposite, taking from the young and healthy to support their Social Security benefits, their insurance, etc.
- Falkon1313 7y ago
  The 55 year olds aren't taking from the young via Social Security and Medicare, they already payed in and are still paying in. The 65+s also already payed in and they're just getting back what they paid for.
- fuzzfactor 7y ago
  It's getting bad over here in the USA. We have propaganda about things like this, but direct observation has been made over a number of decades and today's 55 year olds who will one day start collecting Social Security Retirement and/or begin benefitting more from their health insurance than they are paying in, are still not behaving very differently than 55 year olds at the time going back quite a bit into the previous century. These are the 55 year olds who are still paying in to their respective Social Security and insurance plans, otherwise they would not be the ones that will receive significant benefits later. Of course eventually as each individual reaches 65 and is eligible for full benefits, the true actual worth and buying power of those benefits has always been gradually declining. To the point where you might have been better off without having these earnings immediately removed from your pay right off the top all along by the enforcing authorities. And without having any need for a Social Security number. The fundamental flaw with our Social Security is that the entire bureaucracy, infrastructure, business cash flow, collections & distributions is based on taxes on income rather than commerce. Like a lot of things, but with SS it's even worse since only the lowest-income workers have their entire income taxed. As higher-earning pay levels are achieved, a decreasing percentage of earned income is taxed for SS purposes. Regardless, with SS as one of the UBI systems with proven long-term functionality, it's too bad the full untaxed BI is still only universal for the 65 & over paid members in good standing, and only if they actually quit earning other income and truly retire. And too bad it's not enough for a senior citizen to live on, so it's not up to quite basic levels but it's something. This is because there are bigger tentacles that have been reaching into your pockets during your working years starting decades earlier in the 20th century than the FICA has been doing it. If you do the math considering these resources, there is no excuse for not having gradually extended full benefits to much younger ages in a direct march toward full UBI. These have been the most highly productive hard working people in the most prosperous country in the modern history of my home planet. Same with Medicare, it could have gradually reduced age of eligibility and achieved higher levels of health coverage for a more universal portion of the citizens far ahead of any less propsperous nation. This all would have only required that an affordable portion of the resources were invested wisely to the advantage of the citizens from the outset, and only somewhat wisely at that. Markets can do amazing things, enough wealth was removed from working citizens before Nixon to have been leveraged to full UBI sometime between then & now, even using a no-brainer approach. And when there's no excuse, you tend to get a lot of propaganda. Even if you work for Apple, be careful about reality distortion effects.

pablooliva 7y ago

College debt is one of the reasons that decided to leave the U.S. After I saw the injustice of the federal gov't bailing out morally corrupt banks and Wall St. institutions circa 2008 while leaving me to hang by my college debt, I said enough. One of the best decisions I ever made. Gave me perspective, gave me freedom. The U.S. is giant penal colony.

Waterluvian 7y ago
Did you pay it off or was leaving the country a form of abandoning your debt responsibility? Don't get me wrong. I think it's insane to have an education system this dysfunctional. I think some people get institutionalized and just kind of see college debt as how the universe works.
- pablooliva 7y ago
  I have partially repaid my loans, but now I have been postponing the repayments while I struggle with the idea of defaulting. I feel guilty doing so, but I also think that when I took on the loans I was too young to understand the implications and, as you mention, was "brainwashed" into thinking this was the only way to go. My family was too poor to pay for my college, so this was my only "choice." So while large corporations and the rich can privatize gains and socialize their costs, we peons are on the hook 100%, with a large predatory capitalist system stacked against us.

tracker1 7y ago

Most financial growth comes from home ownership/equity. The debt from student loans has also skyrocketed in line with tuition rate increases since around that time. Those to factors probably account for all of the difference. Starting off deeper in debt with debt that doesn't lead to equity gains for most people.

sytelus 7y ago

TLDR; Education expenses have climbed 65 percent in the past decade. Food costs have jumped 26 percent, health care is up 21 percent, housing jumped 16 percent and transportation rose 11 percent. And there are now expenses that most consumers didn’t have to account for 20 years ago, including smartphones and data plans. Better link: https://www.washingtonpost.com/business/2019/05/31/millennials-have-an-average-net-worth-thats-significantly-less-than-previous-generations/ https://www.washingtonpost.com/business/2019/05/31/millennia...

isostatic 7y ago
Smart phone rubbish again. Kids today don’t need to pay for a landline. Or cable. Or cigarettes

mensetmanusman 7y ago

This is all about the rise of China. Who would have thought competition would have lowered wages for the majority of workers? Guess our politicians should have been asking why it was cheaper to manufacture in China (oh the just dump the output in that river there...).

dang 7y ago
Would you please stop posting nationalistic flamebait to HN? You've done it repeatedly already. It's not what this site is for. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

diveanon 7y ago

I am interested to know how much of that is voluntary. I willing left the tech scene in order to pursue my passions and my net worth has significantly decreased. It was the best decision I have ever made.

l8nite 7y ago
I'd love to hear more, have you blogged about it? :)
- diveanon 7y ago
  Not really, but the short of it is that I gave up my career as a successful software dev in the bay area and sold everything I own to work in diving. I used to hate getting up in the morning and was consumed with stress about trivial work bullshit. These days I work in the South Pacific and split my time between environmental projects and training new divers. It's not going to make me rich, at all, but I honestly don't care. I would trade the decade I wasted in front of computer screens to have started doing this a few years earlier.

nojvek 7y ago

It blows my mind away that in America student loans have a higher interest rate than car loans and housing loans. That’s a country intentionally ruining the next generation’s chance of making the county better. Coming from Australia, this really makes me cringe.

IkmoIkmo 7y ago
Just cause of collateral. You can impound a car, foreclose on a mortgage, sell it and get back much or most of your money, which is why rates can be a lot lower. You can't compound on a college dropouts partial knowledge. And given there are various ways to get the loan forgiven, and with college dropout rates being as high as they are, and given the (popularity and) volume of degrees with low financial returns... Fact is, most studies show that the returns on education in the US are quite high, higher than much of the rest of the world. Where I am from (EU), you're not dissuaded to pursue a degree with low financial returns. My college fees are 10k in total for the entire bachelor+master's programme, and you can borrow 50k during those 4 years currently at 0% interest. I love it, but our returns on education are quite a bit lower than in the US because we subsidise things that don't work, or prevent it from failing, and incentivise people to study things they don't need or have no economic value. And it doesn't necessarily make the country better off. I'm not saying economic value is the only metric that counts, there are other reasons why I'm in favour of pretty strong educational subsidies. But there's also benefits to the US system too that we don't have. And it's too easy to say the US is intentionally ruining the next generation, that's just not true.
- samhain 7y ago
  >Just cause of collateral. You can impound a car, foreclose on a mortgage, sell it and get back much or most of your money, which is why rates can be a lot lower. If it follows that the interest should be higher on a more risky investment, then why are student loans (that are unforgivable) not essentially free? As they should be basically a zero risk investment since they follow the person around forever, through bankruptcies etc.
  - 7y ago

newshorts 7y ago

34% is a lot of a avocado toast. I suspect there are other economic forces at work to cause such a drop. I just can’t think of what they might be.