Older Americans Are 47 Times Richer Than Young – So What Or Injustice?
Posted: November 28th, 2011 | Author: Joe | Filed under: Economy | Tags: Economy, news, Wealth, Wealth gap | 1 Comment »According to a recent “news” article on CNNMoney.com, Old Americans are 47 times richer than young .
Is this social injustice?
Is this even a news story?
It seems from the article that the writer wants to at least give the implication that this portends something inherently unfair:
“According to analysis by the Pew Research Center released Monday, younger Americans have been left behind as the oldest generation has seen wealth surge since the mid-1980s”
Just look at some of the statistics on these greedy elderly people:
- Households headed by adults younger than 35 had a median net worth of $3,662 in 2009.
- Households headed by adults ages 65 years and older had a median of $170,494 in 2009.
- The net worth in the less than 35 age bracket declined 68% since 1984.
- The net worth in the 65 and older bracket increased 42% in the same time frame.
Is this really a story?
CNNMoney is comparing 2 separate things at the same time and getting them muddled.
First, instead of pitting the two age groups against each other, it should serve as an example of how the American dream is still achievable – you can be better off tomorrow than you are today! People, on average, tend to be better off financially as they move through life. This is a good thing. They accumulate more assets and less liabilities – their net worth improves. Comparing younger and older people in this sense is like saying that older Americans are less young than younger Americans. it may be true, but it’s a pointless comparison.
Secondly, comparing these segments to similar segments from 1984 is wildly inaccurate. Here’s why:
- The economy in 1984 was on an upswing after the brutal recession of 1980-82, while the economy in 2009 was still in the midst of the Great Recession.
- Housing prices were hardest hit in the 2008-2009 recession. Most homeowners in the under 35 age set had recently purchased their homes at high prices and had very little or no equity, in contrast to the over 65 age set who had held homes for longer (on average) and not lost as much equity. This skews the net worth towards the older set.
- Simple demographics are different. People are working and living longer in 2009 than they were in 1984, giving them longer to accumulate more worth.
- Children were deferring there entrance to the workforce longer in 2009 than they did in 1984, staying in school longer and accumulating student loan and credit card debt when they would have been earning a salary and likely saving some money or buying assets like houses.
Maybe I’m cynical, but it seems like this CNNMoney piece is just meant to contribute to the sense of class warfare out there and lead people to assume this ” 47-to-one wealth gap” is the result of unfair tax policies, or greed, or Halliburton or whatever. Then again, maybe it’s just a poorly written, minimally researched piece to fill some deadline for the writer.
Judging by some of the comments on the original article, quite a few are taking the story as a justification for class envy, which is just a sad state of affairs.
What say you?
They definitely aren’t comparing the right things here. This could be news in 50-60 years, when they have would enough data to possibly (but hopefully not) support the claim that the two different generations had differing abilities to accumulate wealth.
But idea that older people are typically richer than younger people leads me to think “Duh! That’s the way it should be…” And I agree that it shows that the American dream is still alive and well.