The wealth gap between younger and older Americans has stretched to the widest on record, worsened by a prolonged economic downturn that has wiped out job opportunities for young adults and saddled them with housing and college debt.
The typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35, according to an analysis of census data released Monday.
The analysis by the Pew Research Center reflects the impact of the economic downturn, which has hit young adults particularly hard. More are pursuing college or advanced degrees, taking on debt as they wait for the job market to recover. Others are struggling to pay mortgage costs on homes now worth less than when they were bought in the housing boom.
However a local researcher says one additional factor might be contributing to the wealth gap: young people have a weaker work ethic, on average.
Jean Twenge, author of Generation Me and professor at SDSU, said younger generations are more likely to say they don't want to work very hard. They value their leisure more and work is generally not the center of their lives, Twenge’s report states.
She cites several studies which agree with this assessment. For example, one study found that younger generations were more likely than Baby Boomers to value freedom from supervision. Many of the younger generation’s respondents were more focused on leisure than work: They wanted a job which allowed them to work slowly and with more vacation time.
"If someone is fine with not having as much money because they don't want to work as many hours, that works," she said. "The problem comes in when people expect both more money and status and fewer work hours -- and that's what this data seems to suggest is occurring."
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The Pew Research analysis did not include Twenge’s assessment – instead it focused on recent economic factors, which Twenge admits has its share of validity as well.
“Younger people had the bad luck to come of age in a prolonged recession, and one initiated by a real estate crash, which always affects those in their 20s and 30s the most,” she said.
For young adults, the main asset is their home. Their housing wealth dropped 31 percent from 1984, the result of increased debt and falling home values. In contrast, Americans 65 or older were more likely to have bought homes long before the housing boom and thus saw a 57 percent gain in housing wealth even after the bust.
Older Americans are staying in jobs longer, while young adults now face the highest unemployment since World War II. As a result, the median income of older-age households since 1967 has grown at four times the rate of those headed by the under-35 age group.
Sheldon Danziger, a University of Michigan public policy professor who specializes in poverty, noted skyrocketing college tuition costs, which come as many strapped state governments cut support for public universities. Federal spending on Pell Grants to low-income students has risen somewhat, but covers a diminishing share of the actual cost of attending college.
"The elderly have a comprehensive safety net that most adults, especially young adults, lack," Danziger said.
(Associated Press / NBC San Diego)
