Every generation has its commonalities that set people born during that time period apart from those born before and after them. For the subset of people born in the 1980s, memories of using dial-up internet or playing The Oregon Trail may bond them, but there’s another, decidedly less nostalgia-inducing thing they have in common: they are worse off financially compared to previous generations at their age.
A study conducted by economists from the Federal Reserve Bank of St. Louis, “The Demographics of Wealth,” found that people born in the 1980s were worth 34 percent less (or $12,000) than expected for their age as of 2016. For comparison, those born in the 1960s are worth 11 percent less than expected, and those born in the 1970s are worth 18 less than expected.
The Great Recession resulted in economic losses for all Americans, and it seems that those born in the decade of excess may have been hit the hardest.
To blame? Student loan debt, car loan debt and credit card debt. Because unlike mortgage debt, these types of debt don’t result in anything tangible that can appreciate over time, which means this cohort is lagging behind financially.
“Families whose heads were born in the 1980s are different,” the report reads. “They generally were too young to be homeowners during the housing bubble; in fact, only 19 percent of 1980s families were homeowners in 2007. Even by 2016, fewer than 45 percent of 1980s families were homeowners. The predominant type of debt they owe is non-mortgage-debt, including student loans, auto loans and credit card debt. Because none of these types of debt finances assets that have appreciated rapidly during the last few years — as such as stocks and real estate — they have no leveraged wealth boost like that enjoyed by older cohorts.”
Despite their significant challenges, the economists noted that those in this cohort have two factors working in their favor that could help aid in their eventual financial recovery. First, they still have time on their side, and secondly, they are the most educated generation, which translates to higher earning potential.
The full study is pretty fascinating — you can read it on the Federal Reserve Bank of St. Louis website.