The combination of a fragile economy, fewer jobs and more college graduates seeking employment has created a substantial net worth gap among American generations, according to a recent Pew Research Center analysis.
The net worth of a U.S. household headed by someone 65 and older is 46 times larger than someone 35 and younger, according to an analysis of 2010 Census data by the Pew Research Center. This number is double what it was in 2005 and far larger than what it was a quarter-century ago.
Someone’s net worth includes the value of their possessions, home, and accumulated savings minus any debts, as stated in the report.
“These age-based gaps widened significantly during the sour economy of recent years,” the research report reads. “But all key trends are several decades old, indicating that they are also linked to long-term demographic, social and economic changes that have affected different age groups in different ways. These changes include structural changes in the labor and housing markets; delayed marriage; delayed retirement; and the changing racial and ethnic composition of the population.”
A new census report from 2010 showed an increase in poverty of adults age 18 to 64 from 13.7 percent to 15.2 percent. Part of the reason for this large gap in net worth is the debt amount accumulated by the younger generation.
Credit cards made their first appearance in the early 1900s as proprietary cards, Stan Sienkiewicz wrote in a paper for Discussion Paper Payment Cards Center. They became popularized as general-purpose cards in 1966 and by 1995, about 65 percent of households had at least one credit card. For many people, including Justin Emord, credit cards lead to debt and an overall lowered net worth.
Graduating senior and communications major Justin Emord said after graduation he will be going on tour with his band, Love and a 38.
Though he aspires to continue playing bass with his band, he said he is “trying to think smart and play (his) cards right if the music career doesn’t work out.”
“It’s really unfortunate,” Emord said of the current economic status for graduating students and college students in general. “Especially how difficult it is for us students with tuition, including classes not being available. Students are struggling much harder to get degrees than they used to. It’s hard to get into the workforce with no jobs and will have to go into retail since that’s all that’s available. They struggle to pay the bills.”
Emord said he uses a hefty student loan to pay for school, and had to put this current semester’s tuition on his credit card because he couldn’t receive the loan for the Fall semester.
“It’s gonna be tough with the lack of jobs and jobs only paying minimum wage,” Emord said.
Anthropology major Randi Boord is a graduating senior who currently works at Target while in working on her degree.
She said she doesn’t have any plans if her career choice as working with cultural resource management or a museum doesn’t work out, however she is worried about this gap in generational wealth and its effects.
Boord currently does not have any loans or debt to pay off since she pays her credit card bill in full; however, she said she doesn’t want to work at Target forever.
“Upon graduation, your most valuable asset is your human capital – what you are worth in the labor market,” CSUN economics professor Shirley Svorny said. “You have just made a substantial investment in your human capital by going to college instead of working, and paying tuition, etc., and you are set to start earning the return on your investment in yourself.”
Svorny’s advice to students is to choose a career that they will enjoy and allow them to support his or herself, taking into consideration how much they value wealth in accordance to hard work.
“I do feel you have a responsibility to secure work that will sustain you if you are able to,” she said.
For more features from this semester on student finance issues, follow the link.