Millennials Out-Earn Gen X. The Real Slump Began Decades Ago

Pick almost any headline written about millennials in the past decade and you will find the same verdict: this is the generation that broke the deal. The first lot of Americans, supposedly, doomed to do worse than their parents. The unluckiest cohort in the country’s history. Except the ledger, when you actually total it up over sixty years, says something stranger.

Two economists have now done that totting up, and their answer reorders the story most of us have been telling. Kevin Corinth and Jeff Larrimore tracked five generations of Americans through the same narrow window of life, ages 36 to 40, using six decades of Census income surveys running from 1963 to 2023.

What they found is that each generation has, in fact, ended up better off than the one before. Millennials in their late thirties pull in a median household income roughly 20 percent above Generation X at the same age, once you account for taxes and transfers. That is slower than the Silent Generation managed (36 percent) and slower than the boomers (26 percent), yes. But it is a touch faster than Gen X, who clocked just 16 percent. Hardly the collapse of the American Dream that the commentary promised.

If progress stalled, it did not stall with avocado toast and student debt. It stalled a full generation earlier.

The deceleration shows up clearly with Generation X, the kids of the 1970s, not with anyone born after 1981. And the reason has almost nothing to do with the things we tend to argue about. It comes down, in large part, to a single lever that ran out of room: how many hours women work.

The Engine That Switched Off

For two generations, American household incomes were turbocharged by women pouring into paid work. Silent Generation women in their late thirties worked about 47 percent more hours than the women before them. Boomer women, another 44 percent on top of that. That is an enormous structural tailwind, and Corinth and Larrimore calculate it accounts for 17 percent of the Silent Generation’s income gains and a whopping 42 percent of the boomers’. Then, around the turn of the millennium, female labor force participation levelled off. The tailwind simply stopped blowing.

Generation X women added a measly 1 percent or so in hours over the boomers; millennial women, about 4 percent. Men across all four generations, meanwhile, drifted slightly downward in hours worked, knocking a couple of points off each time. So when you ask what share of millennial income growth came from working more, the answer is striking: essentially none of it. Their gains, slower though they are, came from being more productive per hour rather than from clocking extra shifts. In welfare terms that is arguably the better kind of progress, since it does not eat into anyone’s evenings.

There is a second wrinkle that explains a lot of the gloom, and it has to do with parents. Young millennials looked like they were doing well partly because they were still living off household income that was not really theirs, a sofa, a fridge, and a Wi-Fi bill courtesy of mum and dad. The share of each generation still financially dependent on their parents fell below 10 percent by age 26 for boomers, 28 for Gen X, and not until 31 for millennials. They left the nest later, in other words, then carried on climbing once they did.

Why It Still Feels Like Falling Behind

None of which is to say the grumbling is irrational. The researchers are careful here, and so should we be. Homeownership among 35-to-44-year-olds slipped from 66 percent in 1989 to 61 percent by 2022, a real and visible loss in a country where a house is the whole point. College got pricier too, though the authors find the extra net cost of a millennial’s degree over a Gen X one is clawed back in under three years of higher mid-career pay. Lifetime gains swamp the tuition bill, even with the loans.

And then there is the matter of who you compare yourself with. Twenty-five years ago, 71 percent of Americans believed the next generation would have it better; by 2022 that had cratered to 42 percent. Part of the disconnect, Corinth and Larrimore suggest, is that the rebound in income growth landed mostly at the lower end of the millennial distribution, while better-off millennials sizing themselves up against better-off Gen Xers saw the pace flatten. Both groups are looking at real numbers. They are just looking at different ones.

One caveat looms over the whole exercise, and the authors flag it plainly: they can only see the oldest millennials, those born up to about 1990, since the rest have not hit 36 to 40 yet. Younger millennials will keep entering that window until 2036, and incomes tend to keep rising. If anything, then, this study probably undersells how well the generation will ultimately do. The deal, it turns out, was never quite broken. It was just being measured before the final figures came in.

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