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The wealth of generations, with special attention to the millennials

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Wealth accumulation is of interest for several reasons. At the household level, wealth provides a source of future consumption, as well as insurance against adverse economic shocks. At the aggregate level, wealth finances domestic and foreign investment, affects current consumption spending, and influences the efficacy of monetary and fiscal interventions. More broadly, as discussed further below, the sheer magnitude of changes in aggregate household wealth relative to GDP in recent decades merits attention.

Documenting and determining the causes of changes in the level and distribution of household wealth and its components across generations and over time is an extraordinarily ambitious goal. This paper takes several initial steps in that general direction, building on Gale and Pence (2006), Gale, Gelfond, and Fichtner (2019) and Gale and Harris (2020) and using data from the 1989 to 2016 waves of the Federal Reserve Board’s Survey of Consumer Finances (SCF).  We obtain several key results.

First, while the Great Recession in 2007–2009 reduced wealth in all age groups, the broader long-term trend has been that the wealth of older age groups has increased, while the wealth of successive cross-sections of younger age groups has fallen.  A significant share of these changes, in both directions, can be explained by the evolution of household demographic and economic characteristics. Second, we show that the millennial generation—people who were born between 1981 and 1996 and hence were between the ages of 20 and 35 in 2016—had less median and mean wealth in 2016 than any similarly aged cohort between 1989 and 2007.

Predicting future wealth accumulation patterns is difficult, but we note that the millennials have certain advantages over previous generations in terms of wealth accumulation. They are the most educated generation in history and generally have higher earnings than their predecessors.  Because of the evolution of the pension system toward defined contribution (DC) plans, millennials may well work longer than any previous generation, giving them additional years to save.  And millennials may well end up inheriting more than any prior generation.

Millennials also face numerous disadvantages. Their careers had a rocky start because of the financial crisis and Great Recession in 2007-2009. They will be employed in contingent workforce jobs (which are more uncertain and have weaker benefits than traditional jobs) to a greater extent than previous generations. They are marrying, buying homes, and having children later. Longer lifespans mean that they have to accumulate more wealth, all else equal, to maintain pre-retirement living standards in retirement.  Because their parents are living longer than previous generations did, millennials will also receive inheritances later in life. They will face increased burdens from any eventual resolution of the government’s long-term fiscal shortfalls in general, and the financial imbalances in Social Security and Medicare in particular. They face an economic future with projections of lower rates of return and economic growth than in the past.

Third, we highlight the role that minorities will play in determining wealth prospects for millennials. Minorities constitute a substantially larger share of the millennial population than they do in any previous generation. Using cross-section and pooled regressions, we show that minority status is negatively associated with net worth, controlling for other household characteristics. The difference in wealth between Black and white households appears to be growing over time, controlling for other factors.

One overarching caveat to all of the results and analysis is that the paper applies to the period before the COVID-19 pandemic, an enormous shock that will clearly have significant impacts on wealth accumulation patterns for a wide range of birth cohorts. The paper is thus best interpreted as addressing generational wealth patterns through 2016 and providing a pre-COVID benchmark against which future studies can be compared.



The authors did not receive financial support from any firm or person for this article or from any firm or person with a financial or political interest in this article. The authors are not currently officers, directors, or board members of any organization with a financial or political interest in this article.

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