Young adults are poor despite every metric which suggests otherwise

302 1,440 8,022 4,027,188 A recent article from The Cut received a huge amount of attention: ‘It’s Hard to See My Parents Live So Lavishly While We’re Struggling’. The piece includes vignettes of Millenial hardship: …his dad, Steve, sold his company to a private equity firm about five years ago, which enabled him to retire comfortably in his mid-60s…Two years ago, Joe asked his dad for a loan. He wanted to start a lawn-care business and needed capital for commercial-grade equipment and a trailer, at least $15,000. He presented Steve with his business plan, which included a schedule to pay back the money. Still, Steve said “no.”… Joe hasn’t started the business. He works for a property-management firm and does landscaping work on the side to bring in extra money. But he has two young kids of his own and finds it difficult to save. “Without some initial help, it’s pretty unrealistic that I’ll ever be able to go the entrepreneurial route,” he says. Steve, on the other hand, thinks he’s teaching his son a valuable lesson on self-reliance. “It’s not that I can’t afford to help him,” Steve told me. “I just have a real problem with handouts. And I want him to have the satisfaction of knowing he’s built something himself, with his own hard work. That’s how I was raised, too. The virality of this piece prompted a discussion between Louise Perry and Rob Henderson: ‘The politics of the downwardly mobile class’. Rob disagreed with the Cut article’s perspective: The way that this article is written, it’s intended, I think, to convey that millennials are really struggling… but, generally, Millennials are doing just fine.

And even the link to the US GAO that they cite says that Millennial households were more likely than other generations to be college educated… incomes have remained flat across the three generations… There was an article a couple of years ago from Jean Twenge in The Atlantic showing that Millennials are doing just as well as previous generations were. I disagree! I think that Millennials and Zoomers are not doing fine. In fact, I think there have been structural changes to our economy and society which clearly explain why these cohorts are failing to move through the five pillars of a stable middle-class existence: education, stable employment, marriage, homeownership, children. Some of these negative changes stand out in the normal datasets, while some do not, for reasons I will explain. In short, what has happened is that previous generations were able to take advantage of highly valuable and productive social capital as well as their exploding financial capital to move through each of these life stages in a fiscally efficient manner. (Don’t worry: I will define what I mean by social capital and back my argument with data). Our current young, lacking access to this social capital, must engage in enormous outlays of purely financial capital in order to achieve the same levels of stability and accomplishment — capital that they do not have. We see this clearly in the data on schooling, homeownership, and family formation. All of this is hidden from the top-line metrics, usually in one of two ways: Huge increases in the cost of essential aspects of family life (homeownership, education, etc.) being offset by huge decreases in the cost of non-essential goods (televisions, phones, etc.) making the young appear wealthy in the abstract but without them actually being able to afford anything meaningful; By presenting false equivalencies which imply a level of choice that younger generations do not actually have. For example: an American family in 1975 could send their children to public school on the assumption that the vast majority of other children would belong to intact families, communities like their own, and would speak English as a first language. Now, realistically, many parents must turn to private schooling for the same reassurances. On the surface it does seem as if the young are fine.

Real median incomes are higher than they were for their parents at the same age, unemployment has spent most of the past decade at historic lows, and purchasing power has risen roughly 63 percent since 1973. Televisions, clothing, food, and air travel are cheaper than ever. And yet this generation is also not marrying, not buying homes, not having children, and seem pretty miserable. I think we’re clearly in the midst of a tremendous measurement failure. My argument is that previous generations received an enormous stock of social capital: trusted neighbors, functional public schools, a productive courtship culture, predictable career arcs, and a public square in which children could roam and adults could be relied upon. That stock, once given for free, has now been substantially liquidated. Instead, the young must now buy back, item by item and at retail prices, what their grandparents received as a bounty of prior civilizational investments. The young must do so out of incomes that rose modestly while the prices of the essential elements of life rose radically. Price indexes measure the individual cost of discrete goods, but they are not intended to convey the total cost of personally repurchasing a destroyed commons.

This type of failure is well understood as a threat in economics. The old joke is that when a man marries his cleaner, the GDP of both households collapses even while the actual labor being done remains the same and everyone is better off. In our case, we’re seeing the opposite: a thousand small divorces and social fragmentations which boost the appearance of GDP but leave everyone poorer in reality. Occasionally, researchers succeed in capturing and modelling these hidden transitions, and we get a glimpse into the deep faultlines under society — direct evidence that official measures miss what households actually feel. In 2024, for example, a compelling study by Lawrence Summers and colleagues showed that the gap between depressed consumer sentiment and cheerful official statistics closes once borrowing costs (excluded from the modern CPI but important for family finances) are counted as part of the cost of living. The consumers were right. What actually got cheaper over the past fifty years? Electronics, entertainment, fast fashion, processed food, toys, screens of every kind. And what got more expensive, usually by many multiples? Housing, education, childcare, healthcare, insurance. Absurdly, both of these movements register in the statistics as progress: one shows up as asset appreciation and the other as consumer surplus. But the lived reality for families feels like a pincer. Housing is the least ambiguous case. At age 30, 55 percent of the Silent Generation owned homes. For Boomers the figure was 48 percent, for Gen X 42 percent, and for Millennials 33 percent. The national ratio of median home price to median household income, which stood around 3.2 through the 1990s, reached 5.0 in 2024, nearly matching its all-time high. The median age of the first-time buyer, 29 in the early 1980s, hit a record 40 in 2025. Whatever supposed wage gains the young have enjoyed, housing claws most of them back before they can be converted into anything durable.

Significant changes in rent have made this worse. The standard escape from renting is saving for a down payment, but soaring rent has made saving near impossible. Roughly half of all renter households now spend more than 30 percent of their income on rent and utilities, the federal threshold for being “cost-burdened,” and more than a quarter spend over half. Layer exploding student debt on top — of which more below — and you get a class of people in permanent limbo. One rebuttal you hear to this predicament concerns square footage. The line is that due to consumer preference, houses today are larger than the bungalows of 1955, so price per square foot has risen less than price per house; the young, the argument goes, are demanding more luxury and are pricing themselves out of the market. This is unconvincing on two counts. First, the market barely offers the smaller option: zoning regimes across the country make it easier to build large houses than small ones, and buyers who would prefer modest homes in decent areas frequently cannot find them. Scott Alexander described living alone in a three-bedroom house in Michigan because no acceptable one-bedroom existed near his workplace and the apartments were (his words!) ‘loud and crime-y’. I think this latter point is a generalizable pattern. As Mr. Alexander discovered, the added, expensive square footage — like private school — is a hedge against public dysfunction and is another example of a replacement purchase. The over-priced neighborhood is perversely desirable when pricing is the only legal means of discrimination in an increasingly dysfunctional society. Free childhoods disappeared alongside the loss of something harder to measure: the trust that makes a child outdoors seem normal rather than negligent and the local conditions that once made such trust reasonable. These conditions - like many other kinds of social integrity such as intact two-parent homes - have become aggressively sorted by class… The childhood depicted in nostalgic media rested on a dense web of adults who knew each other, shared a rough moral sense, and could be relied upon to mind each other’s children. That web is now a feature of particular places (often expensive places) rather than a general inheritance, and discerning which places have kept it is of key importance for families hoping to raise agentic children with deep networks of trusted friends.