
Net worth of Americans aged 18 to 35 has dropped 34 percent since 1996: study - joeyespo
https://thehill.com/policy/finance/446372-net-worth-of-americans-aged-18-to-35-has-dropped-34-percent-since-1996-study
======
lettergram
I suspect that a large part of that has to do with student loans, which have
grown by a huge multiple since 1996. With compounding interest it takes longer
to recover from school.

I know I graduated with $75k loans at 8% interest. Even with say, a $100k
salary, just the interest eats ~7% of the income. With the total payments
being somewhere around 12% of your income. Combine that with increased taxes
over the same time and a 34% reduction in worth seems about right (if we
account for the loss in compounding interest from buying a home, 401k
investments, etc)

~~~
badpun
The 8% interest on the loans seems high to me. Around here (Poland), a
standard credit card is at 10% interest, and student loans should be much
safer for the bank.

~~~
joehandzik
It's true. I may have actually been higher for some loans until I got a couple
of promotions and had enough of an income increase to be able to refinance to
a 5 year 4.75% loan at SoFi. Which itself still feels high as you watch DAILY
interest compounding happen.

I lean fairly liberal, but I think we can make significant strides with this
issue in the US by simply changing what max interest rates are and how this
interest compounds. The way things work right now truly feels like robbery
when you're in the thick of it.

~~~
burfog
We could limit max interest rates. If that had been in place, your loan would
have been denied. Would that have been better for you? Might you have then
chosen to get an illegal loan at an even higher interest rate from organized
crime, with a risk of violence for non-payment?

------
challenger22
[https://www.statista.com/statistics/184272/educational-
attai...](https://www.statista.com/statistics/184272/educational-attainment-
of-college-diploma-or-higher-by-gender/)

The percent of people who have completed a 4 year degree has been on a
continual increase.

This will drag down the net worth of young folks who give up working years and
take on a debt load.

~~~
jessriedel
Another, more optimistic way to describe it is that students are spending more
of their wealth to invest in their own human capital, which isn't measured in
statistics.

~~~
rukittenme
Reminder to those down voting this comment. Down votes are for people _not_
contributing to the discussion in a meaningful way. They are not for
expressing disagreement. Use the reply button if you disagree with the parent
comment.

~~~
gnicholas
Is downvote the opposite of upvote? It seems that people upvote comments that
are helpful/insightful and that they agree with.

Because upvote and downvote seem like they would be opposites, it's not
surprising that people might focus on the negative of "I agree with this
comment" instead of the opposite of "this comment is helpful/insightful". The
former is easier to measure than the latter.

~~~
jessriedel
pg has in the past explicitly endorsed the idea that votes should, to some
extent, reflect agreement/disagreement, but he's making a mistake. He has also
correctly said the votes should answer the question "do we want more of this
on HN?" since that's functionally what they are used for. If anything, we
should err on the side of upvoting thoughtful things we disagree with, rather
than agree with, since we learn more from that.

------
posbehsf
I sometimes wonder what it would take for “yellow vest” type protests to
happen in the US.

It seems like there’s a combination of shame in talking about money, in being
made to feel personally responsible for being in precarious financial
situations (e.g. too much avocado toast!), and relatively easy access to
consumer credit to numb things over. Or it’s just the “boiling frog”
phenomenon where things get slightly worse every year due to everything
getting a little more expensive but never sharply enough that it’d create a
mass revolt.

~~~
user17843
It already happened, and was called "Occupy Wallstreet". Then identity
politics came around and occupied the left.

~~~
spamizbad
All politics is identity politics. The difference is the left embraced it
without trying to sugar coat it.

It’s too bitter and now there’s some backlash.

~~~
whatshisface
> _All politics is identity politics._

That's only true if you define the term broadly enough to be useless. What
about, say, anti-war demonstrations during Vietnam?

~~~
spamizbad
It’s less literal than that.

You can think of the whole cosmopolitan urban vs salt-of-the-earth rural
aspect of American politics as one example. Or southern identity/culture. “As
a veteran who served”/“As a parent”, or the cross-denomination “moral
majority”— it’s all based around the idea that your lived experience as
_something_ shapes your political perspective and is intrinsically valuable to
the political conversation.

And even Occupy: was occupy simply making a statement about economic politics
or was it the identity of “the 1%” or “Bankers” vs the rest of Americans?
These categories were somewhat arbitrary and basically represented which group
you identified with.

~~~
whatshisface
That's what I mean by defining the phrase so broadly it becomes useless. You
can say, "I am, and I have an identity, therefore my politics is identity
politics." However, identity politics is specifically when the tribal
motivations exceed and dominate all other motivations. It's similar to how
islands are not called bodies of water even though soil contains water.

~~~
spamizbad
> However, identity politics is specifically when the tribal motivations
> exceed and dominate all other motivations.

Then the term "identity politics" shouldn't be applied. But even if we accept
that extremely narrow view: there are numerous political segments that are
notorious for doing what you describe across the political spectrum. Most
notable the rural Scotch-Irish, often criticized for routinely voting against
their self-interest and instead choosing to vote for pols who simply provide
them cultural validation and do nothing to address their material concerns.

------
YeahSureWhyNot
Here in suburbs of New York, if you have no college degree, most of jobs will
pay you $12/hr, some decent employers will pay $15/hr but if you get lucky and
have some useful experience you can find something for $18/hr which result in
around $2400 paycheck every 4 weeks of work. Most 1br apartments are around
$1500/mo. Car (Lease+Insurance+Gas) is $500/mo roughly. After groceries there
is literally no money left to go out. How the fuck are we supposed to build up
net worth?

~~~
jogjayr
Why would someone making $2400/monthly after taxes rent a $1500/mo apartment
on their own? I'm not sure they'd even qualify because most landlords require
at least 2-2.5x gross income. Renting a room with other housemates, or
splitting rent on a 1-bedroom with a partner/SO is probably a better idea in
that situation.

~~~
StanislavPetrov
Because card board boxes are very cold in the winter.

------
losvedir
First, "dropped" is sort of a misleading term since it's not saying anyone
actually has _lost_ money. Rather, the cohort of Americans in that age group
has less money than previous cohorts did at that age.

Second, 18 to 35 is sort of a crazy range, it seems to me, since the net worth
of the group is likely going to be dominated by those in their 30s who are
mid-career.

Lastly, it's unsurprising that those who began their career in the throws of
the 2008 collapse were stunted, relative to basically any other group.

~~~
eganist
> Second, 18 to 35 is sort of a crazy range, it seems to me, since the net
> worth of the group is likely going to be dominated by those in their 30s who
> are mid-career.

And yet, it still

> has dropped 34%

If you break it down to two sub-demographics, I suspect there'd be an even
larger disparity within e.g. 18-25 than there is with 26-35 for reasons such
as student loans, but 18-35 would seem appropriate for what's perhaps an
overgeneralized view of when most career trajectories and preferences
plateau/harden.

Not sure if it's at all related to the key TV demographic of 18-34, but that
wouldn't surprise me either for largely the same reason (hardening of
preferences).

But I think that's kinda the point. People were previously building more
wealth at a time in their lives when said wealth would have a more profound
impact as they approached retirement age some number of decades later. The
current generation occupying that demographic has been tragically stunted by
stagnation in wage growth + inflation of education charges, and here in the
United States, this may well impose a cascading detrimental impact on the
health of the economy as a whole.

~~~
losvedir
> _If you break it down to two sub-demographics, I suspect there 'd be an even
> larger disparity within e.g. 18-25 than there is with 26-35 for reasons such
> as student loans, but 18-35 would seem appropriate for what's perhaps an
> overgeneralized view of when most career trajectories and preferences
> plateau/harden._

My point is exactly that I _don 't_ think it's likely that 18-25 would show an
even larger disparity, since my suspicion is that the disparity is driven
entirely by those who began their career during the Great Recession. 18-25
year olds, who began their career as the economy was heating up, wouldn't show
the same. But I'd love to see the data to know if that's the case.

------
war1025
Note that in the article it says the avg net worth is now around $8000, which
means 34% more is only ~$11,000.

That's noticeable, but still not really as a big of a drop as 34% makes it
sound.

~~~
ibarea277
I'd almost be more interested in the change in variance across time. If
education costs are the main factor, and the top 10-20% (? estimate) have
parent's who pay for college, you'd think this might be yet another factor
exacerbating inequality.

~~~
war1025
I'd also be much more interested in a more detailed net worth distribution
over time. Reminds me of the quote Nassim Taleb is fond of, "Never cross a
river that is on average 4 feet deep".

------
armenarmen
It’s almost like giving 18 year olds unlimited access to debt for unmarketable
degrees was a bad idea!

~~~
4ntonius8lock
It's almost as if guaranteeing loans to for for profit institutions which
receive the money that is printed out of thing air is going to exacerbate
social inequality!

Don't get me wrong, 18 year olds are generally stupid (I was at that age), but
blaming them seems like the kind of thing the profiteers from this mess would
want. It's also not a very logical position. It's almost as if this type of
idea would be something a propagandist would want to disseminate.

~~~
armenarmen
I think we’re on the same page here. To really stretch an analogy, if I were
to leave a taser with a small child they shouldn’t taser themselves, but I’m
clearly (and Unironically) the asshole for giving them the taser.

------
hprotagonist
I am simultaneously feeling privileged and horrified. My net worth is
substantially above $8k, i have a reasonable income, and i’m feeling stressed
about money most days and will remain unable to buy property in the city that
has the best and most jobs for my profession for the foreseeable future.

~~~
glitchc
There is nothing preventing you from exploring. You can be a big fish in a
small pond. And because they know your worth, they won’t treat you as
disposable.

~~~
hprotagonist
True enough, but i’ve made a home and a life here, and my niche is small
enough that network effects matter a great deal.

------
nojvek
It blows my mind away that in America student loans have a higher interest
rate than car loans and housing loans. That’s a country intentionally ruining
the next generation’s chance of making the county better.

Coming from Australia, this really makes me cringe.

~~~
IkmoIkmo
Just cause of collateral. You can impound a car, foreclose on a mortgage, sell
it and get back much or most of your money, which is why rates can be a lot
lower. You can't compound on a college dropouts partial knowledge. And given
there are various ways to get the loan forgiven, and with college dropout
rates being as high as they are, and given the (popularity and) volume of
degrees with low financial returns...

Fact is, most studies show that the returns on education in the US are quite
high, higher than much of the rest of the world.

Where I am from (EU), you're not dissuaded to pursue a degree with low
financial returns. My college fees are 10k in total for the entire
bachelor+master's programme, and you can borrow 50k during those 4 years
currently at 0% interest. I love it, but our returns on education are quite a
bit lower than in the US because we subsidise things that don't work, or
prevent it from failing, and incentivise people to study things they don't
need or have no economic value. And it doesn't necessarily make the country
better off.

I'm not saying economic value is the only metric that counts, there are other
reasons why I'm in favour of pretty strong educational subsidies. But there's
also benefits to the US system too that we don't have. And it's too easy to
say the US is intentionally ruining the next generation, that's just not true.

~~~
samhain
>Just cause of collateral. You can impound a car, foreclose on a mortgage,
sell it and get back much or most of your money, which is why rates can be a
lot lower.

If it follows that the interest should be higher on a more risky investment,
then why are student loans (that are unforgivable) not essentially free? As
they should be basically a zero risk investment since they follow the person
around forever, through bankruptcies etc.

~~~
IkmoIkmo
Unforgiveable doesn't mean it'll be paid back. If someone goes bankrupt and
can't forgive a loan, it's more likely that they'll continue to miss interest
payments while also never paying back the principal, which just keeps building
up. Typically loans line that get written off internally as a loss, or sold at
a loss to a debt collector, even if the loan isn't forgiven to the borrower,
it'll be a loss and therefore a risk event for the lender.

------
ahmaman
These numbers makes me wonder if the gap among young people also is growing.
Meaning we have more poorer and richer young people than "middle-class" young
people!

~~~
bduerst
I would also like to see the distribution, since the metric in the article is
average. My guess is that it's flatter or more spread, like you say. It's not
that the average worth has dropped, but the worth gap has also grown.

------
crisdux
Along with older retirees, younger generations seem to be supportive of
distributive policies that are going to tax them more during their highest
earning years and shift more wealth to other groups.

I don't see this trend changing anytime soon without more fundamental change.

------
austincheney
I have much greater income security and compensation than my parents achieved
and at a far younger age despite having less education. The biggest difference
is a practiced skill. It takes lots of time, often without compensation, to
build a desired skill.

------
spaceflunky
Why even bother including 18-22 year olds? Almost all of them have zero to
negative net worth.

------
jddj
The bank shown in the article's photo is (somewhat lazily) Australian.

To clarify a bit: The photo doesn't seem to appear in the article itself, but
in RSS feeds and on the article index.

------
diveanon
I am interested to know how much of that is voluntary.

I willing left the tech scene in order to pursue my passions and my net worth
has significantly decreased.

It was the best decision I have ever made.

~~~
l8nite
I'd love to hear more, have you blogged about it? :)

~~~
diveanon
Not really, but the short of it is that I gave up my career as a successful
software dev in the bay area and sold everything I own to work in diving.

I used to hate getting up in the morning and was consumed with stress about
trivial work bullshit. These days I work in the South Pacific and split my
time between environmental projects and training new divers.

It's not going to make me rich, at all, but I honestly don't care. I would
trade the decade I wasted in front of computer screens to have started doing
this a few years earlier.

------
newshorts
34% is a lot of a avocado toast.

I suspect there are other economic forces at work to cause such a drop. I just
can’t think of what they might be.

------
tracker1
Most financial growth comes from home ownership/equity. The debt from student
loans has also skyrocketed in line with tuition rate increases since around
that time. Those to factors probably account for all of the difference.
Starting off deeper in debt with debt that doesn't lead to equity gains for
most people.

------
m3kw9
Money that went to the corps that is constantly improving their targeted
advertising and increasing converting them.

------
narnianal
On one side it's depressing, but on the other side it's not as harsh as media
wants us to believe in recent years. -30% is not "one house and 2 cars less
than the parents", as many articles claimed over at least 2018.

~~~
pojzon
It just shows how extremely hardworking those young people are. Its
effectively harder to earn good money now than 25 years ago.

And thats after two major economy collapses.

Despite all odds against them, they dont give up, yet still get shorter stick.

~~~
JimiofEden
And the media rails on them nonstop for no particular good reason other than
'That darn younger generation!'

------
sytelus
TLDR; _Education expenses have climbed 65 percent in the past decade. Food
costs have jumped 26 percent, health care is up 21 percent, housing jumped 16
percent and transportation rose 11 percent. And there are now expenses that
most consumers didn’t have to account for 20 years ago, including smartphones
and data plans._

Better link:
[https://www.washingtonpost.com/business/2019/05/31/millennia...](https://www.washingtonpost.com/business/2019/05/31/millennials-
have-an-average-net-worth-thats-significantly-less-than-previous-generations/)

~~~
isostatic
Smart phone rubbish again. Kids today don’t need to pay for a landline. Or
cable. Or cigarettes

------
ronnier
There's a huge demographic shift in America. Do we expect things to remain the
same?

------
simplecomplex
Not a surprise when you consider that more people are spending money to go to
college, where they are mostly taught to be poor (spend money on school, rely
on a job for income, spend your money on a house, do what you love, etc.)

------
User23
This is highly misleading, the demographics of the USA were quite different 23
years ago which means that 18-35 cohort of today isn't comparable to the 18-35
cohort of 1996 in any coherent way. These changes can only be understood in
the larger context of a dynamic system, not just comparing static snapshots.

~~~
ajmurmann
Can you elaborate more on how you see the demographics to be different?

------
MagicPropmaker
Is there a solution to this "problem" that doesn't involve taking the hard-
earned wealth away from people 55 and older who carefully planned and saved so
they can enjoy themselves?

~~~
b_tterc_p
You say that, but the reality is that the 55 year olds are largely doing the
opposite, taking from the young and healthy to support their Social Security
benefits, their insurance, etc.

~~~
Falkon1313
The 55 year olds aren't taking from the young via Social Security and
Medicare, they already payed in and are still paying in. The 65+s also already
payed in and they're just getting back what they paid for.

------
pablooliva
College debt is one of the reasons that decided to leave the U.S. After I saw
the injustice of the federal gov't bailing out morally corrupt banks and Wall
St. institutions circa 2008 while leaving me to hang by my college debt, I
said enough. One of the best decisions I ever made. Gave me perspective, gave
me freedom. The U.S. is giant penal colony.

~~~
Waterluvian
Did you pay it off or was leaving the country a form of abandoning your debt
responsibility?

Don't get me wrong. I think it's insane to have an education system this
dysfunctional. I think some people get institutionalized and just kind of see
college debt as how the universe works.

~~~
pablooliva
I have partially repaid my loans, but now I have been postponing the
repayments while I struggle with the idea of defaulting. I feel guilty doing
so, but I also think that when I took on the loans I was too young to
understand the implications and, as you mention, was "brainwashed" into
thinking this was the only way to go. My family was too poor to pay for my
college, so this was my only "choice." So while large corporations and the
rich can privatize gains and socialize their costs, we peons are on the hook
100%, with a large predatory capitalist system stacked against us.

------
readhn
UNREALISTICALLY HIGH REAL ESTATE PRICES.

Single biggest purchase and wealth building instrument is buying REAL ESTATE /
HOUSE.

Most millennials are not leaving on the streets homeless. They are paying high
rent prices = money wasted = money that could have been going towards building
their wealth long term, towards their homes.

High education costs prevented them from buying homes early which in turn
impacted their net worth long term.

Simple example: If you buy a house in an average area when you are 30 - by 35
you have at least $50,000 that you paid towards your net worth (assuming very
budget 1000/month mortgage).

Whats happening instead today? High housing costs and debt load from education
prevent younger generation from bulding their wealth early through real
estate. Something previous generations enjoyed.

We need more affordable housing, we need to change building codes and zoning
laws to allow construction of affordable homes easily (that younger
folks/families/singles can afford to buy). We need to build out
infrastructure!

~~~
simplecomplex
A home is not necessarily an asset or wealth. For the vast majority of
homeowners their home is their largest liability (it costs them money).

The idea that spending money to buy a home is “building wealth” is incredibly
stupid. It’s bad advice for everyone but a real estate agent.

~~~
readhn
"A home is not necessarily an asset or wealth."

a home IS an asset and wealth. it is only a liability on volcano's path on big
island/Hawaii.

~~~
simplecomplex
What kind of backwards finance is that? A house costs money, it doesn’t earn
money.

An asset it something that makes you money, like rental income from rental
properties, profit from a business or investment, stocks, or bonds.

A liability is something that costs you money. A house to live in, apartment,
a car, healthcare, food, etc.

~~~
lazyjones
You've taken "Rich dad, poor dad" too literally it seems. A house can be an
asset or liability, depending on its use. If you live in it, it certainly
earns you something, it replaces the need for renting a space to live in. If
you own it and don't use or rent it, it can be a liability if it's not even a
suitable investment vehicle (e.g. with stable or falling prices).

~~~
dragonwriter
> A house can be an asset or liability, depending on its use.

A house, _per se_ , is an asset. It may or may not have liabilities attached
to it. (Or produce maintenance expenses, which is a different thing
altogether.)

> If you own it and don't use or rent it, it can be a liability if it's not
> even a suitable investment vehicle (e.g. with stable or falling prices).

You seem to have confused a depreciating asset with a liability.

