Eating Our Young: Wealth Gap between Young and Old Becomes a Chasm

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November 6, 2011; The Statesman (Associated Press) | The following may explain why so many young people are encamped at Occupy sites:

According to a Pew study, the wealth gap between younger and older Americans is wider than it has ever been. In fact, using census data, the study shows that the typical household, which is headed by someone 65 or older, has a median net worth of $170,494—47 times the median net worth ($3,662) of a household headed by someone under 35. This gap is double what it was even five years ago, and is believed to be the highest it has ever been, even pre-dating record keeping on the topic.

The reasons for the change are cited to be a combination of factors related to the recession. Younger people are having a hard time securing employment, have high college debt as a result of severely increased tuition costs, and are more likely to owe mortgages that exceed the value of the property.

“Net worth includes the value of a person’s home, possessions and savings accumulated over the years, including stocks, bank accounts, real estate, cars, boats or other property, minus any debt such as mortgages, college loans and credit card bills. Older Americans tend to hold more net worth because they are more likely to have paid off their mortgages and built up more savings from salary, stocks and other investments over time. The median is the midpoint, and thus refers to a typical household.”

Young adults, according to the study, saw their housing wealth drop by 31 percent from 1984 as a result of falling home values, while Americans 65 or older were more likely to have bought homes before housing prices skyrocketed and so are seeing a 57 percent gain in housing wealth, even after the bust.

In addition, according to this article, older people are staying in jobs longer, while young adults now face the highest unemployment since World War II, so the median income of older-age households since 1967 has grown at four times the rate of those headed by the under-35 age group.

This brings the whole issue into stark relief. For those of us who are older, these are our children and grandchildren who are being hamstrung by an economy that cares little about keeping up even a pretense that the storied American dream is within reach of most. Make a noise today.—Ruth McCambridge