May 22, 2007
generations and economic inequality
(Indianapolis) According to USA Today (which I get in my hotel room),
Inequality within age groups hasn't changed much. People in their 30s or 60s have roughly the same wealth distribution among themselves as in 1989. What's changed is inequality between age groups.
Older people are thriving in wealth and income. Younger people are not. How wealth and income have changed for two age groups, after adjusting for inflation:
• Ages 55-59: Median net worth — the middle point for all households — rose 97% over 15 years to $249,700 in 2004, the most recent year for which data is available. Median income rose 52%.
• Ages 35-39: Median household net worth fell 28% to $48,940. Median income fell 10%.
I'm not sure this widening gap is, by itself, a social injustice. Most people in their thirties today will still be alive and in their fifties twenty years from now. If the fifties continues to be a decade of wealth, they will be fine. In part, this will happen because they will inherit their parents' savings.
But that is a static picture. It could be that the gap is not between decades of age but between generations. The Generation-X'ers could move through life consistently poorer than the Boomers, especially if part of the cause is upward redistribution through tax and social policy--and if the Boomers are spending much of their wealth on imports.
Besides, it's not simply the case that each Boomer has a Gen-X offspring. Some Boomers have no kids. Some Xers are immigrants whose parents live in foreign countries. Some Xers have already lost their parents. There is variation in families' wealth and size in both generations. Thus the enormous aggregate wealth of the Boomer generation could be inherited by the Xers and their kids in very unequal ways. Then inequality within generations would increase as a result of massive inequality between generations.
May 22, 2007 8:03 AM | category: none