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Millenials Have No Savings

www.usnewsMillenial wages have not kept up with the rising cost of living.  In the past, wages have kept up with the rage of inflation, but The Atlantic has revealed that “wages for young people are increasing 60 percent more slowly than overall United States wages” (2014). The median wage for workers in all major industries has slumped for workers relatively new to the workforce, ages 25 to 34, because the wages have not been adjusted for inflation.  The only industry that is paying this age group in appropriate proportion to inflation is the health care industry.  The reason why health care is not experiencing the same trends as other industries, is that the demand of the health care industry is moreso set by the government, and is not as volatile of a market as a result of this.  Americans are spending less on ‘shopping and a significant amount more on health insurance, thus boosting the health care industry.  Employers who provide benefits might rationalize this by replacing a higher salary with a higher health insurance cost.  Money Talks News contends,

“More than 25 percent of young workers are employed in retail, leisure, wholesale and hospitality, where inflation-adjusted wages have plunged 10 percent since 2007…To be clear, this doesn’t mean that most of this cohort are seeing their pay slashed, year after year.  Instead it suggests that wage growth is failing to keep up with inflation, and that, as 20-somethings pass into their 30s, they are earning less than their older peers did before the recession” (2014).

Millenials are getting out of college with debt, and falling back on a job market that does not pay them enough to keep up with their expenses or the inflation of basic goods, meaning that they are spending more than they are earning and many are experiencing a negative savings rate.  The costs of health care, education, housing, and food continue to climb.  The wages have been falling because after the Great Recession, the demand for hotels, amusement parks, and restaurant declined sharply, and “newer” less experienced workers took the slack for this.  The Atlantic states, “as the ranks of young unemployed and underemployed Millennials pile up, companies around the country know they can attract applicants without raising starter wages” (2014).  Not only is this generation slacking on savings, but they are also more averse to buying food out of home, purchasing homes, and purchasing cars with an auto loan.

Technological advancements are also a culprit for the wage decline.  A lot of middle-class work has been outsourced to other counties, or replace with computers.  While technology has not necessarily reduced the amount of jobs available, it has reduced the number of decent-paying, routine jobs, and have been replaced by cheaper ones.  Thus providing companies with fair reasoning for the disconnect between pay and inflation.

This needs to change in order to stimulate the economy, as millennials are currently determining the immediate future of the U.S..   The same issue is prevalent among an even younger age group, the 18-24 year old age group, as many major industries employing them part time are allowing wages to fall behind inflation.

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