Rising Age Gap in Economic Well-being

Disparities in personal wealth in America are often measured along the lines of gender, race and geography. As economic shifts continue, however, an emerging divide relates to the age of the household head. Recently the gap between older and younger households has widened dramatically, sharpening concerns that new generations of Americans may not enjoy the progress that previous generations did.

A 2011 report by the Pew Research Center, “The Rising Age Gap in Economic Well-Being,” analyzed data from the U.S. Census Bureau’s Survey of Income and Program Participation (SIPP). The survey compared 6,513 households headed by persons younger than 35 with nearly 8,500 headed by adults ages 65 and older.

The study’s findings are as follows, broken out into key categories:

• Home equity: Adults aged 65 and older are now more likely to own a home: 79% in 2009 versus 73% in 1984. Older households also had 57% more equity in their homes in 2009 than did those in 1984. By comparison, households headed by adults under 35 had less housing wealth in 2009 than in 1984 and were less likely to be homeowners: 38% in 2009 versus 40% in 1984.
• Assets: In 2009, older households possessed 42% more net worth than similar households did in 1984. However, households headed by younger adults in 2009 had 68% less net worth than similar households in 1984.
• Income: For younger households, in 1967 the median adjusted annual income was $38,555; in 2010, it was $49,145, an increase of 27%. For households headed by adults over 65, in 1967 the median adjusted annual income was $20,804; in 2010, it was $43,401, an increase of 109%.
• Net wealth: In 2009, older households had 47 times as much net wealth as the typical household headed by someone in the younger age group ($170,494 versus $3,662). By comparison, in 1984 this ratio was 10 to 1. In 1984, the median net wealth gap between old and young was $108,936; by 2009, that gap had widened to $166,832.
• Overall, households headed by adults under 35 are much more likely to be living below the poverty line: in 1967, 11% of such households were in poverty; by 2010, that number had doubled to 22%.

The authors conclude: “These age-based divergences of households widened substantially with the housing market collapse of 2006, the Great Recession of 2007-2009 and the ensuing jobless recovery. But they all began appearing decades earlier, suggesting they are as much linked to long-term demographic and social changes as they are to the sour economy of recent years. For the young, these long-term changes include delayed entry into the labor market and delays in marriage — two markers of adulthood traditionally linked to income growth and wealth accumulation. Today’s young adults also start out in life more burdened by college loans than their same-aged peers were in past decades.”

Tags: poverty, youth aging

Tags: aging, poverty, youth

By Christopher Olver January 17, 2012