Jeffrey Miron
Maybe not.
Commentary on the left and right tends to paint a gloomy picture about whether currently young generations will be economically better off than previous ones.
Yet such pessimism has existed for centuries, even while improved outcomes have mainly been the norm. FDR’s “forgotten man” and the “Make America Great Again” slogan — as used by Trump, Clinton, and Reagan — both prey on inaccurate nostalgia.
It appears this pattern — pessimism that is inconsistent with the facts — continues. Kevin Corinth and Jeff Larrimore, of AEI and the Federal Reserve, explain in their paper and Cato Research Brief no. 391 that
each of the past four generations of Americans was better off than the previous one, using a post-tax, post-transfer income measure constructed annually from 1963–2022 based on the Current Population Survey Annual Social and Economic Supplement. At age 36–40, Millennials had a real median household income that was 18 percent higher than that of the previous generation at the same age. This rate of intergenerational progress was slower than that experienced by the Silent Generation (34 percent) and Baby Boomers (27 percent), but similar to that experienced by Generation X (16 percent).
Thus at least by this measure, intergenerational progress has been continuing, albeit at a slower rate. Even on this point, the authors show that
[s]lower progress for Generation X and Millennials is due to their stalled growth in work hours—holding work hours constant, they experienced a greater intergenerational increase in real market income than Baby Boomers. Intergenerational progress for Millennials under age 30 has remained robust as well, although their income growth largely results from higher reliance on their parents. We also find that the higher educational costs incurred by younger generations is far outweighed by their lifetime income gains.
Working fewer hours—even if that means less income—is an understandable choice when income is well above the level needed to survive.
Nothing can guarantee that intergenerational progress will continue. But it is important to avoid misstated pessimism about the past since that is often used to justify misguided policies. For example, the idealization of America in the 1950s regularly inspires unfruitful industrial policy.
Lemoni Matsumoto, an undergraduate at the University of Chicago, contributed to this article.
