New York (MainStreet) - It’s well known by now that Millennials make up a socially aware generation. They care about socio-economic issues, volunteer at an unprecedented level and even expect companies to show a softer side of themselves.
Yet all of that has not protected them from one of the most important social consequences of living in the 21st Century: inequality among Millennials is bad. In fact, it may be even worse for the under-35 set than for their parents, and that’s saying a lot.
According to data gathered by the U.S. Census Bureau and put together by Fusion, among anyone born after 1980 it takes about $129,000 to join the top 1% of earners. For about 720,000 of us, that dream is coming true, out of a generation 70 million people strong.
On the other side of the income gap are the Millennials who have gotten left behind. About 28 million people under 35 aren’t enrolled in school and live on less than $10,000 per year. In fact, if you earn more than $10,400, congratulations. You’re wealthier than half of an entire generation.
The Recession hurt pretty badly.
Much of the gap, according to Pew economist Richard Fry, has to do with education. While many of us take a college degree and the subsequent struggle with entry level jobs for granted, that’s not the experience of every Millennial out there. In fact, that’s not the experience of most Milllennials out there. About 60% of our fellow young Americans live in an entirely different world, one without student debt but also with far fewer opportunities in the long haul.
“On almost every basic indicator you want to look at,” Fry said, “the typical outcomes for college educated Millennials are substantially better than they are for the typical high school educated Millennial. It’s across the board, whether we’re talking about what’s going on in the labor market [or] whether we’re talking about their household incomes.”
In his report The Rising Cost of Not Going to College, Fry laid out the incomes that the college educated can expect compared to those with some or no college education. The numbers are stark. With a bachelor’s degree, a worker aged 25 to 32 earns a median income of around $45,500, often higher if he enters a big-money field such as science or engineering.
A high school graduate, on the other hand, will collect about $28,000 in that same time period and is four times more likely to live in poverty. At $45,500 that college graduate is in the top quintile of his or her generation. With a couple of raises to cross the $60,000 threshold, he or she will enter the top 10%, and probably stay there for life.
This gap doesn’t describe a handful of people. Two in three Millennials don’t have a college degree. When we talk about the bottom percentages of young people who average less than $30,000 per year, we’re talking about the supermajority of a generation.
A college degree brings enormous economic firepower to the table while it also encourages self-sorting. According to Fry, the college educated both marry more often and generally marry each other. It’s a perfectly reasonable phenomenon; plenty of lovers meet in English class or bond over a tough day in the office. It also has what economists call a multiplier effect as those already-wealthy households create increasingly concentrated pools of wealth.
Two college educated Millennials pairing off, even at the median income, will create a $90,000 per year household. Their high school educated counterparts are not only far less likely to marry in the first place, but would also barely break $55,000 if lucky.
“These direct earnings differences, they bleed and they feed into other basic differences that impact on young adults lives,” Fry said. “Let’s look at the typical household incomes of Millennials by education levels. For the typical college educated Millennial, if they’re college educated their typical household income is around 90 grand, and if they’re high school educated their household income is around 40 grand.”
Why? The college educated pair off and are more likely to produce dual earner households with higher paychecks.
The story of the 1% vs. everyone else is stark and growing, but among Millennials the biggest differences are felt between the top 20% and a generation that’s getting left behind.
A college education is significantly more important today than it was for the Baby Boomer or Silent Generations. When our parents came of age the high school educated had far better prospects than they do today. Skilled labor positions in manufacturing and jobs protected by collective bargaining agreements created a real path to the middle class whether or not you went to college.
Today those jobs are either going or already gone. Increasingly the best option for the high school educated involves a paper hat or a blue smock, jobs that rarely pay well or offer real opportunities for advancement.
Those who fall behind, generally, get left behind. The income gap actually grows larger the older we get, with the college educated far more likely to get raises and career advancement. Over a lifetime the difference between a college and high school degree can range from hundreds of thousands to millions of dollars in earnings. That’s a gap that the majority of Millennials will simply never be able to close.
--Written for MainStreet by Eric Reed, a freelance journalist who writes frequently on the subjects of career and travel. You can read more of his work at his website A Wandering Lawyer.