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by Reid Cramer

Millennials have come of age in a time of economic uncertainty. Even though they bear no responsibility for the financial crisis and subsequent Great Recession, which began over a decade ago, they have to live with its consequences. The precariousness unleashed by stagnant incomes, rising debts, and eroded assets has complicated life decisions, reordered aspirations, and made navigating the road to adulthood more arduous. Dramatically altered prospects for an entire cohort of young Americans is setting up a generational reckoning that may eventually rewrite the social contract.

Crucially, Millennials’ issues are everyone’s issues. Millennials are not just the future—they’re already here and poised to exert their influence as the largest generation. They’re the young adults powering our workforce. They’re the consumers and, increasingly, the producers steering our economy. They’re the people deciding if, when, and how to start families, and assuming responsibility for raising the country’s most prized resource: the children of the next generation.

Dramatically altered prospects for an entire cohort of young Americans is setting up a generational reckoning that may eventually rewrite the social contract.

Despite this outsized role, there’s a growing disconnect between the conditions facing Millennials and prevailing public policy. Individuals are increasingly saddled with risks that had previously been collectivized, and the economy is seemingly erecting more roadblocks to financial security rather than opportunities to build wealth. This misalignment between social policy and lived experience threatens to undermine the potential of an entire generation. Consequently, there’s a growing imperative to develop a set of policy ideas that can respond to current conditions, align with prevailing attitudes and behaviors, and create new pathways of progress for the rising generations.

Insights and Obfuscations of a Generational Lens

Looking at the world through the perspective of birth cohorts has both value and inherent limitations, especially as a basis for crafting public policy. The Pew Research Center has taken a data-driven approach to exploring the generational experience, defining Millennials as those born between 1981 and 1996, making the youngest 21 and the oldest 37.¹ Even though this is a large spread capturing different parts of the life course, it facilitates a comparative analysis. From a number of perspectives, it’s apparent that Millennials are outpacing their elders. Today, Millennials make up 22 percent of the total population, 30 percent of potential voters, and 38 percent of working-age adults.² By 2025 they will comprise 75 percent of the workforce.³ They’re not just going to make their mark; they will re-paint the canvas.

Shared formative experiences shape priorities and opinions in ways that distinguish generations from one another. For Millennials, there were early memories of confusing social disruption, such as the Oklahoma City Bombing in 1995 and Columbine School Shooting in 1999 as well as political disputes associated with sharpening political polarization, memorialized by the impeachment and acquittal of President Clinton in 1998. Most Millennials were between 5 and 20 years old when the 9/11 terrorists attacks occurred, followed by the extended wars in Iraq and Afghanistan. Seven years later, they were between 12 and 27 years old during the 2008 election campaign, when the force of the youth vote helped elect Barack Obama, the first Black president. Their subsequent adolescence and early adulthood was spent in the shadow of the Great Recession, with an economy wracked by job losses, business failures, wage stagnation, and a slow recovery. The unexpected results of the 2016 election were relatively unpopular among Millennials, creating a new political landscape they are collectively navigating to this day.

In designing policies that meet the moment, it matters what those who are impacted think about current affairs and how they participate in the political process. In the years ahead, Millennials will lead shifts in public opinion, creating opportunities for large-scale policy change. They are already having an impact on a number of social-issue policy debates—such as marijuana legalization, gun control, and gay rights—as they express their preferences in ways that diverge from older Americans. As a cohort, Millennials remain skeptical of political parties; 44 percent identified as political independents in 2017, far exceeding GenX-ers (39 percent) and Baby Boomers (32 percent).⁴ Yet, as a group, they tilt toward the liberal side of the political spectrum. When “lean” is considered in survey answers, more Millennials associate themselves with the Democratic Party (59 percent) than the Republican Party (32 percent); the 27 percent spread exceeds GenX (6 percent) and Boomers (2 percent), as of 2017.⁵��Still, only 49 percent of Americans ages 18 to 35 voted in the last presidential election, compared to about 70 percent of Boomers.⁶

In designing policies that meet the moment, it matters what those who are impacted think about current affairs and how they participate in the political process.

While Millennials share cultural touchstones that distinguish them from older generations, broad generalizations about their preferences and behaviors will miss their diverse experiences. In fact, the Millennial generation is defined by its diversity. Forty-four percent of Millennials identify as something other than non-Hispanic white, greatly exceeding the minority share of previous generations.⁷

Specifically, the Hispanic slice of the population pie is dramatically increasing. While 9 percent of Boomers identify as of Hispanic, 19 percent of Millennials identify as being of Hispanic (or Latinx) origin.⁸ Given demographic trends, this transition to a country with more color will continue. In fact, without the growth of Hispanic children, the nation’s child population would have declined from 2000 to 2010.⁹ In 2011, the majority of babies born in the United States had parents who were traditionally seen as minorities, and in only a few more years, most children in the United States will identify as non-white.¹⁰ By many metrics, Millennials are serving as the bridge to a more diverse America.

Though 75 percent of older Americans—those over age 55—are white, this percentage drops to half for children under the age of 5.¹¹ In the near term, the working population will increasingly be made up of people of color and the nonworking population will be overwhelmingly white Baby Boomers, widening an already existing cultural gap. In the long term, this new demography will undermine generalizations, remake institutions, and change the country.

Rising Inequality and Growing Divides

Unfortunately, this diversity has become a foundation for rising generational inequality, with the reality of an older, whiter America contrasted with more diverse rising generations. To acknowledge this diversity is to acknowledge that the experiences of Millennials of color are particularly distinct—and perilous. According to the Black Youth Project, unemployment rates are substantially higher, living in poverty is more prevalent, experiencing violent crime is more likely, and being involved in the criminal justice system is much more likely for Black and Latinx youth than for their white counterparts.¹²

In this light, examining differences among demographic groups must be an essential component of any generational analysis. The GenForward Survey, directed by political scientist Cathy Cohen at the University of Chicago, is facilitating this type of analysis through a nationally representative sample of young adults that applies an intersectional lens and pays special attention to how race, gender, and sexuality influence their view of the world.¹³ Their survey findings offer an opportunity to break down monolithic explanations of universal experience and heed the diversity of the Millennial generation. Their data clarify when and how race and ethnicity are associated with different beliefs or experiences. For example, when probing the contours of a persistent economic opportunity gap, they dig deeper than reporting relative levels of employment and ask about the ability to pay bills, cover an unexpected expense, or ask family for financial support. The GenForward Survey approach prompts us to examine disparities and identify places where policy is not adequately responding to changing conditions in a variety of consequential areas.

A Remade Socio-Economic Landscape

Consider how dramatically the educational landscape has changed, and its pernicious consequences. Among Millennials, there are more degrees and credentials—having tripled since the 1960s—but also higher tuition and more student debt.¹⁴ Students have taken on at least 300 percent more debt than their parents, but, unfortunately, it hasn’t always led to a degree.¹⁵ Among college graduates with a bachelor’s degree, student loans average almost $30,000, triple the figure for the same group in 1993.¹⁶ This debt, the state of their finances generally, and other factors are changing Millennials’ behavior over the life course. Fifty-six percent of Millennials with student loans report having delayed a major life event because of their debt.¹⁷

Students have taken on at least 300 percent more debt than their parents, but, unfortunately, it hasn’t always led to a degree.

The data shows that the milestones of adulthood are indeed changing. Millennials are less likely to marry than their parents. When they do, they do so later. The median age for a first marriage today is about five years older than it was in the 1950s and 1960s.¹⁸��Cohabitation with a committed partner among 18 to 29 year olds is increasingly common, rising to over 9 percent today from around 6 percent in 1997.¹⁹ Regardless of marital status, having children has become less prevalent. Although teen pregnancy and childbirth have declined significantly, so too has the overall birth rate, which was at a record low in 2017 after dropping for the sixth straight year.²⁰ Today, only 29 percent of women ages 18 to 29 have ever had children, down from 41 percent in 1998.²¹��

Entering adulthood in the wake of the Great Recession has been economically devastating. In 2007, more than 50 percent of college graduates had a job offer lined up; yet for the class of 2009, fewer than 20 percent did.²² The large-scale loss of jobs in the years following the recession and the slow recovery have depressed incomes and undermined workforce attachment. Even as the recession recedes from vivid memory, its effects linger. Over half of the unemployed today are young adults, greatly exceeding their share of the workforce. While unemployment rates have come down in recent years, the labor force participation rate for those between the ages of 18 and 34, remains near its lowest level in four decades.²³ The labor market consequences of entering the workforce during a downturn are large, negative, and long lasting.²⁴

In the aggregate, Millennials currently earn 20 percent less than Boomers did at the same stage of life, despite being better educated.²⁵ Specifically, the median earnings today for 18- to 34-year-olds are lower than they were in 1980 and income flows are more volatile.²⁶ Between 1970 and 2002, the probability that a working-age American would unexpectedly lose at least half her family income more than doubled.²⁷ A rise in freelance and contract work associated with employers’ drive for flexibility has shortened employment tenure and contributed to an overall decline in income.��Poverty remains pervasive, with one in five Millennials officially classified as poor.²⁸ From 1979 to 2014, the poverty rate among young workers with only a high school diploma more than tripled to 22 percent.²⁹��

Since the Great Recession, the number of young people who own homes has plummeted. Young adults today are half as likely to own a home as young adults were in 1975. Since 2005, the decline has been dramatic. The homeownership rate for the under-35 households fell from 43 percent in 2005 to a historic low of 31 percent in 2015.³⁰ More people are renting homes now than at any other time since the late 1960s. But rents are up, and the number of households spending over half their income on rent has grown by more than 50 percent over the last 15 years.³¹

Growing Gaps of Wealth and Opportunity

Without home equity to bolster their balance sheets, younger Americans are significantly behind older generations in terms of wealth accumulation. In 2016, after years of decline, the median household net worth for all families—the difference between families’ gross assets and their liabilities—rose to $97,300 in 2016, which, when adjusted for inflation, is 16 percent higher than the 2013 figure of $83,600 (although still 30 percent below the 2007 peak).³² Young families didn’t fare as well: The median net worth for families headed by a person under the age of 35 is $10,900, which is a 2 percent rise over the last three years but still $8,000 less than it was in 1995, a 41 percent decline (in 2016 dollars).³³ In contrast, households over age 75 have seen their wealth dramatically rebound, rising 32 percent in the last three years to $264,000.³⁴ This is the Millennial wealth gap, and its emergence should be alarming.

Even though we expect wealth to rise with age before plateauing as people leave the workforce, the impact of sustained low wealth holdings over time can be severe. Not only does it amplify financial insecurity, but also it corrodes the ability to plan for the future. Clearly, the prevailing economic realities in America today are complicating how young people assemble the traditional building blocks of success.

Without home equity to bolster their balance sheets, younger Americans are��significantly��behind older generations in terms of wealth accumulation.

The Millennial wealth gap is even more devastating when combined with our historic racial wealth gap. Throughout U.S. history, almost every means of wealth creation—higher education, homeownership, access to credit—has been systematically denied to minorities. The Great Recession has amplified previous disparities. In 2016, the median net worth of non-Hispanic white households was approximately nine times the net worth of Black and Latinx households—$171,000 versus $19,000, according to the Federal Reserve Board’s Survey of Consumer Finances.³⁵��This makes the racial wealth gap larger today than it was in the early 2000s, when the average non-Hispanic white household had “only” six to seven times the wealth of the average African American household.

Divergent experiences with homeownership are among the key drivers of these disparities. For decades, homeownership was how the majority of (white) American families traditionally built their wealth. Discrimination by banks and early federal homeownership programs that began in the 1930s prevented minorities from accessing mortgage financing that enabled white families to build their wealth through housing equity. The Fair Housing Act of 1968, passed in the days following the assassination of Martin Luther King, Jr., made this discrimination illegal, and modest gains in homeownership for families of color eventually followed. Unfortunately, less attention was paid to policing the financial services marketplace, which allowed predatory lending practices and poor mortgage underwriting to spread without oversight. The housing boom burst with the advent of the Great Recession, wiping out significant assets on the family balance sheet.

As the housing market collapsed, Black homeownership rates fell more than non-Hispanic whites’, and their houses lost more value. Last year, the homeownership for Black American households was 28 percent lower than it was for non-Hispanic whites, and many of the gains in Black homeownership since the Fair Housing Act was passed have been erased.³⁶ Additionally, declines in homeownership have been most pronounced for younger Black households. According to the Urban Institute, the homeownership rate for families headed by Black Americans between the ages of 35 and 44 fell from 45 percent in 1990 to 33 percent in 2015, lower than the Black homeownership rate in 1960.³⁷ On top of that, in recent years, only 22 percent of younger Black Americans aged 24 to 34 were homeowners.³⁸

If the rising cohort of young adults, especially those from historically disadvantaged groups, can’t improve their financial balance sheets by earning more, increasing their assets, and lowering their liabilities, their climb up the economic ladder won’t be delayed but rather won’t occur at all. The diminishing prospects for economic mobility have made financial security itself a primary goal for many young adults, rather than the more aspirational features of the American Dream. Absent a concerted policy response, the troubling disparities in wealth and opportunity will persist for years to come.

Constructing a Millennial Policy Response

There’s little doubt that the current political moment presents major challenges in crafting a Millennial public policy agenda. The weakening of norms during a period of entrenched political polarization is undermining our system of governance. Still, there is value in the task of identifying durable policy solutions that respond to current conditions and can be effective when implemented at scale.

As society attempts to grapple with the present and future of this generation, it must bring any social policy ambitions in line with the reality of unprecedented diversity. Policies explicitly designed to create these avenues of economic opportunity for Millennials will be as diverse as the generation. These policies should be expected to increase economic security by creating the means to access educational and training opportunities, grow incomes, and build wealth; additional policies will be needed to support raising healthy families and facilitating civic engagement. This agenda should be ambitious.

We must find more successful ways to support, care, and educate our diverse populations. Given changes in the economy, evolving gender roles, expectations of families and employers, we have new insights into what it takes to build communities of care. There will be challenges and opportunities associated with technological innovation and change. Political engagement will be required to make policy change happen. We’ll need to find better ways to govern the civic spaces where policy and politics meet, especially by including new and diverse voices to help drive this ideas-generation process. For this process to be successful, it will be essential for the young and diverse generation of Millennials to have a seat at the policy-making table. Their time has come, and we all must ensure that it is not too late.