Millennials Make More Money, But Have More Debt Than Gen Xers
It’s often debated which generation had it worse: millennials or Gen Xers? But now a new Statistics Canada report has put that debate to rest.
In the new study, the agency compared the household incomes of millennials aged 25 to 34 to those of Gen Xers’ at the same age. They found the younger generation made more money, with incomes reaching $66,500 in 2016, compared to Gen Xers who made $51,000 in 1999.
The reason for the higher income is that millennials are the “most educated generation,” thus making them more qualified for higher paying jobs. According to a National Household Survey, 68 per cent of people aged 25 to 29 had a post-secondary degree or diploma in 2011. This is significant compared to the proportion in 1981, which was just 43 per cent.
The median net worth of millennials — meaning their total household assets minus debts — was also higher than Gen Xers. Their median net worth was $70,600 compared to $42,800 for the older generation.
But despite being wealthier, millennials still don’t have it easy. The younger generation is “relatively more indebted, as they carried considerably more mortgage debt,” the report found.
While millennials had similar homeownership rates than other generations — with 51 per cent of those aged 30 to 34 investing in housing — they still had more debt. Their median mortgage debt was $218,000, 2.5 times the value of their after-tax income. Gen Xers, on the other hand, only had a mortgage debt of $67,800 at the same age.
StatsCan does not further explain this increase of debt among millennials, however, high house prices and rising interest rates could be contributing factors.
While the report specifically calls out mortgage debt for pulling down millennials, a previous study found that student loans have also caused more millennials to file for bankruptcy. So while the younger generation is more educated, thus giving them an edge in the workforce, they are also more indebted.
Additionally, the wealth disparity among millennials is far greater than that among Gen Xers. For the former generation, the top and bottom 25 per cent had a net worth of $253,900 and $9,500, respectively. For the latter generation, the net worths were $126,900 and $6,200, respectively.