The American Interest
Analysis by Walter Russell Mead & Staff
The War Against The Young: Wealth Update

A typical US household headed by a person over the age of 65 is 47 times wealthier than a typical household headed by someone under the age of 35. 47 times. Politico has the story:

The median net worth of households headed by someone 65 years or older was $170,494, up 42 percent from 1984. Meanwhile, households headed by someone 35 or younger had a median net worth of $3,662, down 68 percent from that same year.

In fact, 37 percent of the younger group had a net worth of zero or less, nearly double the percentage from 1984. But the percentage of the older group with less than zero net worth has remained unchanged in 27 years, at 8 percent.

To be sure, assets do accumulate as one ages. But the gap between the two groups has doubled since 2005. Even adjusting for inflation, the disparity is nearly five times the 10-to-1 ratio recorded over 25 years ago.

Skyrocketing student loans play some role in the growing wealth gap; so too does the growing trend to keep older workers on the old, high wage scales while putting new and lower wage and benefit levels into effect for new hires.

Americans of all ages need to realize, though, that nobody ever wins a war against the young.

Published on November 9, 2011 3:17 pm
  • WigWag

    It seems to me that there is not a single fact in this post that suggests that there is a “war against the young.”

    Older people typically have a higher net worth than younger people because, if they’re smart, they’ve been saving for a lifetime.

    In 2011, the average social security recipient received a monthly check of $1,177. Seniors fortunate enough to have a net worth of $170,494 excluding their home could count on additional monthly income of $426 if they managed to get a three percent return on their money (which is not easy today). That represents a total monthly income of $1,603. This is significantly less than the average monthly wage so my question is simple; where’s the “war on the young?”

    But the reality is actually bleaker than this. Included in the $170,000 net worth is the equity that seniors have in their home. This equity can’t be monetized on a monthly basis which make’s Professor Mead’s thesis even weaker.

    Finally, it’s important to remember that if the median net worth of American seniors is $170,000, as many seniors have a smaller net worth as have a higher net worth. What’s the monthly income of these seniors who haven’t accumulated much wealth?

    If there is a “war against the young” Professor Mead is going to have to provide better evidence than this to prove it.

  • Mrs. Davis

    I generally don’t agree with wig wag, but I do have to acknowledge when I think he’s correct, and this time he’s hit the nail on the head.

    But this and many more slanted factoids will be fodder for the coming war on the much reviled Boomers and to justify the inevitable reduction in Medicare and Social Security benefits.

  • Jordan

    It isn’t necessarily a “war against the young” if there is such a disparity in wealth. In fact, it proves nicely the benefits of ownership and saving over time.

    However, it is a war against the young when you combine this with the extraordinary toll entitlements will take on consuming national resources, especially since it is the young who will be paying taxes to support these programs and that the “trust funds” meant to support some of these programs (Soc Sec) are illusions.

    Seniors will have to give their “fair share” too — real cuts in entitlements that will affect them.

    The wealth disparity is more than just a “slanted factoid” in this case, it is quite relevant given entitlement programs are wealth transfers from young to old.

  • http://therandomtexan.wordpress.com Mike Anderson

    From my own experience, I didn’t have much in the way of net worth until I was in my mid-thirties, and finally wised up to saving and investing. Thirty years later, I’m well above the median for the geezers. I encourage my students to wise up at a younger age.

    Time invariably wins his war against the young.

  • dearieme

    People over 65 have often inherited grandma’s house: perhaps she too was guilty of a war against the young?

    In fact, unless you have some persuasive theory of a natural age-related distribution of wealth, you have little basis for comparison. The italics used for “47 times” aren’t much of a substitute for argument.

    Mind you, what I’ve learned lately about the lunatic American system of student loans persuades me that on that topic you could argue that there’s been a war agin the young, waged by the universities.

  • a nissen

    Flash! Wisdom shown once again to come with age.

    Just in time too, as the years in which to make amends shrink to a precious few.

    WRM appears at first glance to have been reading too fast and been taken in by confirmation that while the elderly lost financial assets, they are not the prime victims of excessive loans for college and consumption.

    On second glance and as Jordan points out, WRM puts his finger squarely on the need for special application of the wisdom that the elderly have so fortuitously acquired. Beats crossword puzzles!

    Battles with the young being losers, the elderly will need to join the young, OWS, or otherwise, in demanding appropriate “haircuts” all around.

  • John Burke

    I hope Mead doesn’t fall for this war on the young blather. As others have pointed out, a lot of the growth in geezers’ net worth is due to house values which are depressed from three years ago but sky high compared to 25 or 30 years ago.

    Also, a generation or two back, a great many more average and above average income folks had defined benefit pensions. As conservatives rightly point out, today’s retirees and pre-retirees have had to save through their own 401-Ks and IRAs. Most have done so and consequently have a net worth that would have been hidden in their parents’ pension plans.

    Third, and this is a guess, younger people are far more likely than oldsters to have taken on high indebtedness during the recent credit binge. If you have mortaged 95 percent of the house you bought, at any age, that will pretty much wipe out any positive net worth for any average income person.

  • Whit

    Why can’t the old win a war against the Young? They are doing it now- living well on taxpayer funded entitlement without regard for the future costs to the Treasury or the very existence of the Nation. They have the time to vote and this particular boomer generation has #s. Its very possible the old folks can “win” while the next few generations lose.

  • Diogenes’ Lantern

    Well, I’m looking at it from the high side of seventy, subsisting on $669 a month Social Security and food stamps just so I can have health insurance. From here it looks like as it always has, except we’re all a lot better off in our current positions than we’d have been at any time in the past.

    Seems if people could get past their fear of this sea change we’re in, they’d see a much brighter future … for themselves, for their children and their grandchildren.

    Capitalism has replaced whatever else there is. Our greatest enemies of the 20th century are now our most important trading partners. They used to call us capitalist pigs and now they all are one.

    Consider for a fear-free moment what the addition of easily 3 billion producers and consumers will mean. We are on the verge of the greatest creation of wealth we have ever seen. And fear not, the top 1% will still have the majority of the wealth and the rest of us will be sitting pretty.

    We should also take a moment and pat ourselves on the back. For the first time in history our species developed the means to truly destroy the world. And we survived it. We survived the 20th Century, arguably the bloodiest in history.

    Cheers, I say. Cheers.

    /dl

  • http://lorenzo-thinkingoutaloud.blogspot.com/ Lorenzo from Oz

    The places where there are “wars against the young” are in Europe. Particularly places like Italy, Spain, Greece …

  • Toni

    Prof. Mead, maybe someday you’ll lay the fault for “skyrocketing student loans” at the door of those responsible: colleges and universities.

    This year, according to the College Board, tuition and fees rose 8.3% at public colleges and 4.5% at private colleges.
    http://trends.collegeboard.org/college_pricing/report_findings/indicator/Tuition_and_Fee_Room_and_Board_Charges

    The public schools may have had some cause, since the recession has hit state budgets. What’s the private schools’ excuse? The stock market is doing fine. Nobody’s endowment is hurting. Greedy, greedy. “Let’s gouge the suckers a little more. Obama has banned banks from student lending, the government does it all, and what pol will campaign on cutting student loans?”

    Colleges and universities do it because they can.

  • Eurydice

    Part of the cultural divide between generations has been the changing attitudes toward debt and the differing expectations about what a job is supposed to provide. Earlier generations regarded debt as a temporary measure for extraordinary circumstances or for certain accepted large purchases as a house or a car. One’s current salary was expected to be able to support that debt, provide for current expenses and have a little left over for savings.

    Younger people have grown up in a world of loose credit, getting loans and credit cards at a much younger age and and accepting and receiving larger credit lines based upon future earnings expectations. Also, the credit card has become a depository of value as it’s used interchangably with cash – the credit card is viewed as an assumption of future value rather than an accumulation of current debt. This blurring of what is an asset and what is a liability can lead to shocking conclusions at the end of the month.

    I agree with the other posters here that the statistics as quoted from Politico don’t point toward a War Against the Young – they don’t point to anything really, except to the call for further examination and research.

  • http://www.pacrimjim.com PacRim Jim

    Prosperity determines the underlying political system.
    If the young can’t prosper from capitalism, they’ll demand something else, however self-defeating.

  • Quayle

    Has there ever been a generation of parents that treated their offspring with such utter disregard and devastation as the 60s kids?

    The boomer generation has financially plundered their children and grandchildren.

    The boomers were the wealthiest generation in the history of the world, and yet they still couldn’t restrain themselves to live within their ample means.

    And what is the most amazing is how, under the guise of “education”, the boomers have filled the you generations’ heads with such nonsense that the young don’t even know they’ve been pillaged, but are busy chasing squirrels of post modern “crit” nonsense.

    Our greatest challenge and objective should be to wake up the younger generation before it is too late.

  • Mark in SD

    If there’s a generational war or class war going on now, nobody is winning. Everybody is losing. My son is a young family man, he is struggling. I’m middle-aged and we are struggling. My parents are elderly, they are struggling.

  • garrettc

    The risk of being laid off becomes very high as you approach 45. Most of my acquiantances over 55 have been laid off at least twice. Typically in a lay-off there is a suspicious bulge of 45-55 year olds. There is usually enough dead wood to mask the pruning of live limbs. “Older workers”, on re-entering employement are forced to do so with much reduced benefits and severely reduced salaries. Yes, the net worth of some of us much larger. There have been some very good years in our past in which our savings increased and we have largely paid off our homes, so we are not underwater. The proportion of us that are not divorced is somewhat higher than in more youtful cohorts. The biggest difference I can see is that those who live relatively frugally, are quite well off compared to the same age and earning level group. Comparing populations across ages and earning power is just specious.

  • nohype

    These statistics on wealth are misleading because they do not include the most important part of wealth, what economists call human capital. Young people have a lot of human capital compared to old people. Hence, the strategy of most people is to compensate for the loss of human capital as they age by increasing financial wealth, and that is what these numbers are capturing.

  • Russ

    How many in the younger group have paid off a mortgage in full? Seems a no-brainer to me.

  • Andy Freeman

    > Americans of all ages need to realize, though, that nobody ever wins a war against the young.

    I doubt it, but the relevant question is not whether such a war can be won, but whether my generation can avoid paying for the previous generations and get the next generations to subsidize us.

    The jury is still out on the former but it looks like the younger generation is insisting on subsidizing us.

  • Multitude

    I’m not convinced that millions of young education consumers are completely irrational in their accumulation of debt. Consider an alternate view that takes long-term macroeconomic and demographic data into account:

    1. Declining in working-age population with swelling numbers of retiring Boomers consuming trillions more in social security benefits than ever paid in, the U.S. will be forced to radically inflate its currency to satisfy social program obligations.

    2. Further stressing the health of the dollar is the Boomer generation’s accumulation of an estimated $115 trillion in liabilities (debt, unfunded pensions, etc.) which could not be satisfied if all wealth were confiscated. Dollar devaluation again is the only option excluding systemic collapse.

    3. Declining employment opportunities associated with the above trends, combined with the rise of less taxed nations globally (particularly in Central Europe, the post-SSRs, China, India, etc.) will continue to shift jobs offshore, causing a “flight to quality” for the remainder of the domestic jobs. Differentiators will become absurd yet pragmatic, where PhDs may even become necessary to secure mid-level positions given a glut of readily attainable undergraduate degrees, as well as an increase in graduate degrees.

    All factors suggest the rational decision is to incur $100K or more in debt. Let me ask you, would you wish to borrow and spend $100K today, given an obligation to repay it in $10K in today’s dollars? That option is quite realistic and increasingly probable.

  • EJ

    I blame the federal government for massive student debt. When they removed the risk from the banks and put it on the US taxpayer as last resort, of course we’d get stuck with the bill.

  • Bonfire of the Idiocies

    Yeah, I was pretty broke in my 20s also. Years of living within my means, some good investments, staying away from debt (the only loan I ever took out was a mortgage for much LESS house than I could afford) has left me a millionaire at age 60. Is making good decisions and financial prudence unfair to someone? Would the young be happier if I spent all my money and now had to be bailed out and/or supported on welfare in my old age? I accumulated some wealth to avoid being a burden to society. The fact that I did NOT shoot myself in the financial foot is NOT a war on the young. The fact that they took out huge loans to get useless degrees is SOMEBODY’S war against the young, but it’s not one I or many like me prosecuted. Talk to the colleges, the banks and the government.

  • JamesB

    That olds are significantly richer than youngs is a good thing. Young people are generally always poor – most all of us start with nothing. If anything, this information shows the benefits of the so-called ownership society – and what a young person can achieve with prudence (living below one’s means with minimal debt) and adequate opportunity, over time. Compounding; it’s the most powerful force in the universe. (A sentiment often attributed to Prof. Einstein). Over a lifetime of moderately prudent saving and investing, the result can be quite good.

    Too bad a lot of the asset values are probably still inflated and likely to fall over the mid term a la Japan’s lost decade(s). And too bad our government-banking cartel that is the federal reserve currently promotes debt incurrence and profligacy and is actively punishing those that saved with its ZIRP. And for separate discussion are the ethics of the forced transfer payments including the generational transfer payments that are social security, medicare and debt service on the U.S. Treasury’s obscene debt.

    Not much data on the debt loads carried by youngs vs. olds but debt obviously reduces net worth dollar for dollar. Interest payments are also destructive to wealth generation via compounding’s effects.

  • Mike

    A little observation about the “young people get lower salaries and benefits” allegation– there’s a little thing called “experience,” and in most employment situations that counts for a lot. Older workers (who know the system, have “seen it all” and know how to get from A to Z in the most efficient way possible) are in fact worth a lot more to employers than young, inexperienced workers.

    Consider the heart surgeon with 20 years experience v. the guy who just finished his training. Who do you want working on your loved one?

  • Allan E.

    I am getting very tired of hearing Social Security being disparagingly called an entitlement. For those of us who paid into SS all of our working lives it is an earned income. Yes now a days there are many leaches receiving Social Security who have never paid into the program, and yes the federal government raided those funds to pay for their social giveaway programs. That does not change the fact that those who faithfully paid into Social Security are owed their benefits now. Cut the excessive salaries, medical and retirement benefits of all of the federal politicians and the rest of the bloated government employees first.

  • JamesB

    If a securities firm was to offer high and ever increasing-priced investments to 18 year-old kids with little training or understanding of matters finance (due to the weakness of their earlier education on these subjects) based on dubious data about past performance and unsupportable projections of future outcomes with tied non-dischargeable debt financing, many would be calling this predation and urge the government to stop it. In education, it’s directly supported by the government.

  • CBDenver

    Many are saying “move along, there’s nothing to see here. But what about the part that says “the gap between the two groups has doubled since 2005. Even adjusting for inflation, the disparity is nearly five times the 10-to-1 ratio recorded over 25 years ago.” Are you all really so certain that there is nothing to be concerned about here?

  • M. Report

    households headed by someone 35 or younger

    Define ‘households’ and provide demographics,
    please.

  • RS

    Politico seems to employ idiots.

    I should hope that people accumulate wealth as they get older, learn more, and work more years. Otherwise something is very very wrong.

    As for the dubious concept of “a war against the young”, I am afraid aging will do that, just give it a while.

    Reminds me of that Shaw quote, “Youth is wasted on the young.”

  • MSO

    Contrary to rumors and myths, most boomers will be lucky to get as much out of social security as they paid into it (and that does not include interest).

    Of course for many boomers, those social security payments, at 13% or so, precluded them from saving for their own retirement. Don’t wander off now on how the employer actually paid half. For some that may be true, but for many, that is not true.

    Nevertheless, the boomers did indeed boom despite paying for the Interstate highway system, the space program and their parents social security. It was the boomer’s parents, after all, who did not pay enough to cover their SS payouts.

    The youngsters today are angry that the boomers didn’t pay enough for them as well. Get busy and invent your own economy, the boomers did and they didn’t do it on your back. The national debt is something that grew exponentially in the past decade or so and it went into schools, public employee salarys and the welfare state.

  • Tom Holsinger

    This is supporting evidence for the adage, “There are three kinds of lies – lies, damned lies, and statistics.”

    http://en.wikipedia.org/wiki/Lies,_damned_lies,_and_statistics

  • Andrew

    Older people don’t fight. We just kill the antagonizers.

    What is it about 30 year mortgages you do not understand? And 30-40 year inputs to 401k and IRA accounts that you do not understand?

    Of course we have more wealth built up. Tell the young to do the same thing.

    What do they want? Instant wealth and a corner office? I have forgot more than these young, worthless (at this point in their life) shits think they know about life and work.

  • Plutarch

    The only war against the young arises from the predator class that feeds upon them. In this sense, the so-called war becomes more the punishing of the young.

    And punished they are; as were we.

    Should we not turn instead to the issue of how to help them? How technology and our mutual resources can be better used?

    One might argue that today there has never be a more onerous or pernicious monopoly on the access to Capital than the modern syndicalism created by scoundrels and sociopaths that dominate our Congress and national political parties.

    The best way to help the young is the best way to help ourselves; help the American family across generational boundaries. This could be accomplished by a revolution in access to capital.

    Let every American citizen who so chooses borrow directly from the US Treasury in exclusive matter of buying a domicile, purchasing tuition for personal development or paying for a medical procedure. Let them borrow direct from the treasury interest free.

    The present war is essentially no different that the current punishment: our society faces a crises of monopoly on the access to capital. The usury is destroying the old and consigning our youth to indentured servitude.

    Not all things should be interest free — just borrowing for a personal domicile, personal development or personal medical procedure, and let if come direct from our Treasury.

    What damage is done to our economy when a young couple with children cannot own a $140K home without paying additional interest >100% again the purchase price over the following thirty years — interest paid to private and monopolistic interests.

    We need to liberate our citizens from this “war” against Americans by using the mutual wealth comprised in our Treasury to lend for highly-specific basics interest free.

    There will still be monies lent at interest. There will still be commercial borrowing and much interest earned.

    But let us liberate the wealth of our children from the usury and monopoly that is installed and protected by our corrupt Congress and the Washingtion DC syndicates that control our politics and dominate our government.

    It’s war by fiat of usury. We should instead invest in our mutualism, our families and our nation. To borrow for strategic purchases interest free will liberate the personal wealth our children, our families and in turn will enrich us all.

    The time has come to smash the usury monopolies installed and operated by our Congress. Let’s peel the financial Sandusky predators off the backs of our struggling youth.

  • Howard McCarthy

    What war? Everything we geezers have is being passed on to our children. Perhaps the largest transfer of wealth the world has ever seen is going on. I have lived relatively frugally all my life and have accumulated a small fortune, emphasis on small. I am not going to take it with me. I am helping my daughters over rough spots in the road and my grandchildren with their education. Does anyone really believe I am waging war with anyone? Horse feathers!

  • tyree

    Interesting. Some other reasons that contibute to this fact. The change in lending regulations that allowed more than one income on a mortgage creates greater debt in the young and greater riches after retirement. Another factor could be the flood of illegal immigrants, mostly young, who could well be depressing the average wages among the 35 year olds.

  • Richard

    No one ever won a war against the old either. Basically, everyone gets old and then the interests shift. As a now old but once young person, I can recall arguing against the deliberate underfunding of a pension plan. I can also recall arguing against a huge transfer of wealth from younger people to older people.

    I think that the problem is the urge for instant gratification. It took us 75 years to get into this mess and it will take us that long to get out of it. It would be nice to make a start on it but we really can’t pull the rug out from under those who paid the taxes/contributions and counted on the payments when they retired.

    The answer is to start reforming the system on a go forward basis and to suck it up and honor the commitments that have been made.

  • Milo

    I’m 3 score and 12. When I was in college, tuition was affordable. (Some even worked their way through). The sales tax didn’t exist in most states or cities. The income tax didn’t exist is most states or cities. Much later, after a 2 year stint in the Army and working, my Social Security tax for the year was 365 bucks and by September or October I had paid up and saw a “raise” in my paycheck. The Medicare tax had just been implimated.
    I had money left over at the end of the month which I saved. With those savings, I made the downpayment on a 2 family house where the tenant paid the mortgage and most of the property taxes which were really low. Well, low then. I grew to really dislike having tenants. (I even put down 20%) I had a 30 year mortgage at 9% which I paid off in 20 years. I invested some from time to time and won some and lost some. I always lived beneath my means.
    In short, for us “older” guys, it was more than possiible to build some wealth. That’s not so anymore. There are too many “blood Suckers” now. It’s not the old vs the young, it’s the young vs governments.
    An afterthought: I have been seeing the ads on TV for reverse mortgages. What does that portend for the younger generation who quite possibley will be be left nothing because “The folks” needed the money?
    I don’t see a pretty future.

  • icc

    Ahh, but the young are stupid enough to help the union bosses to win in Ohio. It never occurs to them the unions are ripping them off. To be young and stupid!

  • Tim McD

    So we save as much as we can, while Uncle Sugar takes 15% of our salary to pay current benefits, paying way more than reasonable rate of return, and in exchange, we get back a lousy rate of return, and we are waging a war on the young? The boomer generation is getting squeezed by their parents and their children, and WE are declaring war? You might want to look at reality again.

  • Walter Sobchak

    Typical Boomers. No war on the young they say while they finish the last of the seed corn.

    You whippersnappers better pay off your student loans or we going to come after you.

    It is a war by the unwise, against the unsuspecting.

    They will hear that you died from the nursing home clerk. They won’t attend the funeral. They will have you cremated, and your ashes sent to the municipal dump. They will remember you only in the way Amalek is remembered.

  • Ryan

    In reference to social security, government created inflation and the dependency it creates over the long them, espcially in the long term, F.A. Hayek wrote in The Constitution of Liberty in 1960;

    “…the real outcome is indeed likely to be such that most of those who retire at the end of the century will be dependent on the charity of the younger generation. And ultimately not morals but the fact that the young supply the police and the army will decide the issue; concentration camps for the aged unable to maintain themselves are likely to be the fate of an old generation whose income is entirely dependent on coercing the young.”

  • AD

    “…This equity can’t be monetized on a monthly basis…”

    I would suppose that WigWag has never heard of a Reverse Mortgage?

  • Largebill

    “Americans of all ages need to realize, though, that nobody ever wins a war against the young.”

    That’s just crazy talk. We win the war against the young by recruiting them or converting them to our team. Seems just a little while ago I was on the young side and now I’m fighting to join the old team. 20 some years ago I thought old people (like 70) shouldn’t drive. Now, I’m less inclined to agree to restrictions on driving. Young people need to realize the changes they propose affecting seniors will be in place waiting for them in a few years. And those years go quicker than any of us want to believe.

  • Mike Mahoney

    Considering that savings tend to graph parabolic rather than arithmetic, the young will be just fine. Not until you bought every spatula and bath towel you need when starting out, paid off that loan, raised those kids and paid their tuitions, paid off that house and car does one really start to save. If one has been a regular saver the benefits of compounding accrue heavily towards the end of a working life, too.
    $170,000 is ALL on average? I guess I am OK.

  • scf

    It’s bizarre that many commenters here make comments disparaging the post, making plain and general comments about saving, yet fail to make any remarks about the growing gap between young and old. Why can’t they comment on that?

    Is it really normal to have 47 fold gap?

    The over-65s are accumulating the entire net worth of the under-35s EVERY SINGLE YEAR. Assuming the typical under 35 has worked for 5 years or so, that means the average over 65 year old is accumulating the same in 1 year that the under-35s earn in 5 years, ON AVERAGE. This does not seem right to me.

  • Danube of Thought

    How many of the over-65 heads of households majored in gender stidies? Sociology? African-American studies?

    How many of the under-35′s have prepared themselves to be able to provide something for which others would be willing to pay them money?

  • Pat Dooley

    It is wrong to compare the wealth of the young compared to the old. Most people accumulate wealth as they get older. The bigger problem is that government is incurring massive debt to finance present-day consumption and leaving it to future generations to repay. Two of the signs I saw at the 9/12/2009 rally in DC read “Don’t force debt on our children” and “Stop Spending (stealing) My Grandkid’s $”. They were carried by older people concerned at the debt being loaded onto the younger generations. Those generations haven’t yet figured out that they are the victims. The debt will be repaid, one way or another, and it will come out of their pockets.

  • leishman,

    Oh, what nonsense! Most older folks have a lifetime of savings and gradually-growing home equity. Of course they’ll have more assets than someone just starting out. Most older folks don’t eat out as much, don’t drink as much, don’t buy as many clothes, don’t have to have the latest iPhone, don’t go to as many movies, don’t buy their kids’ prom dresses and piano lessons and athletic gear–you name it. And most older folks give more to churches, charities,, etc. Prof. Meade, usually a sagacious fellow, wrote before thinking this time.

  • MarkD

    I think the real war against the young happened to my generation. It was called Vietnam.

    On the bright side, I was paid 128.50 a month, didn’t go to Vietnam (some of us were luckier than others), and got the government to pay for my education.

    Now I can listen to how unfair it is and agree. Yes, life is unfair.

  • Chartermom

    I’m a bit late to this party but I agree with other commenters that much of the wealth gap and the increase in it can be explained by things like the need for 401k’s and other savings instead of defined benefit plans. There are pros and cons as to which is better overall but the 401K’s greatly increase the net worth calculation.

    Plus there is another factor in the change from the 1980′s until today — interest rates for mortgages. Most people buy houses based on the monthly payment. I bought my first place in the mid-80′s with a mortgage rate of about 11%. I bought what I could afford based on payment. If mortgage rates had been 6% I could have afforded 2/3′s more and at 4% I could have afforded double. However that would have increased my negative net worth. Multiple that impact across millions of young people and you would have seen a large change in both average and median net worth.

    Student loan balances are definitely an issue but one that we need to be very careful about. I know too many young people who chose state schools or schools where they received scholarships over the pricey school of their dreams. They may also have chosen “practical” majors over their interests in interesting but impractical subjects. And went to work after their bachelors degree and did grad school at night. Those young people shouldn’t have to pay for young people who chose the elite school or the “interesting” major. I realize there are some very recent grads who chose all the right things and still don’t have jobs but we need to tread carefully.

  • Phil

    Note the weasel words: “household income”. A big contributor to the breathless 47 number is the fact that far more “households” among the young are single parent (usually single mom) than ever before. Obviously, a traditional married couple, with perhaps 2 jobs, has a much higher “household” income than a single parent. This “household” income trick is being used dishonestly to foster this whole liberal “wealth inequality” meme that is in danger of wrecking our system.

  • FrancisChalk

    The Socialist economic model, so prevalent in Europe and pushed mightily by Obama and the Democrats, is what is keeping the “Young” down. Amazingly, young people are the main supporters of the leftism that is destroying their possibility to earn wealth. But, despite having three children, I’m firm believer of “you reap what you sow” and “actions have consequences.” So, if these young people foist another four years of Obama on me, I am going to stop voting Republican/Conservative/Tea Party and start voting for the candidates (Democrat) that will guarantee I get every penny of my promised Social Security and Medicare benefits. You young people worship Obama and want Socialism—I’ll give it to you. Now, pay my pension and medical bills till the day I die. You force Obama on me with your vote, I’ll force you to pay taxes out the ying-yang for your entire working life with my vote. We baby Boomers have the numbers—79 million strong, so go out and “Rock the Vote,” but remember: you reap what you sow.

  • Jason

    I notice the other posters aren’t mentioning the unfunded liabilities in entitlement programs, the crumbling infrastructure we haven’t maintained or acknowledged the 2-tier wage and benefit structures popping up so the entitled class doesn’t’ have to give up the stuff which hasn’t been paid for…

    Also consider the fact that down market or not, I couldn’t afford to by my house if I didn’t already own it. Could you? Try doing that on the bottom tier of the new two-tier wage system.

    You would expect all generations to start at zero and work up from there. So it’s obvious that the old will have more than the young. Else they haven’t done much of anything good over their working years.

    However, it’s a bit rich to say that young people have some moral failure for their personal debt when previous generations shifted their debt to the very young you disparage through public handouts not paid for.

    While you also complain about the young racking up debt, think about who taught them their values… Good job people! Lets feel smug and superior while we sit on the porch and watch it all crumble away.

  • ACS

    This particular datum does not indicate a war against the young, but it does undercut the actual war going on. A few years back, the oldsters here in South Texas voted themselves a property tax freeze. Individual home owners 65 and older, regardless of income or wealth, essentially froze their property taxes in place. Of course, they did not freeze their demands for public services. Those demands continue to grow, yet they limit what they are willing to pay for them. The taxes necessary to cover this growing difference are now being levied on the backs of those who are either unemployed or seeing their incomes shrink.

    Yes, there is a war going on. It is being waged by a numerically larger and wealthier cadre of older Americans fighting to maintain and expand the government services and transfer payments they have come to expect and demand (not to mention generous incomes and pensions). They are doing this on the backs of their children and grandchildren. In an age of narcissistic self-absorption, what else should we expect?

    Enjoy the gravy train while you can Boomers. That which cannot last forever will not.

  • Zion Blogster

    I have not read all the comments but this could be redundant.

    This info as application in the recent common discussion of the growing income [sic, welath] gap int eh US. As Sowell has pointed out, there is an age component not taken in to account. Most be start out in the bottom quartiles and work their way up. So with the wealth gap bt young and old growing (and perhaps an aging population), you naturally have a growing gap bt the top and bottom in terms of wealth.

  • epobirs

    Ah, but there is yet another battle front in which today’s young are battling their own children. They’re winning by a form of preemptive attrition aka not having children or having very few. That is the ultimate power they have over the future generation. To deny it existence.

    Personally, I cannot imagine why I should care whether a person decades older is far better off. In fact, I think it preferable, so long as they put that wealth to use in ways that create wealth opportunities for me to earn.

    A far bigger worry is the people who have gotten old but have no significant wealth and rely on the young to sustain them. This wasn’t such a bad thing when multi-generational households were common but things have changed. People in such arrangement are now made to feel they’re failures.

    Further, aside from the old parasitizing the young beyond their own family, there is the question of whether opportunity has diminished for the younger generations compared to their forebears. Well off old people are not a problem, if they came by it honestly. If anything, they are a societal benefit

  • Howard McCarthy

    What war? The young are our children and grandchildren. They’ll end up with everything we have.