Editor’s note: This commentary is by state Sen. Becca Balint, D-Windham, and the majority leader in the Senate. She lives in Brattleboro.
[A] new friend recently confided in me that she’s feeling frustrated because she keeps having the same argument with her dad. As she and her husband struggle to make student loan payments, find affordable child care, and pay their mortgage, her father chimes in with: “When I was your age …” and then list all the ways in which his generation worked harder. She told me, “We can’t work any harder. How can I get him to see that?”
I get this question a lot from constituents.The financial predicament of millennials is much more challenging than what Gen Xers, like myself, or the boomers navigated, but the message isn’t getting through. Instead of relying on conventional stereotypes, we must understand the realities millennials face.
According to estimates from the U.S. Census Bureau, millennials now outnumber baby boomers: over 83 million millennials compared to 75.4 million boomers. That means that the health and strength of our nation is tied to the success of these adults, and we should all be concerned that this generation faces significant obstacles to financial security.
A report compiled by the Young Invincibles Think Tank compares the financial health of young Americans in earlier generations to that of millennials. Today’s young adults face significant declines in five important fiscal areas: income, assets, net wealth, home ownership and retirement savings.
Wages have declined by 20 percent since 1989 – when I was about to graduate from college, and millennials can expect to earn $10,000 less per year than my peers did. And a lower starting salary greatly impacts one’s long-term earnings. As well, because millennials started on a lower economic rung, due to the Great Recession, they have less money to invest in education, thus further depressing their wages.
Boomers and Gen Xers did not need to attain a college education in order to make a decent living. Millennials who graduate college with debt will make about the same money as boomers who only had a high school diploma. While not all jobs today require a college degree, our modern economy greatly favors young adults who get further training or education. The greatest wage declines since 1989 have been among adults without college degrees.
Almost half of Vermont high school graduates do not immediately go on to college, and while 60 percent eventually enroll in post-secondary programs, 14 percent drop out, according to a 2015 report released by the Vermont Student Assistance Corp. And they’ll leave college with more debt. Between the time millennials were born and when they enrolled in college, college tuition at public four-year colleges rose by an astounding 213 percent.
According to a report by personal finance site Student Loan Hero, millennials purchasing a home today will pay 39 percent more (adjusted for inflation) than boomers who bought their homes in the 1980s. Millennials also pay significantly higher rents: a national average of $1,358. Gen Xers paid just $850 (in today’s dollars) in rent per month and the boomers paid under $500. These young people start with less earnings and then pay more for housing. The reality is that millennials have about half the net wealth boomers had at the same age.
Vermont’s young families face much bigger financial obstacles than their predecessors. They aren’t whining; they’re telling the truth, and we need to listen. My work in the Legislature has included expanding our successful Down Payment Assistance program through the Vermont Housing Finance Agency and working on the Building Bright Futures Think Tank on affordable, high quality child care. There are many concrete steps we can take to, but an important one is honestly acknowledging the challenge rather than denying it.
