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 by Steven Koczak, Ph. D., Program Research Specialist
A core principle of the “American Dream” holds that each successive generation will be better off financially than the one before it. This sentiment seems deeply embedded in the American psyche.
However, this key aspect of the American Dream has been called into question in recent decades. For example, several studies from the 1990s and early 2000s suggested that Baby Boomers (people born 1946-1964) would be left behind relative to older generations.
Despite these concerns from 20-30 years ago, Boomers appear to have done fine — to the point that the Boomers are now poster children for the idea of a generation that has done well for itself at the expense of future generations. Today, the concerns held about the Boomers 30 years ago have been transferred to their younger children or older grandchildren, known as the Millennials (people born 1981-1996). Here, we review some studies that investigated how the financial health of people from different generations varied over time.
The Measurement Problem
In 1992, University of Michigan economist Gary Solon noted: “Given the widespread concern about intergenerational mobility, it is astonishing how few attempts have been made to measure the simple intergenerational correlation of income in the U.S.” Since then, many articles have been written on the topic using data from such sources as the Panel Study on Income Dynamics, the Survey of Consumer Finances, Current Population Survey income data, tax liabilities, home ownership, or other measures of accumulated household wealth.
Analysts have used different methods to try to measure the intergenerational movement of wealth or the lack thereof. The studies reviewed for this article were written from the early 1990s to earlier this year. Perhaps the most-accurate summary of the relevant research is that the results, in both broad and specific terms, depend a lot on the data sources and analytical techniques used.
A 2014 review of various studies published in the “American Economic Review” also pointed out the variety of research findings. The review highlighted how rising inequality has made “the consequences of the ‘birth lottery’ — the parents to whom a child is born” — more important than they once were.
The Problem of Millennials
As noted above, once upon a time it was the Baby Boomers’ ability to exceed their parents financially that was the focus of concern. That concern has now passed to the Millennials, who are a mix of the youngest children of Baby Boomers and the oldest children of Gen X (people born 1965-1980). The present concerns about Millennials’ economic progress tend to revolve around several key issues, including:
- Their income level relative to their large amount of student debt
- Their seeming tendency to rely economically upon their parents more than earlier generations
- Their relative lack of home ownership
A January 2023 article appearing in the “Washington Post” referred to the Millennials as the “unluckiest generation.”
Other Studies
A 2019 study published by the Government Accountability Office (GAO) came to various conclusions about generational mobility. In general, it mostly agreed with what was related above — the results depend a lot on data sources and analytical techniques used. They also found that a greater relationship between the wealth or income of children and their parents exists than one might think. On multiple occasions the GAO report refers to income as “flat” across the Millennials, Gen X and the Baby Boomers.
The primary aim of the GAO study, though, was to examine the economic position of Millennials. They found Millennials were burdened by low “net worth” (assets minus debt), low rates of home ownership and high student debt compared to previous generations. Though, befitting their relatively high student debt, Millennials were found to be more likely than prior generations to be college educated.
The Population Reference Bureau (PRB), a private, nonprofit research organization, came to mixed conclusions in a January 2024 study. They found that, even with regard to Millennials in particular, the conclusions could differ widely depending on the data and methods one uses. On the positive side, the PRB found rising median incomes and lower gender pay gaps relative to prior generations. On the negative side, among other things, they found higher incarceration rates, lower home ownership rates and higher proportions of income spent on rent.
CAP Study
An analysis of Federal Reserve data published earlier this year by the Center for American Progress (CAP) looked at the change in inflation-adjusted wealth by the age of the head of household. Their study period was from the fourth quarter of 2019 to the fourth quarter of 2023. They found that the average wealth level of households headed by Americans under age 40 — a group that includes most Millennials and some from Gen Z (people born 1997-2012) — grew by $85,000 to $259,000 over the study period. This translated into a percentage gain of 49%, which represented the strongest gain of any age group since the onset of the pandemic.
By way of comparison, inflation-adjusted wealth for households headed by people ages 40-54 (Gen X) fell 7%; rose 4% for households headed by people ages 55-69 (younger Boomers); and rose 15% for people age 70 and older.
Analysts at the CAP noted that these wealth gains for younger households were a “stark departure from the past” and “reflect broad-based wealth growth among young people.” The largest contributors to the average wealth gain of $85,000 at households headed by someone under age 40 were increases in the value of financial assets, like stocks and mutual funds, which rose by $31,000, and in house values, which rose by $22,000.
Every Generation Blames the One Before
In 1936, journalists George Leighton and Richard Hellman wrote in “Harper’s Magazine” of a “Lost Generation” that “acts without thought of social responsibility” and was “rotting before our eyes.” Other writers at around the same time expressed similar concerns. That age cohort, which in 1998 was profiled in a best-selling book called The Greatest Generation by journalist Tom Brokaw, halted the rising threat of the Axis Powers in World War II. In addition, along with their younger siblings known as the “Silent Generation,” members of the “Greatest Generation” gave birth to the Baby Boomers. The Boomers of course were the object of great concern, as related above. Leighton and Hellman’s concerns were not economic, but going back to when the Boomers were young, the concerns about them weren’t completely economic either.
Gen Z is the latest generation that analysts seem to worry about. For example, a “New York Times” article from 2019 cited a Millennial-aged researcher fretting that "Gen Z is going to be the first generation to have a lower quality of life than the generation before them…Previous generations have left Generation Z with the short end of the stick.”
And so, the cycle continues.
For Millennials, Gen Z, and for that matter even the older but in some ways still struggling Gen X, there are indeed warning signs which are real. Ultimately, though, it’s potentially as useless to pretend the story is a new one as it is to pretend there is no truth to it.
To the extent that a consensus can be teased out of the various writings on the topic, it is that structural inequality is the issue. That issue is perennial, though not necessarily inherent. When they encounter it, younger generations tend to blame the prior generations even as their elders in return alternately espouse concern for, and loudly complain about, their collective behavior and potential fate.
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“There is hope that New York's housing can help shift the city and the state toward a more equitable future.”
by Elena Volovelsky, Labor Market Analyst, New York City region
It’s no secret that housing costs have climbed to record levels in much of the country over the past decade. To measure the impact, economists estimate housing expenses — rent, utilities, taxes, and more — in relation to a household’s median income. In turn, they calculate a statistic called the “rent-to-income ratio” (RTI).
According to the U.S. Department of Housing and Urban Development (HUD), no more than 30% of a tenant's gross income should go toward rent. HUD considers renters to be “cost burdened” if their RTI exceeds 30%.
Housing Affordability
The national average RTI — as estimated by Moody’s Analytics — has been close to the cost-burdened threshold of 30% for a number of years. In 2022, however, the threshold was crossed for the first time in the 25 years Moody’s has tracked this statistic. The New York City metropolitan area’s RTI, according to the same report, stood at 64% in 2023 — far above any other metro area in the U.S.
Research suggests that a housing shortage is usually the primary factor contributing to rapidly rising rents. Such a shortage can be observed throughout much of New York State, but is especially visible in NYC, where rents surged in 2022, as the city emerged from the COVID-19 pandemic.
Housing experts consider a rental vacancy rate between 5% and 8% to be “healthy,” while government agencies typically designate a rate of less than 5% a potential “housing emergency” under state and federal laws. According to a survey conducted by the NYC Dept. of Housing Preservation and Development, the city’s rental vacancy rate dropped to 1.4% in 2023, the lowest on record.
Despite adding 60,000 units since 2021, the demand for homes in the five boroughs far outpaced new construction. Some of the blame falls on the expiration of the tax break for multifamily developments, which offered builders tax relief in exchange for setting aside a portion of the project for lower-income residents. As proof of the tax break’s importance, the number of residential building permit filings dropped dramatically after the program expired in the first half of 2022.
However, most experts cite local zoning codes as the true culprit behind the long-term dearth of new housing. Existing regulations limited new construction over the past decade to just a handful of neighborhoods, while other areas received virtually no new homes. In its list of the most exclusionary metro areas in the nation, the MIT Eviction Lab ranks NYC as second worst in the nation, with restrictions affecting both the suburbs and the urban area.
During the period of the post-pandemic recovery, housing moved to the forefront of political debate. A Quinnipiac poll from December 2023 found that one-quarter of all New Yorkers thought that affordable housing was the most urgent issue facing the city — the same share of respondents that cited public safety.
New Housing Initiatives
This year, after intense negotiations, lawmakers arrived at a set of policies that aim to balance the needs of renters and landlords, while spurring construction. A set of zoning policy changes proposed by NYC government, called the “City of Yes for Housing Opportunity,” includes these initiatives:
- Building higher in low-rise neighborhoods, including neighborhoods where apartments are currently restricted
- Legalizing shared amenities like kitchens, which could allow the return of single-room occupancy-style housing
- Encouraging office-to-residential conversions
The recently passed New York State budget also incorporated measures to promote construction of housing across the state, including the City. These include:
- A new tax break to provide tax relief for projects, which include an “affordable” component
- A “good cause” eviction law that gives tenants the right to dispute outsized rent increases. For now, it applies only in NYC, with other localities having the ability to opt-in to the program
- Allowing NYC to modify its longstanding cap on floor-area ratio, to pave the way for denser apartment buildings
Summary
With housing costs skyrocketing and homeownership increasingly out of reach for many New Yorkers, the suite of legislative solutions recently passed by the State Legislature, coupled with changes proposed by the NYC local government, could not have arrived soon enough. The process is still in its early stages and there will surely be obstacles to overcome in implementing these policies. But, for the first time in over a decade, there is hope that New York’s housing can help shift the city and the state toward a more equitable future.
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 In March 2024, New York State’s seasonally adjusted private sector job count increased over the month by 19,300, or 0.2%, to 8,348,300. In addition, the state’s seasonally adjusted unemployment rate decreased from 4.4% to 4.3% in March 2024, while New York’s seasonally adjusted labor force participation rate held steady at 61.4%.
Capital
Over the past year, the private sector job count in the Capital Region rose by 5,600, or 1.3%, to 431,900 in March 2024. Gains occurred in leisure and hospitality (+3,600), education and health services (+3,200), natural resources, mining and construction (+700), financial activities (+200) and other services (+200). Employment losses occurred in professional and business services (-1,200), trade, transportation and utilities (-700) and manufacturing (-400).
Central NY
The number of private sector jobs in the Syracuse metro area increased over the past year by 5,700, or 2.3%, to 255,300 in March 2024. Employment gains were greatest in leisure and hospitality (+1,900), professional and business services (+1,900), education and health services (+1,300), trade, transportation and utilities (+800) and financial activities (+200). Over-the-year employment losses were centered in manufacturing (-400) and information (-200).
Finger Lakes
From March 2023 to March 2024, the private sector job count in the Rochester metro area rose by 6,800, or 1.5%, to 450,000. Job gains were largest in education and health services (+4,100), leisure and hospitality (+2,500), trade, transportation and utilities (+1,000) and financial activities (+700). Job losses occurred in professional and business services (-1,000), information (-400) and manufacturing (-400).
Hudson Valley
Over the past year, the number of private sector jobs in the Hudson Valley grew by 8,100, or 1.0%, to 807,800 in March 2024. Gains occurred in education and health services (+9,800), leisure and hospitality (+3,700) and financial activities (+1,100). Losses were greatest in professional and business services (-2,400), trade, transportation and utilities (-2,300), manufacturing (-900) and natural resources, mining and construction (-600).
Long Island
For the year ending March 2024, private sector jobs on Long Island increased by 21,100, or 1.9%, to 1,140,700. Employment gains were largest in education and health services (+11,500), leisure and hospitality (+8,100), other services (+1,700) and natural resources, mining and construction (+1,400). Losses were greatest in professional and business services (-800), information (-400) and trade, transportation and utilities (-400).
Mohawk Valley
For the 12-month period ending March 2024, the number of private sector jobs in the Mohawk Valley region increased by 1,500, or 1.1%, to 140,100. Over-the-year employment gains were largest in education and health services (+600), trade, transportation and utilities (+400), natural resources, mining and construction (+300) and professional and business services (+200). Job losses occurred in manufacturing (-200).
New York City
The private sector job count in New York City rose over the past year by 34,000, or 0.8%, to 4,127,200 in March 2024. Job gains occurred in education and health services (+65,600), leisure and hospitality (+13,400), financial activities (+2,500) and other services (+900). The largest losses were in information (-14,500), professional and business services (-14,200), trade, transportation and utilities (-10,600) and natural resources, mining and construction (-7,500).
North Country
The number of private sector jobs in the North Country region rose over the year by 1,900, or 1.8%, to 106,700 in March 2024. Employment gains were greatest in education and health services (+600), manufacturing (+500), leisure and hospitality (+200), natural resources, mining and construction (+200), professional and business services (+200) and trade, transportation and utilities (+200).
Southern Tier
For the year ending March 2024, the number of private sector jobs in the Southern Tier increased by 1,000, or 0.5%, to 213,500. Employment gains were greatest in leisure and hospitality (+1,100), natural resources, mining and construction (+500) and education and health services (+300). Losses were largest in professional and business services (-500) and trade, transportation and utilities (-400).
Western NY
Over the past year, the private sector job count in the Buffalo-Niagara Falls metro area rose by 9,400, or 2.1%, to 464,800 in March 2024. Job gains were largest in education and health services (+3,500), leisure and hospitality (+3,000), trade, transportation and utilities (+1,200), natural resources, mining and construction (+900), manufacturing (+500) and financial activities (+300). Losses were focused in professional and business services (-200).
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