Young adults are poor despite every metric which suggests otherwise
Society burned through social capital and replaced it with ruinous private expenditure
A recent article from The Cut received a huge amount of attention: ‘It’s Hard to See My Parents Live So Lavishly While We’re Struggling’. The piece includes vignettes of Millenial hardship:
…his dad, Steve, sold his company to a private equity firm about five years ago, which enabled him to retire comfortably in his mid-60s…
Two years ago, Joe asked his dad for a loan. He wanted to start a lawn-care business and needed capital for commercial-grade equipment and a trailer, at least $15,000. He presented Steve with his business plan, which included a schedule to pay back the money. Still, Steve said “no.”…
Joe hasn’t started the business. He works for a property-management firm and does landscaping work on the side to bring in extra money. But he has two young kids of his own and finds it difficult to save. “Without some initial help, it’s pretty unrealistic that I’ll ever be able to go the entrepreneurial route,” he says.
Steve, on the other hand, thinks he’s teaching his son a valuable lesson on self-reliance. “It’s not that I can’t afford to help him,” Steve told me. “I just have a real problem with handouts. And I want him to have the satisfaction of knowing he’s built something himself, with his own hard work. That’s how I was raised, too.
The virality of this piece prompted a discussion between Louise Perry and Rob Henderson (thank you Louise for the mention!): ‘The politics of the downwardly mobile class’.
Rob disagreed with the Cut article’s perspective:
The way that this article is written, it’s intended, I think, to convey that millennials are really struggling… but, generally, Millennials are doing just fine. And even the link to the US GAO that they cite says that Millennial households were more likely than other generations to be college educated… incomes have remained flat across the three generations… There was an article a couple of years ago from Jean Twenge in The Atlantic showing that Millennials are doing just as well as previous generations were.
I disagree! I think that Millennials and Zoomers are not doing fine. In fact, I think there have been structural changes to our economy and society which clearly explain why these cohorts are failing to move through the five pillars of a stable middle-class existence: education, stable employment, marriage, homeownership, children.
Some of these negative changes stand out in the normal datasets, while some do not, for reasons I will explain. In short, what has happened is that previous generations were able to take advantage of highly valuable and productive social capital as well as their exploding financial capital to move through each of these life stages in a fiscally efficient manner. (Don’t worry: I will define what I mean by social capital and back my argument with data).
Our current young, lacking access to this social capital, must engage in enormous outlays of purely financial capital in order to achieve the same levels of stability and accomplishment — capital that they do not have. We see this clearly in the data on schooling, homeownership, and family formation.
All of this is hidden from the top-line metrics, usually in one of two ways:
Huge increases in the cost of essential aspects of family life (homeownership, education, etc.) being offset by huge decreases in the cost of non-essential goods (televisions, phones, etc.) making the young appear wealthy in the abstract but without them actually being able to afford anything meaningful;
By presenting false equivalencies which imply a level of choice that younger generations do not actually have. For example: an American family in 1975 could send their children to public school on the assumption that the vast majority of other children would belong to intact families, communities like their own, and would speak English as a first language. Now, realistically, many parents must turn to private schooling for the same reassurances.
On the surface it does seem as if the young are fine. Real median incomes are higher than they were for their parents at the same age, unemployment has spent most of the past decade at historic lows, and purchasing power has risen roughly 63 percent since 1973. Televisions, clothing, food, and air travel are cheaper than ever.
And yet this generation is also not marrying, not buying homes, not having children, and seem pretty miserable. I think we’re clearly in the midst of a tremendous measurement failure.
My argument is that previous generations received an enormous stock of social capital: trusted neighbors, functional public schools, a productive courtship culture, predictable career arcs, and a public square in which children could roam and adults could be relied upon. That stock, once given for free, has now been substantially liquidated.
Instead, the young must now buy back, item by item and at retail prices, what their grandparents received as a bounty of prior civilizational investments. The young must do so out of incomes that rose modestly while the prices of the essential elements of life rose radically. Price indexes measure the individual cost of discrete goods, but they are not intended to convey the total cost of personally repurchasing a destroyed commons.
This type of failure is well understood as a threat in economics. The old joke is that when a man marries his cleaner, the GDP of both households collapses even while the actual labor being done remains the same and everyone is better off. In our case, we’re seeing the opposite: a thousand small divorces and social fragmentations which boost the appearance of GDP but leave everyone poorer in reality.
Occasionally, researchers succeed in capturing and modelling these hidden transitions, and we get a glimpse into the deep faultlines under society — direct evidence that official measures miss what households actually feel. In 2024, for example, a compelling study by Lawrence Summers and colleagues showed that the gap between depressed consumer sentiment and cheerful official statistics closes once borrowing costs (excluded from the modern CPI but important for family finances) are counted as part of the cost of living. The consumers were right.
What actually got cheaper over the past fifty years? Electronics, entertainment, fast fashion, processed food, toys, screens of every kind. And what got more expensive, usually by many multiples? Housing, education, childcare, healthcare, insurance.
Absurdly, both of these movements register in the statistics as progress: one shows up as asset appreciation and the other as consumer surplus. But the lived reality for families feels like a pincer.
Housing is the least ambiguous case. At age 30, 55 percent of the Silent Generation owned homes. For Boomers the figure was 48 percent, for Gen X 42 percent, and for Millennials 33 percent. The national ratio of median home price to median household income, which stood around 3.2 through the 1990s, reached 5.0 in 2024, nearly matching its all-time high. The median age of the first-time buyer, 29 in the early 1980s, hit a record 40 in 2025. Whatever supposed wage gains the young have enjoyed, housing claws most of them back before they can be converted into anything durable.
Significant changes in rent have made this worse. The standard escape from renting is saving for a down payment, but soaring rent has made saving near impossible. Roughly half of all renter households now spend more than 30 percent of their income on rent and utilities, the federal threshold for being “cost-burdened,” and more than a quarter spend over half. Layer exploding student debt on top — of which more below — and you get a class of people in permanent limbo.
One rebuttal you hear to this predicament concerns square footage. The line is that due to consumer preference, houses today are larger than the bungalows of 1955, so price per square foot has risen less than price per house; the young, the argument goes, are demanding more luxury and are pricing themselves out of the market.
This is unconvincing on two counts. First, the market barely offers the smaller option: zoning regimes across the country make it easier to build large houses than small ones, and buyers who would prefer modest homes in decent areas frequently cannot find them. Scott Alexander described living alone in a three-bedroom house in Michigan because no acceptable one-bedroom existed near his workplace and the apartments were (his words!) ‘loud and crime-y’.
I think this latter point is a generalizable pattern. As Mr. Alexander discovered, the added, expensive square footage — like private school — is a hedge against public dysfunction and is another example of a replacement purchase. The over-priced neighborhood is perversely desirable when pricing is the only legal means of discrimination in an increasingly dysfunctional society.
Free childhoods disappeared alongside the loss of something harder to measure: the trust that makes a child outdoors seem normal rather than negligent and the local conditions that once made such trust reasonable. These conditions - like many other kinds of social integrity such as intact two-parent homes - have become aggressively sorted by class…
The childhood depicted in nostalgic media rested on a dense web of adults who knew each other, shared a rough moral sense, and could be relied upon to mind each other’s children. That web is now a feature of particular places (often expensive places) rather than a general inheritance, and discerning which places have kept it is of key importance for families hoping to raise agentic children with deep networks of trusted friends.
Perversely, this turns ‘overpriced homes’ into a feature, rather than a bug. When families have no organic access to likeminded, competent, stable, trustworthy families, they use one of the only mechanisms left which forces some kind of homogeneity: money. People’s revealed preference is to live in arbitrarily expensive neighborhoods because the cost is a moat against endemic dysfunction. Or, as one X user put it, families must escape the tyranny of the bottom quintile which has been allowed to run rampant.
The socializing that happened in parks, neighborhoods, boy scouts, etc. now must happen in the private domain. A bigger house, which includes a large playroom and yard, is the private replacement for a public square that no longer functions and is thus necessary infrastructure as much as luxury.
An owned home is the material base of psychological stability: it fixes housing costs against inflation, converts rent into equity, roots a family in a particular place among particular neighbors, and provides the security without which people demonstrably hesitate to marry and reproduce.
Robert Sampson’s research on Chicago found that the collective efficacy which keeps neighborhoods safe — mutual trust plus the willingness of residents to intervene for the common good — is strongest where residents own their homes and stay put. Ownership is both a private good and the raw material of the social capital whose destruction started this spiral. A generation locked out of ownership is locked out of both.
Marriage follows the same pattern. Women now substantially outnumber men on university campuses and outpace them in degrees earned, yet the preference for husbands who match or exceed a wife’s income and education has not correspondingly relaxed. The result is a radical market mismatch.
Daniel Lichter, Joseph Price, and Jeffrey Swigert constructed statistical profiles of the husbands that today’s unmarried women would marry, based on the actual husbands of demographically comparable married women. These “synthetic husbands” have incomes 58 percent higher than the real unmarried men available; they are 30 percent more likely to be employed and 19 percent more likely to hold a college degree. The men whom women are prepared to marry bear little resemblance to their struggling real-world counterparts. The few who shape up to the fantasy are snapped up quickly.
For a regular man, this implies that becoming marriageable now requires clearing exceptional bars: a degree (with the debt that comes attached) and an income well above the male median (also — 6ft, muscular physique, etc. etc.). Likewise social media has raised the expectations against which men are measured to make-believe levels. A working man in 1965 was marriageable by default in a way that his grandson is not. Again, all of this leverages tremendous economic pressure on men to overperform.
Supposing marriage and family formation is achieved, new parents discover that the activities formerly provided by ‘free-range childhoods’ must now be bought as expensive private services. Supervision that neighbors and older siblings once provided becomes daycare and after-school programs.
The average annual cost of childcare reached $13,128 in 2024, a 29 percent rise in four years; infant care now exceeds in-state college tuition in most of the US. All of this buys back, imperfectly and at great cost, what the 1960s family got free. “Intensive parenting,” routinely diagnosed as a cultural fashion, is a rational insurance response to a collapsed commons.
The transition to the economic default of the two-earner household intensifies these pressures. A household with a parent at home produces an enormous stream of untaxed, uncounted output: childcare, cooking and cleaning, budget management, and the daily maintenance of relations with other families (ie. social capital).
Move the at-home spouse into the labor market and every service she provided must be repurchased from the latest private equity roll-up (nursery, takeaway, cleaner, security system…). GDP records each purchase as growth. A family can thus be measured as substantially richer while consuming the same services — only now they spend less time together.
Education is the same. The credential became increasingly mandatory and increasingly ruinous. This is where Rob Henderson’s analysis really misses the mark: if a hugely increased percentage of young people are going to college — and thus losing years of their lives and accruing record debt — without substantially increased earnings, that bodes very badly for the young indeed.
In a service economy with proliferating occupational licensing and degree screening, the bachelor’s degree is now required in almost all dynamic sectors. I used to work for a company whose founder made a lot of noise about not requiring degrees! In practice, based on my experience both being interviewed and later interviewing and hiring others, the company absolutely did require degrees (in fact, it required the very best ones and prestigious graduate studies were desirable).
Real tuition and fees have roughly tripled at public universities since 1990 and risen about fivefold since 1970; average debt at graduation has risen 41 percent in real terms just since 2007, and total student debt now approaches $1.8 trillion. For a large fraction of borrowers the wage premium never offsets the balance, and the debt functions purely as a tax on family formation: it raises the savings threshold for a down payment, delays marriage, and delays or forecloses children.
And beneath higher education sits the same repurchasing dynamic at the school level. The public school was among the most valuable components of the inherited commons: perhaps not perfect, but usually a free, orderly, locally trusted institution that a family got with its address. Where it has decayed into disorder — and urban district performance and safety data leave little doubt that in many places it has — families face tough choices.
The cheap and effective Catholic school system of old has largely collapsed due to the dearth of nuns. And so the options are pay private tuition (which has risen about 158 percent in real terms since 1973), pay the housing premium for a catchment with a functional school, or pay in parental labor through homeschooling and forfeit the second income on which the broader economy is calibrated. The “good school district” premium is a particularly pure example of social capital being financialized and resold as real estate.
Employment volatility and changes in the career market compound all of this. Young people whose income arrives in unpredictable tranches rationally desire a larger private buffer before committing (savings, credentials, attainment of a rare stable career…). This comes at the moment when housing, education, and childcare inflation have made this buffer tremendously hard to attain.
The young are told they are richer, and in the currency of flat-screen televisions they are. But the goods that constitute a life — house, spouse, children, good school, good neighbors — have inflated so far beyond wages that the ordinary life path of 1965 now requires an extraordinary income. It turns out that we do actually need social capital. They are not doing well!
Find Part II of this essay, Origins, here.
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Sic transit imperium,
Johann
This is excellent, as usual. But I think one important factor that is missing that underlies all of it, is the fiat monetary system. In 1971, we completely detached from any sound money standard. This allowed politicians to print money, backed by nothing, at will. It no coincidence that you’re noticing patterns over the last 50 years in the essay.
Assets tended to inflate with the monetary dilution. Not because the houses are worth more, but because our dollars buy less. So real assets tend to hold their value. Those that bought homes when they were cheaper have captured a lot of that appreciation, while those that are younger are being paid wages that haven’t kept up. Encourage you to check out wtfhappenedin1971.com to see how this has played out, through charts alone, in nearly every domain.
The monetary system itself is not the lone cause, but it’s a vicious feedback loop that feeds our cultures high time preference.
I work in a small, private parochial school. We're one of the least expensive around, but it's still a lot of money that parents could save by sending their children to public school. Why don't they? Because they know that, even with our shortcomings, when they send their kids to us, they're not sending them to a zoo.