Karsyn Lemmons

Millennials and Gen Z are commonly referred to as the ‘entitled’ generations by Gen X and Boomers. They are often accused of wanting more than what they’ve earned and desiring excessive compensation for less strenuous work compared to previous generations. We see ideas like this expressed in Business Insider and Fox Business. Yet, on the other hand, many millennials and gen z workers might suggest they feel they are working both smarter and harder than their elder counterparts.

Where does the truth lie? Do millennials and gen Z want success handed to them? Or are younger generations simply not getting the credit and compensation they deserve? Or perhaps there another reason for this disagreement between generations?

This data blog post will propose an explanation by analyzing a number of contributing factors as they’ve evolved over recent decades – including US median household income, attainment of advanced degrees, and factors that contribute to the cost of living. By the end of this post, I will answer ‘just what the deal is’ with millennials and gen Z.

1. Setting a Baseline

First let’s set a baseline understanding for Boomers and Generation X in order to comprehend their point of reference when comparing their experience to others. This involves looking closely at degree attainment and median income levels in the last part of the 20th century.

Reflecting on the rates in which higher education degrees were awarded, the graduating class of 1989 was the first year that more than 1,000,000 bachelor’s degrees were awarded to students across the US. That same year, approximately 300,000 master’s degrees were awarded along with 100,000 doctoral degrees.

Dissecting the chart above, we see that the US median income sat at $11,196 in 1974 and rose by approximately 3.5x by the end of the millennium to $41,988. At first glance this seems incredible. However, when adjusted for inflation, this same information translates to an average annual income of $56,640 in 1974 and $67,470 – a rise of only $10,830 real dollars across a quarter of a century.

We will review both of these charts in an expanded format in a following section.

2. Trends over the Years

Entering the 21st century, there was a significant shift emphasizing the importance of a college degree for achieving success in the job market and improving one’s financial income. This trend was driven by the Digital Revolution and the expansion of the knowledge economy, which favored information-based services and technology skills, necessitating higher educational qualifications.

Economic data from the College Board during this period showed that higher educational attainment correlated with lower unemployment rates, reinforcing the value of a college degree. Additionally, societal narratives supported by media and educational policies promoted college education as essential for career advancement and economic stability.

The influence of technology and globalization also necessitated more advanced technical and analytical skills, with industries such as IT and finance requiring higher levels of education. Government initiatives to increase access to higher education, including expanded financial aid and federal student loans, further encouraged high school graduates to pursue college degrees.

Overall, these factors combined to create a strong push towards higher education which is reflected in increased college enrollments and the growing societal perception that a college degree was crucial for career success.

What effect did this have on the newest generations?

As depicted in the chart above, the incline of students awarded bachelor’s and master’s degrees has a minor yet notable increase beginning in the early 2000s, likely due to a culmination of factors discussed thus far. While from 1981-2001, the number of bachelor’s degrees awarded only rises by approximately 400,000 degrees, the following nearly two decades (2001-2020) witness almost double that, with bachelor’s degrees awarded going from 1,244,171 in 2001 to 2,038,431 in 2021 – an approximate 800,000 increase. Similar trends are displayed in both master’s and doctoral degrees awarded as well.

The chart above shows a sharp rise in US median household income and at first glance seems like an exceptional advancement – $11,196 in 1974 to $74,580 in 2022 seems like a true testament to American progress . Once the numbers are adjusted for inflation however, we see that overall US income has risen by approximately $18,000 in the last half century.

3. That’s Enough, Right? Younger Generations Have It Easy! Well, No. Let’s Talk About Why.

More Americans than ever have advanced degrees. And salaries are higher. So why aren’t millennials and gen Z doing better in life? After all – better education leads to better income and better income leads to better life outcome.

For a great variety of reasons, the statement I just listed can be (and deserves to be) disproven. For the purpose of this blog post, we’re going to look at two major contributing factors that I believe impact the overall outcome of these new generation’s livelihoods – rising college tuition costs (as well as presumed needs for financial aid being that 70 percent of students who receive a bachelor’s degree have education debt by the time they graduate) and the rising costs of home buying.

I’ve said it before and I’ll say it again. More Americans have degrees than ever before. But more Americans (particularly millennials and gen Z) have more student loan debt than ever. While obtaining a university degree became more accessible in recent decades, so did access to federal student loans. And as more students enrolled in university, tuition costs continued to rise. Now a millennial or gen Z college graduate may have the same degree as previous generations, yet paid on average anywhere from 2x-4x for the same education.

Buying a home today is much different than in years past. In 1980, the average annual income was $17,709 and the average house cost $55,074, making it 3.1x the average American’s income. Similarly in 2000, the average income was $41,988, and the average cost of a home sat at $131,520, making it 3.13x the average annual income. If this trend was to remain steady and match the 2022’s average annual income of $74,580 then a home would cost approximately $232,316. Instead, the average price of a home in 2022 was $354,723, a whopping 4.76x more than the average American’s annual income and $121,957 higher than what trend lines would have projected decades ago.

The rising cost of housing, coupled with the cost of paying down student debt are only two factors that play into the reasons that younger generations might be justifiably frustrated by financial hurdles as they attempt to achieve certain life milestones.

4. So Where is the Disconnect?

Ultimately, yes, younger generations ARE making more money than the generations before them. And perhaps this is where older generations found millenials and gen z to be entitled, thinking “these new workers make more than I did when I was their age and I was able to purchase x,y,z and build a life for myself. Why can’t they do the same?” And older generations can’t be blamed for this type of thinking – it sounds rational. But it fails to take the bigger picture into account. While salaries are higher now, it is still outpaced by inflation, with the rising cost of major purchases such as housing and college tuition amongst many other factors. The dollar amount being paid out today is higher but ultimately possesses less spending power. Inflation, you foul beast.

For education – who can blame Boomer and Gen X generations for wanting their children to get an education? It does – overall – improve the earned income of the average American. However, there is certainly room for a number of Americans currently fighting to pay down student debt who might return with the argument of “yes, but at what cost? If I make $10,000 more per year but have to pay down $100,000 worth of student loan debt in the meantime, do the ends justify the means?” It’s definitely a factor to consider as part of the bigger picture.

5. Are Millennials and Gen Zs Working Smarter AND Harder?

Working smarter? Yes. It’s clear in the charts above that there are more Americans with various levels of higher education working now than ever before. Despite the fact that a large portion of careers now have bachelor’s degrees as a baseline for entry, the job market is now a space where more and more people have advanced degrees yet they simply aren’t valued as much as they might have previously been. And definitely not as much as younger generations have been led to believe.

And working harder? Most likely – especially if they expect to hit the same milestones as previous generations on previous timelines. Either that or millennials and gen Z must come to terms with the fact they may have to readjust the expectations for their life – buying a house, owning a car, having a big family, going on trips, etc.

To conclude, millennials and gen Z are still not making enough to outpace inflation and therefore are being excluded by an economic landscape that prohibits them from using their income to make similar purchases along the same timeline as the generations before them EVEN WITH technically higher salaries and more advanced educations.

Answer: To achieve the same as generations before them – Millenials and Gen Z have no choice but to work smarter and harder.