Personal Finance

Are millennials worse off than Gen Xers?

Millennials are really not underpaid
Millennials are really not underpaid

Are millennials earning less than Gen Xers were at their age?

If you compare inflation-adjusted median weekly earnings for Gen Xers in the mid-1990s to earnings for the same age group today, millennials (usually defined as those between 18 and 34 years old) actually come out a little ahead, according to the Bureau of Labor Statistics.

But income is only part of the equation. Take into account the financial challenges millennials face and it's easy to understand why so many feel like they aren't making enough, say experts.

"Millennials have an uphill climb," said Anthony P. Carnevale, a professor and director of the Georgetown University Center on Education and the Workforce. "The economy has increased the demand for skills and millennials are the first generation that has had to deal with that."

The cost of getting a job is leaving millennials in the red. Educational requirements for many jobs have increased, and so has college tuition.

The average cost of attending undergraduate classes at a four-year private university is now nearly $42,500 per year—triple the price tag in 1990. Even state schools now cost students nearly $19,000 per year on average, a more than 100 percent increase over the last 25 years.

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"There's no doubt that more [millennials] are likely to graduate with student debt and the amounts that they owe are greater" than other generations, said senior researcher Richard Fry of the Pew Research Center. On average, student borrowers who graduated this year will owe $35,051, according to Mark Kantrowitz, a student financial aid policy expert and publisher of—a record high.

A lot of millennials also graduated into or after the Great Recession, which was deeper and longer than the recession Gen Xers faced in the 1990s.

The 1990-91 recession in America lasted eight months and saw unemployment rise to 7.8 percent. But unemployment reached as high as 10 percent in 2009, just after the Great Recession officially ended. (That downturn officially lasted from December 2007 to June 2009.)

While earnings of full-time workers are up slightly compared to the 1990s, "On every other indicator–unemployment rate, landing full-time jobs, average hours worked, etc.–there's no doubt that millennials four years into the recovery were worse off than any other generation," said Fry.

Based on his studies, Carnevale estimates about 23 percent of millennials are underemployed but projects that will drop down to about 17 percent in the next few years as the economy continues to improve. Still, he adds: "The Great Recession will mark the millennials for the rest of their lives. It affects your earnings trajectory for the rest of your life."

There is one silver lining for millennials though: baby boomers. Over the next decade, economists estimate about 30 million job openings will arise from baby boomers retiring. That's good news not just for the underemployed or out-of-work millennials, but for the millions of younger millennials who will soon be entering the workforce.