Millennials might have a better education than baby boomers, yet they are earning 20% less than their elders did at the same age, according to new research.
A report published by nonprofit New America found that those in the 18-to-34-year-old age bracket earn less today than that same age group in the 1980s, and the Great Recession was one of the main reasons behind the earning gap.
“The data are clear that during the Great Recession, American families suffered widespread and deep income and wealth losses,” the report said. “However, younger families were hit particularly hard; they experienced greater financial damage in percentage terms than did retirement-age families. Younger families’ typical household income in 2016 was between 6% and 10% lower than that of similarly aged families in 2007, while older families’ income never fell below 2007 levels.”
One reason why median earnings are down for Millennials is today’s working culture. The report noted that the rise in freelance and contract work has affected today’s workers by shortening employment tenure, weakening access to employee benefits and the overall decline of income.
These economic changes have also leaked into personal life for Millennials, specifically when it comes to different life stages like marriage, buying homes, and starting families. The median age for a first marriage is five years older than it was in the 1960s, while Millennials also are delaying moving out of their parent’s home and having babies.
A detailed looked at Millennials’ saving habits
In a survey of 600 Millennials, the finance website Flinty took a detailed look at how Millennials are saving and spending today.
In terms of monthly income, Millennials put about 5% or less towards saving, while 23% try to stash 6-10%.
The main driver for Millennials’ spending habits was setting up an emergency fund (27%). Others said to make a down payment on a house and to pay off debt.
Just 15% of respondents said they saved for the future, setting aside funds for retirement.
With Millennials’ putting away such little funds, 25% said they’d be able to cover less than a month based on the current cost of living with savings after losing a job. Twelve percent said they’d be able to float for two months, while 10% said one month and three months.