Following up from our post “How Millennials Would Be Less Interested by Start-Ups“, one of the reasons may be that millennials have less money to start companies. There is an ongoing debate about the wealth of millennials compared to previous generations. Some argue that this generation is substantially poorer than previous ones, in particular in the US due to student debt (see for example ‘Millennials are killing countless industries — but the Fed says it’s mostly just because they’re poor‘), while other argue that they are in fact more educated and potentially more wealthy even if it does not show in numbers at a younger age (see ‘Actually, millennials may be the wealthiest generation‘).
The Fed states that “Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth,” the study said, adding, “Conditional on their age and other factors, millennials do not appear to have preferences for consumption that differ significantly from those of earlier generations.” It seems their average net worth is substantially lower than previous generations at the same age.
The counter argument is that the metrics used traditionally to measure wealth are not applicable. “Millennials are not only more educated, they are also more urbane. The changing structure of the economy rewards living in large, urban areas. In a knowledge economy, big cities are where they find well-paid jobs and valuable social networks. Better opportunities, coupled with falling crime rates, means millennials tend to live in cities more than previous generations. More time in school and city living requires different life choices than boomers and Gen Xers and it shows up in millennials’ asset portfolios.”
The debate is on. What seems clear is that millennials have less net-worth than prevous generations, at least in the US but also probably elsewhere, even if they can hope to earn more in the future. The feeling of becoming poorer may be the engine of social unrest and substantial changes in how our societies are run, in particular for those less educated and not living in cities.
