Millennials, also known as Generation Y or Gen Y, are having an increasingly difficult time emulating the financial success of older generations in the developed world. Generation Y is usually defined as the subgroup born from the early 1980s to early 2000s and are the children and grandchildren of the Baby boomers. There is a currently a huge wealth disparity between generations, as millennials struggle to reap the financial benefits of their overall wealthy societies. Here are five reasons why young people are struggling to make money:
- Debt: Generation Y is truly the first group in the modern era to be plagued with such high levels of student loan debt. In the United States, young people have excessive student debt that is increasingly hard to pay back and a huge burden. Young people in the US have $1.3 trillion in student debt. Even though millennials are the most educated generation, they must spend years paying back their debt and often cannot even find jobs after graduation.
- High housing prices and cost of living: In Australia, the housing situation is the most dire issue for millennials who must compete for places to live with their older and more wealthy counterparts.
- The Great Recession: Angel Gurría, secretary general of the west's leading think tank, the Organisation for Economic Cooperation and Development (OECD) says, "The situation is tough for young people... They were hit hard by the Great Recession, and their labour market situation has improved only little since. This is a problem we must address now urgently. Kicking it down the road will hurt our children and society as a whole." The labor market for millennials has improved little since the end of the recession, while older age groups have not experienced the same slow recovery. Young people are earning less at work and paying more for rent and bills, resulting in lagging disposable income growth for young people compared with the past few decades.
- Unemployment: In Europe, the lack of jobs is the most serious problem. As a result, an increasing number of individuals in their thirties still live at home, which leads to a lower birth rates and an elderly population.
- Low Income: In seven major economies in North America and Europe (UK, Canada, Germany, France, US, Spain, Italy and Australia) the growth in income of the average young couple and families in their 20s has lagged dramatically behind national averages over the past 30 years. Studies have shown that the young work force today now earn as much as 20% below the average citizen in their country. On the other hand, pensioners have been experiencing distinct increases in income. In many developed countries, young people are now poorer than those on pension. Gen Y's disposable income has hardly increased in the past 30 years. According to data from the LIS (Luxembourg Income Study): Cross-National Data Center, pensioner disposable income in the UK has grown three times as fast as the income of young people.
The prosperity of Generation Y has declined across the board in developed countries, and this issue could ultimately affect all age groups if not improved. The inability of millennials to establish themselves as financially independent adults will result in great societal inequality and eventually may stunt all around economic growth.