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By Candice Bernd
November 16, 2011
Caption : Saddled with tens of thousands in student loans, lacking job opportunities, and declining home equity, young people face the widest income disparity ever recorded between generations.     

The generational divide has more to do with income and wealth than it does with the old adages about moral decay and the cultural differences of “kids these days.”

According to new data recently released by the Census Bureau and the Pew Research Center, households headed by someone 65 or older had  an average total net worth 47 times greater than a home headed by a person 35 or younger.

That gap is representative of an economic stranglehold that has left young Americans without jobs, accumulating thousands of dollars in student loans, and straddled with bad mortgages. And it shows a much longer trend over time.

“Young adults are postponing marriage … they’re also staying in school longer and both of those things have an impact,” said Richard Fry, one author of the Pew analysis. “Marriage is associated with wealth building and it’s also associated with higher incomes … Similarly staying in school, building your education, that’s a good thing. That’s an investment in the future but it’s sacrificing current income and the potential of savings and wealth building.”

While it’s typical that older households—who have accumulated more in assets over time—have more wealth than younger households, the economic gap between the two has significantly widened.

“That advantage of the young has considerably narrowed where now it’s the case that older households almost have the same income as younger households,” Fry says.

The wealth gap between the younger and older Americans is double what is was in 2005 and five times greater than the 10-to-1 gap documented 25 years ago after adjusting for the another troubling economic factor—inflation.

Today’s gap is the highest disparity between generations ever recorded.

Fry also said there are more minority households among the nation’s younger generations than there was a quarter-century ago, and those minority populations tend to be significantly less wealthy than white households in the U.S. 

Households led by someone 35 or younger also saw their net worth reduced 27 percent in 2009 resulting from unsecured liabilities, researchers found. Those liabilities were most often a mix of credit card debt and student loans.

“A lot of what’s happening here is indeed explained by what’s going on in the housing market. It’s not that older households did not get whacked by the Great Recession—some of them clearly did experience declines in their homes,” Fry said. “Given the fact that they bought their homes so many decades earlier, their wealth, their homes, still even after the recession, they’re still way better off than they were back in the ‘90s and early ‘80s.”

Younger households typically bought their homes more recently after housing values fell drastically during the housing bubble, researchers said.

And changes among older households also played a role in the economic disparity between young adults and older Americans: Fry pointed to data that indicated older Americans are working more and postponing retirement.

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