Occupy protesters move down a Toronto street. (Photo: Martin Helmut Reis)
It is a late-in-life milestone that people pass with a mixture of bemusement and woe: getting old enough to qualify for the senior citizen’s discount on coffee at McDonald’s. Mundane in nature and trivial in value, qualifying for cheap coffee seems to be the moment where many people realize they’ve joined the ranks of the senior citizenry. With aging comes myriad perks, from retail discounts to politicians fussing endlessly about pension security; society makes a Herculean effort to ensure the financial security of its elders. But if you trust a recent whirl of punditry, we’ve been worrying about the wrong generation.
It is not the elderly but young people who currently face economic jeopardy, according to a study released in early November by the Pew Research Centre. The report found that American households headed by adults 65 and older had a median net worth of $170,494 in 2009. In comparison, households headed by someone under 35 had a median net worth of just $3,662. While the value of older households was 42% higher in 2009 than in 1984, the worth of younger households fell by 68%. In 1984, the older age group had 10 times as much wealth as the young folks. Today, the gap is more like 47 to one. In short: the older keep getting richer, the young keep getting poorer.
Why the disparity? Housing prices, mostly. If not for the value of their homes, the net worth of older Americans would have fallen by one-third over the past 25 years rather than skyrocketing. Members of this generation bought before the housing market began its decades-long ascent and were therefore less affected by the recent collapse. Other factors—like seniors working later in life and youngsters taking longer to enter the labour market—aided in spreading the gulf, but it was housing that split it so wide.
With the Occupy Wall Street movement creeping along in the background, the Pew Centre’s research was taken as a further sign of the disenfranchisement of America’s youth. Writing on The Atlantic’s website, Erik Hayden noted the study’s findings would be no surprise to “Millennials occupying their old bedrooms back at their parent’s home.” He pointed to recent stories pronouncing this demographic as the “Sucks to be Us” generation (New York) or “Generation Jobless” (The Wall Street Journal).
It is undeniable that people just beginning their lives and careers face stiff challenges today. But throwing a pity party—as the Occupy movement sometimes verges on becoming—won’t help. The real estate growth that benefited past generations was a unique and likely unrepeatable moment. That young people can’t rely on a house purchase leading to a lifetime of prosperity doesn’t mean they’re doomed to a bleak future. There remain plenty of wealth-creation opportunities beyond real estate. And if the barrier to entry into the housing market is too high for now, there is a compelling case for renting, and investing the savings elsewhere. Though the job market has shifted, there are well-paying jobs available beyond the boomers’ career paths. In this issue, associate editor Jacqueline Nelson details how the skilled trades offer significant opportunities, if we overcome some long-standing prejudices. The experiences of previous generations aren’t road maps. When we pretend that they are, we get lost.
James Cowan is interim editor of Canadian Business magazine.
