Millennials Are Broke, But Some Are Way Broker Than Others, Study Shows
Here's why student debt is creating a massive racial wealth divide between millennial families.
It’s no secret that millennials are broke. They lag in retirement savings, homeownership, and overall wealth when compared to previous generations. But it turns out that some millennials are much more broke than others — for an upsetting reason.
Per NPR, a deep dive into the numbers revealed a disturbing trend in millennial wealth that highlights racial inequality in America.
New research showed that, when considering just older millennials (that is, millennials born before 1990) while white millennials have managed to start closing the wealth gap between them and older generations, Black millennials have actually seen the gap widen.
What Does the Study Say?
Researchers at the Institute for Economic Equity (IEE) at the Federal Reserve Bank of St. Louis looked into the Federal Reserve’s Survey of Consumer Finances and found that older millennials (who they define only as millennials who were born before the 1990s) had made “pretty substantial” wealth gains over the past few years, though they still remain 11 percent behind previous generations.
On the surface, this sounds like great news for a generation that previously seemed destined to drown in debt. But a closer look at the numbers showed that it is primarily white, college-educated millennials who have managed to amass wealth.
Meanwhile, Black and non-college-educated have actually fallen further behind, as research shows white millennials trailing the wealth of previous white generations by only five percent, while Black millennials are a shocking 52 percent behind previous Black generations.
Why Are Black Millennials Experiencing a Wealth Gap?
There’s no single reason for this level of wealth disparity but the two primary factors seem to be generational wealth and student loan debt.
White millennials are also more likely to have wealthy parents, which means they might be receiving financial help with things like buying a house or paying off debts. This is especially relevant when it comes to student loan debt, as 80 percent of Black millennials still have student loan debt, versus just about half of white millennials.
What Does This Mean for Families?
That things are terrible for them. This massive wealth disparity is even larger for millennial families, as data indicates that the typical white millennial family has $88,000 in wealth, while a typical Black millennial family only has about $5,000.
And wealth is an intergenerational problem. Families that struggle to gain, maintain, or have access to wealth will have fewer financial opportunities to pass along to their children — meaning that the wealth cycle could continue, barring major governmental action.
Stuff like this shows just how monumental canceling student debt would be for Black (and all) millennials, and how universally helpful affordable child care would be for everyone.