Are Gen-Y’s Financial Struggles Unique?

by JT McGee

Love us or hate us, we’re generation Y.

We’re more likely to be part of Occupy Wall Street than the Tea Party. We’re more likely to read blogs than newspapers and play video games instead of bridge. Many of the things we do are unique to our generation.

With all the things that make Generation-Y different from previous generations, are financial struggles one of them?

Generation Y’s Differences

There are any number of economic differences that make Generation-Y unique from the baby boomers and the “greatest generation.”

Here are just a few of these differences:

  1. No guarantees – Generation Y’s biggest economic disadvantage might be living in a world without guarantees. Whereas most every boomer and certainly every one of the greatest generation were guaranteed a manufacturing job and a pension, there are no such promises today.
  2. More freedom – Generation Y has a few big freedoms, including the financial freedom to save and invest. As I addressed in a previous post, guaranteed pensions given to workers in the 1970s drastically increased the savings rate among middle class families leading all the way up to the 1980s. Where most employees were forced to save a portion of their salaries in defined benefit plans, Generation Y has only the choice to invest in defined contribution plans when made available.
  3. More responsibility – Given that Social Security displaced the pension In the United States, Generation Y certainly has far more responsibility to previous generations than generations previous. Social Security’s trust fund is merely an accounting gimmick, backed only by IOUs from the US Treasury. The year 2011 brought a Social Security cash flow deficit of roughly $60 billion.
  4. Economic Calamity – Few generations have experienced a longer recession during the periods most crucial to career development and wealth accumulation. The wealth distribution and income inequality has never been as tilted as it is today, and there’s no sign of a changing tide.

Do Baby Boomers “Get” Gen-Y?

Do the baby boomers who created the consumption economy of the late 80s and 1990s really understand Generation Y?

Is generation Y at a disadvantage that the boomers nor the “greatest generation” never experienced?

Are Generation Y’s struggles really difficulties, or just whining and complaining from another entitlement generation?

{ 20 comments… read them below or add one }

Shona February 1, 2012 at 03:00

These days, people say that Generation Y ‘can’t afford to enter the housing market like their parents did,’ or they ‘can’t afford this or that or that…’

What a load of bollocks, to be bluntly honest. These days, people seem to think that they can just buy whatever they want and when they can’t afford to repay the astronomical loans they have taken out, they expect a bailout.

Many of them forget that their parents certainly didn’t start off by buying a brand-new car, a 5000 square foot home and expensive clothing. No, back then, they made do with the family sharing a bathroom, having 1 living room, driving a used car and having the kids earn their allowance by cutting the grass or doing extra chores around the house.

These days, people try to play the ‘deprived’ card when they can’t have the big house, the new car and the fancy clothes…you get what you work for in life. Period.


JT McGee February 1, 2012 at 17:43

Interesting perspective. Curious – seeing as you tend to suggest that the expected standard of living has increased, do you also think that the productive capacity of this generation has also increased relative to previous generations. For example, expensive cell phones may kill a budget, but computer technology makes a modern clerical worker, for example, far more productive than the same worker many years ago.



tom February 1, 2012 at 09:53

Different, yes, unique… maybe?

Speaking in generalities…
We’ll never relate to Boomers or Gen X. Generational cycles themselves prove that.

We do, however, relate closest to the “greatest generation”. They went through a massive war and a great depression. Where iPhones and the internet are at your fingertips now, television became mainstream in the early 20th century changing the way we communicated.

So the differences you highlighted are very much present, from a 50,000 foot level, we seem to mirror the “greatest generation”.


JT McGee February 1, 2012 at 17:45

Tom, great thoughts as always. I definitely understand your underlying comment about perspective (it’s easier to see bigger differences up close than it is with time and distance giving us an “overhead view” of sorts.)

I think there are some similarities between our generation and the “greatest generation.” Is that something to be proud of?


Jonathan February 2, 2012 at 13:47

I disagree. The “greatest generation” were active participants in World War II. From my understanding, war permeated EVERYTHING – from the fact that a huge percentage of the young population was overseas fighting or supporting the troops, manufacturing and materials were devoted to war, etc. Today’s youth – of which, at 27, I am a part of – can’t identify with that because for the majority of us, the war hasn’t touched us. I know a grand total of 2 people who spent any time overseas for Iraq and/or Afghanistan. I don’t know anyone who knows anyone who died in the wars. To me, it’s been relegated to the subject of “politics,” which generally bore me. Call me a pessimist but I think most in my generation will turn back to rabid consumerist mode as soon as they get a little money in their pockets. I agree with Shona’s comments above.


JT McGee February 2, 2012 at 14:08

The inflation adjusted cost of WWII is rivaled by the current wars. While it hasn’t affected us in the sense that there certainly fewer people participating in the war effort today, just as much resources have been contributed to the two major wars today as WWII.

This leads to an interesting point war costs and “benefits,” if you can call them that, are perhaps less “democratically” distributed today. Whereas the US Army had like…what, 15 million soldiers in WWII, we have far fewer today.

There is certainly a drain on the poorer people as well, due to rising oil prices from falling Iraqi production. Higher gas prices, even if only marginally over a period of a decade, do certainly hit those with lower incomes, which would certainly include a disproportionate number of younger people. With the US Navy being the largest consumer of oil, Iraqi production dropping by 1.5 million barrels a day (a loss of 2% of total production), and oil being something with inelastic demand, there is plenty of reason to believe war has affected everyone. The poor being the worst affected.

I think you’re right, though, as it relates to the depression and realization that money doesn’t fall from trees. Generation Y probably hasn’t come to understand that…yet.


Melissa February 1, 2012 at 11:22

It’s not entitlement. The problems faced by Gen Y are distinctly different from the Boomers. Think about it. A boomer could have finished high school at 18, walked into a well-paying job that would provide for him/her and a family until retirement, with a full pension. A Gen Yer is almost required to go to university, which means delaying entering the workforce until a minimum of 22, at which point he likely has about $30,000 worth in student debt, and because average incomes have actually decreased in the past decade, even if he works his butt off, he’ll be lucky to accomplish by 30 everything his parents accomplished by 20, in terms of financial stability, home ownership, etc.

But is it a disadvantage? That’s hard to tell. The circumstances have changed so drastically, it’s really hard to compare the two generations at all. But I take huge issue with the idea of entitlement. Maybe it’s just my group of friends, but every 20-something I know is a workaholic!


JT McGee February 1, 2012 at 17:47

I don’t think there’s a sense of entitlement with my generation either, but maybe I just have my own sense of entitlement. To be quite frank, I know a heck of a lot of people who work a lot harder than I do who don’t have nearly the same outlook that I have. It was kind of interesting to see many of my peers who are very responsible, forward-looking and hard-working who are literally freaking out about life after graduation.

I hear you on the clear differences. Four less years in the workforce plus $30k in debt requires much higher earnings power to compensate. And, let’s face it, you can’t put a monetary value on your younger years.


Eric J. Nisall - DollarVersity February 1, 2012 at 11:28

I don’t think there has ever been a time in history where one generation actually understood another. And that goes double (maybe even triple) for understanding money problems. I know my father supposedly walked 5 miles uphill both ways to get to school, when he was a kid, so why should they buy me a car? The costs of living, and the technology have inserted major gaps in the comprehension process between the generations today. To some degree, it can be viewed as whining, but I think there are ways in which their problems are indeed real and different from past generations.


JT McGee February 1, 2012 at 17:50

I walk 5 miles uphill both ways to get to my car! No, really though, I think you’re right about how technology makes us all different. There’s a lot of studies that say the younger generations are less likely to share their feelings – they’re introverted. I think this has (somewhat) to do with preferred methods of conversation, which almost always goes back to technology. To a smaller degree, I think the problem solving skills of this generation are far better than that of previous generations because of technology like computing.


Shawanda @ You Have More Than You Think February 2, 2012 at 07:10

I remember hearing a C-SPAN caller say that baby boomers were born during a sweet spot in American history. Many of them had access to pensions and are able to receive a descent sum of Social Security as well. They were able to buy homes at affordable prices. Pay for college at reasonable tuition rates. And work a good job for decades with little fear of being laid off.

Never the less, they too face challenges, such as the rising costs of health care (along with medical advances that are allowing them to live longer). Baby boomers and the generation before them are too busy feeling sorry for themselves to identify with youngsters they believe, ironically, are entitled.


JT McGee February 2, 2012 at 14:11

The rising cost of health care is definitely a concern. I wonder, though, how much of the rising cost is being displaced by older people. Younger people don’t have Medicare access, older folks do. Do seniors care if health care costs rise, given that many have very heavily subsidized health care paid for by younger generations?


Eric J. Nisall - DollarVersity February 2, 2012 at 07:43

I personally think that the technology has hampered the newer generations in some ways. I think their grasp of the English language and grammar skills is less apparent than when I was growing up. I’m not sure the problem solving skills are better in newer generations, but rather the resources they have for doing so have improved greatly. Their reliance on technology as a crutch isn’t such a good thing–some kids today don’t seem to have a sense of history and can’t solve basic algebraic problems without a calculator or computer, which is necessary when dealing with money.

I definitely agree with your assessment of the social awkwardness exhibited by some members of the newer generation: it’s hard not to be awkward in social settings when you do most of your communication from a phone’s keyboard or on facebook/twitter.

I’m not immune from any of this, though. I used to have everyone’s phone numbers memorized before cell phones, but now I’m luck if I can remember 5 people’s numbers.


JT McGee February 2, 2012 at 14:12

I’ve always felt that technology improved my problem solving skills because computers break. Thus, you have to solve a logical system to find the problem. I don’t know, but I find that to be a pretty good exercise in critical thinking, no?


Thomas - Ways to Invest Money February 2, 2012 at 09:33

I dont know but I think the generation have a lot more upside but most are using it too their advantage. With the internet and more work from home jobs, low housing costs and better education I dont know what to really feel sorry for. The problem is that a lot of them don’t want or know what responsibility is. When I grew up cutting grass and working was not a choice but something I had to do. Now kids have cell phones and video games at age 6. With housing back then people bought homes and lived in them forever. Now its this is my FIRST home. They are already looking for the next why not just get an apartment.


JT McGee February 2, 2012 at 14:19

If I’m interpreting you correctly, you think the current generation is more likely to “collect” on their potential before other, earlier generations might? That is to say that Gen-Y is more likely to finance something on future projections, and expose themselves to a different risk?

Makes sense. I can buy that. Student loans are a prime example.

Doesn’t responsibility go both ways? It’s much easier to be responsible if the responsible thing is to go get a job when there are plenty to be had at a wage that would pay for all your necessities and allow your spouse not to work. Isn’t a 4-year + $20,000 (or more) wager different than going off to get a job at the nearest factory, which would provide the same standard of living years ago?


Norman February 3, 2012 at 17:45

Every generation seems to have their own unique set of problems and every older generation seems to think the younger one doesn’t have any sense of responsibility. I graduated high school during the oil embargo inflationary period of the 70’s. I swore I’d quit driving if gas hit a dollar a gallon. I’m still driving! Everything is relative. Getting a job was not so easy as some suggest. By the time I was in my early twenties, I knew I had to go to college to be able to get ahead, so I did. I also think it will start getting easier for Gen-Y as jobs open up when we boomers retire. So, go to college or the only job you can find will be wiping our boomer butts when we get old.


Young and Thrifty February 3, 2012 at 19:46

Each generation has a struggle relevant to their time but there are HUGE differences between the boomers and Gen-Y. So many jobs have been replaced by technology. There are way more laws, taxes, and deductions waiting at every step. People were able to make a decent living without a college degree… now you need that piece of paper to fold clothes in retail.


Daisy February 4, 2012 at 18:09

@Shona – to play the devils advocate, things ARE a lot harder to afford for Gen Y than in previous generations. My perspective is bias, because I live in the second most expensive city in the world when comparing living costs vs. average wage, but my parents were able to buy thier first property – a duplex – at less than a years salary for them. They rented out all of it and lived in a basement suite, making the equivalent of another large salary.

To buy a house – let alone a duplex – on a years salary here, you’d have to make $800,000 a year. The average housing prices in Vancouver are approx. 1.1 million, and the average wage is still $40,000 /year.

So yes, where I live – but certainly not everywhere – stuff is much more expensive, even in relation to wages now than it was when my parents were my age.


Darwin's Money February 5, 2012 at 23:24

On one hand, some of these classifications are somewhat expected. i.e. Gen Y more likely to be part of Occupy Wall Street than Tea Party – in general, younger people are more liberal (and occupy is anything but a conservative movement). Their liberal school teachers and professors subtly (or overtly) influence their students. Gen Y largely elected Obama and now there’s plenty of buyer’s remorse. Over time, people tend to shed their idealistic liberalism and turn more center or conservative. This isn’t just my opinion, this is what reams of demographic information demonstrations. So, any young generation at any point in the past, present or future will be largely liberal and switch allegiances over time.

I’d agree, they’re coming into a real shitty job market. However, when looking at unemployment by education level, at least college grads still seem to be faring relatively well, but I wouldn’t go so far as to say they’re entering a better job market than in prior years… maybe just not as bad as the headlines might indicate.

I think Gen Y will continue the trend we’ve seen over the years that differs from prior generations – working many, many jobs, in many locales rather than a career with one employer. This means more renters and fewer homeowners (not to mention the shitty housing market they just witnessed). More focus on multi-tasking during routine work hours (social media, web use, working from home more, etc) – but having to “get it done still” which basically means working a more flexible schedule (more work at night, and always connected on weekends and even on vacation).

It will be interesting to see what it’s like for Gen Z!


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