After reading yesterday's post, my dad emailed me to say that he thought the question of whether young adults are better off than their parents depends mostly on what level of education each generation has attained. Specifically, he argued that a young adult with a college degree is likely to be better off than her parents if she's a first generation college student, but not if her parents also went to college.
Let's look at the possibilities.
- If your parents went to college, and you went to college, they are probably earning more than you are. (Obviously, there are exceptions when the parent suffers from a disability, or chose to be a starving artist, or got laid off, or when the kid joined Google or Microsoft at just the right time, but on average, 55 year old college grads earn a lot more than 25 year old college grads. To be precise, in 2006, the average 25-34 year old with a bachelor's degree in 2006 earned $40,276 and the average 55-64 year old with bachelor's degree earned $50,397.
- I wasn't convinced that young college graduates were necessarily earning more than their non-graduate parents but I looked up the numbers, and my father is right. The average 55-64 year old with a high school degree and no college education earned $29,283 in 2006. While there are some plumbers and union mechanics who earn good money with just a high school degree, there's not enough of them to affect the median.
- Young high school graduates are also earning less than their HS-grad parents -- the average 25-35 year old with a high school degree and no college earned just $25,0354.
- And, to fill out the options, the HS grad child of college-graduate parents is clearly downwardly mobile.
My dad's point was that because the fraction of the population going to college has increased so much, a significant portion of college graduates are from families where their parents didn't go to college. And they're doing better than their parents. At least in terms of income -- they also have more college debt. And, as lots of people commented yesterday, their parents probably own a home that has appreciated significantly since they bought it, while in a lot of the country, homeownership is still out of reach for most young people, even those with good incomes.
Also, check out Figure 4 in this report.