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Maybe millennials didn't get screwed by the economy after all

Story by mturner@businessinsider.com (Matt Turner) • 


Student loan borrowers and advocates gather for the People's Rally To Cancel Student Debt During The Supreme Court Hearings On Student Debt Relief on February 28, 2023 in Washington, DC. Jemal Countess/Getty Images for People's Rally to Cancel Student Debt

There's a common perception that millennials have gotten screwed by the economy.

This idea rests on the generation getting whacked by rising housing costs, student debt, and graduating around the time of the great financial crisis.

But a recent article makes a convincing case for why the common idea of broke millennials is a myth.

Stop me if you've heard this before: Millennials got screwed by the economy.

It's a generation that took on huge loans to go to college in increasing numbers before graduating shortly before or around the time of the great financial crisis, entering a weak job market that set them back years. They put off having kids, gorged on avocado toast, and found it nearly impossible to get started on the housing ladder.

A record 39% of the US workforce freelanced in 2022.
Insider spoke with three millennial women who have found success as freelancers.
They shared their stories, as well as advice they have for people looking to follow in their footsteps.

As the New Year approaches, many Americans are going through performance reviews and taking stock of their job satisfaction. Some may consider ditching their 9-to-5 and joining the millions of Americans who have embraced freelancing in recent years.

39% of the US workforce freelanced full-time or part-time in 2022, per an Upwork survey of 3,000 US adults, equating to a record 60 million Americans. The younger generations led the way, with 43% of Gen Z workers and 46% of millennial workers saying they performed freelance work over the past year — compared to 35% of Gen Xers and 27% of Boomers who said the same.

While many freelancers enjoy the flexibility freelancing provides, the survey found earning extra income was a key reason 83% of freelancers decided to explore this alternative style of work.

If the US enters a recession or inflation remains elevated, even more workers might find themselves pursuing freelancing not because they want to, but because they need to.

Insider previously spoke with three millennials who have found success as freelancers. They shared their stories and offered advice about how others can find similar success.See More

It's a generation that's more likely to consider things out of reach because of their financial situation. There's even a series of self-help books titled "Broke Millennials."

It also happens to be my generation (I was born in 1984).

But a recent article from academic Jean M. Twenge in The Atlantic titled "The Myth of the Broke Millennial," along with a response from Substacker Noah Smith, makes a compelling case for why millennials are more like boomers and Gen Xers that they might like to let on.

"Millennials, as a group, are not broke — they are, in fact, thriving economically," Twenge writes. "That wasn't true a decade ago, and prosperity within the generation today is not evenly shared. But since the mid-2010s, Millennials on the whole have made a breathtaking financial comeback."

Both Twenge's article and Smith's response are worth reading in full. I'm going to focus on a handful of charts that show how this is playing out.



Jeremy Horpendahl© Jeremy Horpendahl

First, there's this chart from economy writer Jeremy Horpedahl. This data, from the third quarter of 2022, shows that — based on generational wealth per capita — millennials (green line) are building wealth at the same rate that Gen X (yellow) and boomers (orange) did. One other key thing to note is that this is adjusted for inflation, so it takes rising prices into account.

That's contrary to common perception, as these kinds of charts often focus on generational shares of wealth, which leads to headlines about the boomer generation having X times more wealth than millennials.

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But one should expect boomers to have a greater share of wealth: They've had decades to build their career and amass assets. And while many millennials did get off to a rocky start in the jobs market — especially those at the upper end of the generation who graduated before and into the great financial crisis — there's evidence of a significant bounce back since then.

You can see the strength of that rebound here in Twenge's chart on household income, which Smith has added to with an annotation.



Jean Twenge© Jean TwengeHere's Twenge: "By 2012, the median household income of 25-to-34-year-olds had dropped 13% from its peak in 2000. But the mid-2010s saw the beginnings of a turnaround that has continued ever since. By 2019, households headed by Millennials were making considerably more money than those headed by the Silent Generation, Baby Boomers, and Generation X at the same age, after adjusting for inflation."

Per Twenge, by 2019 income for the median millennial household was about $9,000 higher than that of the media Gen X household at the same age, and $10,000 more than the median boomer household.

"Booms and recessions push incomes up and down, but although many media stories have tended to associate Millennials almost exclusively with the latter, they've now experienced both, and in a big way: Increases in income since 2014 have been steep," Twenge writes.

That brings me to real estate. There have been some meaningful changes to the housing market over the past several generations. In particular, earlier generations benefited from the explosion of the suburbs, a period where housing supply was especially strong. Today, there's a housing shortage.

Still, a recent report from Redfin showed that in 2022, 30% of 25-year olds owned their own home, higher than the rate for millennials (28%). But the millennial rate was actually very slightly higher than it had been for Gen Xers.



Redfin© Redfin

It remains the case that millennial homeownership lags begin the baby boomer generation. While 69% of baby boomers owned their own home at 40, the same is true for 62% of millennials, a seven-percentage-point gap. For comparison, 64% of Gen Xers owned a house when they were 40, closer to the millennial figure.

Still, it remains the case that 62% of millennials own their own home at 40. Clearly the majority of millennials are, in fact, getting on the housing ladder, contrary to the perception that it's not possible to do so.

That leaves total wealth, including assets like real estate. And once again there's a similar picture here. Per data from the St Louis Fed, the Millennial/Gen Z wealth is currently tracking with Gen X after initially getting off to a tough start.



St Louis Fed© St Louis Fed

"While trailing Gen Xers for the beginning of their adult lives, younger Americans have closed the gap over the past five years (as of the most recent data)," the report said.

There are lots of nuances to all of this data, with differences across ages, professions, geography, gender, and race. And there continue to be real challenges for many millennials.

But Twenge and Smith make convincing arguments for why, while the millennial generation did get off to a rough start, it has now caught up to previous generations in terms of household income, home ownership, and wealth.

And that acceleration isn't necessarily over yet, in part because of the passing of their parents. Here's Smith:

Where do you think the vast accumulated wealth of the Boomer generation will go in 10 or 20 years when the Boomers die? What will happen to all those nice expensive houses in the suburbs? Their children will inherit them. Their children are Millennials.