Kotkin, Joel, Newsweek
Byline: Joel Kotkin
'Boomer America' never had it so good. As a result, today's young Americans have never had it so bad.
Today's youth, both here and abroad, have been screwed by their parents' fiscal profligacy and economic mismanagement. Neil Howe, a leading generational theorist, cites the "greed, shortsightedness, and blind partisanship" of the boomers, of whom he is one, for having "brought the global economy to its knees."
How has this generation been screwed? Let's count the ways, starting with the economy. No generation has suffered more from the Great Recession than the young. Median net worth of people under 35, according to the U.S. Census, fell 37 percent between 2005 and 2010; those over 65 took only a 13 percent hit.
The wealth gap today between younger and older Americans now stands as the widest on record. The median net worth of households headed by someone 65 or older is $170,494, 42 percent higher than in 1984, while the median net worth for younger-age households is $3,662, down 68 percent from a quarter century ago, according to an analysis by the Pew Research Center.
The older generation, notes Pew, were "the beneficiaries of good timing" in everything from a strong economy to a long rise in housing prices. In contrast, quick prospects for improvement are dismal for the younger generation.
One key reason: their indebted parents are not leaving their jobs, forcing younger people to put careers on hold. Since 2008 the percentage of the workforce under 25 has dropped 13.2 percent, according to the Bureau of Labor Statistics, while that of people over 55 has risen by 7.6 percent.
"Employers are often replacing entry-level positions meant for graduates with people who have more experience because the pool of applicants is so much larger. Basically when unemployment goes up, it disenfranchises the younger generation because they are the least qualified," observes Kyle Storms, a recent graduate from Chapman University in California.
Overall the young suffer stubbornly high unemployment rates--and an even higher incidence of underemployment. The unemployment rate for people between 18 and 29 is 12 percent in the U.S., nearly 50 percent above the national average. That's a far cry from the fearsome 50 percent rate seen in Spain or Greece, or the 35 percent in Italy and 22 percent in France and the U.K., but well above the 8 percent rate in Germany.
The screwed generation also enters adulthood loaded down by a mountain of boomer- and senior-incurred debt--debt that spirals ever more out of control. The public debt constitutes a toxic legacy handed over to offspring who will have to pay it off in at least three ways: through higher taxes, less infrastructure and social spending, and, fatefully, the prospect of painfully slow growth for the foreseeable future.
In the United States, the boomers' bill has risen to about $50,000 a person. In Japan, the red ink for the next generation comes in at more than $95,000 a person. One nasty solution to pay for this growing debt is to tax workers and consumers. Both Germany and Japan, which appears about to double its VAT rate, have been exploring new taxes to pay for the pensions of the boomers.
The huge public-employee pensions now driving many states and cities--most recently Stockton, Calif.--toward the netherworld of bankruptcy represent an extreme case of intergenerational transfer from young to old. It's a thoroughly rigged boomer game, providing guaranteed generous benefits to older public workers while handing the financial upper echelon a "Wall Street boondoggle" (to quote analyst Walter Russell Mead).
Then there is the debt that the millennials have incurred themselves. The average student, according to Forbes, already carries $12,700 in credit-card and other kinds of debt. Student loans have grown consistently over the last few decades to an average of $27,000 each. …