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Blog Post

Millennials Are Doing Better than You Probably Think


February 12, 2024

“Each generation is worse off than the one before.” It’s one of the primary tenets of the notion that American capitalism has failed and that we live in the final days of “late capitalism.”

But have things really been all downhill since the Boomers became adults? Maybe not, according to the new study “Has Intergenerational Progress Stalled? Income Growth Over Five Generations of Americans” by my AEI colleague Kevin Corinth and Jeff Larrimore of the Federal Reserve Board. The economists compared income levels at ages 36–40 across the five generations, calculating the percent change in median income from each generation to the next. The goal: to gauge economic mobility by determining whether each generation as a whole has surpassed the previous one. To do this, Corinth and Larrimore create a measure of income that includes market income but also accounts for taxes and resources gained from government benefit programs.

They find that incomes rose across the board for each generation in aggregate, but the rate of growth slowed down for Gen X and Millennials. Specifically:

  • Silent Generation’s incomes grew 34 percent vs. Greatest
  • Baby Boomers +27 percent over Silent
  • Gen X + 16 percent over Boomers
  • Millennials +18 percent over Gen X

Now, the slowdown was more pronounced for market income than when including government taxes and transfers. But even just looking at market income, Millennials in their late 30s were still 14 percent better off than Gen Xers at the same age. What explains the slowdown? A key factor behind slower income growth for Gen X and Millennials is stagnating work hours. This stall coincided with flattening female labor supply around 2000, before Gen X and Millennials entered their late 30s.

As to why there’s a perception of worsening outcomes for Millennials, it may stem from fallacies about parents and college. From the paper:

First, we find that the higher household incomes of Millennials relative to Generation X, through their 20s, is a result of dependence on their parents rather than a rise in their own market incomes. By age 31, however, less than 10 percent of Millennials are still dependent on their parents and by then their own market incomes exceed that of previous generations. Second, we find that the rising cost of college offsets only a small portion of the income gains achieved by Millennials, especially when accounting for the growing generosity of financial aid.