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- Millennials are being "squeezed out of the middle class," reported Richard Partington for The Guardian, citing the OECD.
- The shrinking middle class among millennials worldwide means that millennials won’t have the same opportunities as their parents, according to Partington.
- This can be seen in homebuying trends — unlike their parents, American millennials are renting longer and buying later because of a more expensive real estate market.
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Millennials are being "squeezed out of the middle class," according to the Organisation for Economic Co-operation and Development (OECD), reported by Richard Partington for The Guardian.
According to the OECD, the middle class and its influence have gotten smaller in 40 countries for every generation since baby boomers, and the living standards of the middle class have lowered in the past 30 years, Partington wrote. The OECD’s analysis included the 36 nations it’s comprised of, plus South Africa, China, Russia, and Brazil.
About 60% of millennials are middle class, compared to 70% of baby boomers at their age, he said, citing data from the OECD.
The middle class is particularly shrinking in the US — middle-income Americans represented about 61% of the country in 1971, but only 52% of American adults were classified as middle-income in 2016, reported Business Insider’s Katie Warren, citing data from the Pew Research Center.
And Americans know it — just less than half said they were middle class in 2014, while more than half said they were middle class in 2008, according to Pew.
The Pew Research Center defines the US middle class as people earning two-thirds to twice the median household income, which was $60,336 in 2017, meaning middle-class Americans were earning about $40,425 to $120,672. But that number shifts as it’s broken down by state and even by city.
About a quarter of American millennials earning $100,000 a year or more consider themselves below middle class — nearly 7% think they’re poor, and almost 20% think they’re working class, according to an INSIDER and Morning Consult survey. Of those who responded, about 38% of millennials earning $100,000 a year or more think they’re middle class, and 23% think they’re upper middle class.
Millennials don’t have the same opportunities as their parents
But, as the OECD’s findings show, the disappearing middle class is a worldwide trend. "The snapshot of modern life for middle class households around the world suggests that younger generations are increasingly being denied similar opportunities to their parents," Partington reported.
The ability to buy a home is one of the main things millennials can’t do that their parents did. Homes are 39% more expensive than they were nearly 40 years ago, according to Student Loan Hero. A report by SmartAsset found that in some cities, the average home outweighed the average income by so much that it could take nearly a decade to save for a 20% down payment.
As a result of a more expensive real estate market, millennials are renting longer and buying homes later — a move that’s wiping out starter homes.
While millennials have benefited from a 67% rise in wages since 1970, according to Student Loan Hero, this increase hasn’t kept up with inflating living costs: Rent, home prices, and college tuition have all increased faster than incomes in the US.
Ultimately, high costs of living, along with effects of the Great Recession, have made it harder for millennials to save and build wealth.
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Source: Business Insider – hhoffower@businessinsider.com (Hillary Hoffower)