The Indicator from Planet Money - The Growing Racial Divide In Millennial Wealth

Many white millennials have made amazing progress in building wealth in recent years. Meanwhile, Black millennials keep falling further and further behind.

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So great results, key, welcome, you write the Planet Money newsletter and you've recently published this newsletter about Millennial wealth and how it compares to previous generations through a few years ago with a senior researcher at the Federal Reserve Bank of st. Louis, her name is Anna Hernandez. Kent Anna is what you'd call a young Millennial old enough to have friends, who still wear skinny jeans. I would have threatened to spend too much time making videos on Tik-Tok and I am wearing skinny jeans right now. So she may have been born in the 90s, but she's definitely not genze. I absolutely refuse to take it on the new trend of like, party my hair down the middle. I'm, I'm not a fan of that. I have no idea what she's talking about, but maybe that's because I'm an older Millennial born in the 1980s. A few years ago, Anna and her team at the St. Louis fed. Begin studying the wealth of

Older Millennials like me they found that the typical older Millennial household as of 2016 had only about $28,000 in net worth putting them 40% behind what previous generations had in. Well that the same age for Millennials are a lot of reasons to believe that older Millennials could become a kind of Lost Generation that came of age in an economy marked by growing and equality. And a decline in Social Mobility. They had to deal with issues like the skyrocketing cost of college and the enter their careers during the Great Recession may be behind us. But the economic scars from that same era are real. And so and I was worried that we Millennials were destined to be poor than the generations that preceded us.

Then Anne and her team got their hands on this newer data which tells a new and more complicated story. This is the indicator from Planet Money. I'm Stacey Vanek Smith in the show, the good news and the bad news about Millennial wealth.

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Every three years, the Federal Reserve releases the survey of consumer finances. It's based on extensive interviews of thousands of Americans about the kind of nitty-gritty details of their finances, which is why it takes three years to compile. So when the FED released, the latest date of last year and a Hernandez, can't and her colleagues jumped at the chance to see what happened to older Millennials. You do 80s babies since 2016 and have remained The Lost Generation brother behind and break. We have good news and bad news to report. Let's start with the good news. We little good news, typical older Millennial household, jump substantially from $28,000 in 2016 to $51,000 in 2019, but it is worth noting that that is still behind compared to other Generations. But the booming

Stock market, and housing market over those three years, has helped to close the gap. The 40% wealth Gap with previous generations that they found in 2016. Fell to an 11-percent Gap in 2019, so it's improving, that's the good news. But when you dig deeper, there's a lot of bad news. And the most glaring is the growing gap between black and white Millennials. The typical household headed by an older white Millennial has about $88,000 in wealth. Black, Millennials are feeling much much worse. That is very, very little while seems to be able to weather an economic crisis. Be able to plan for the future whatsoever. Let alone a down payment on a house $5,000 for $88,000. And what about two-thirds of white older Millennials own homes? Less than a third of older black Millennials to. They're also big gaps in owning stocks and paying off student.

Why do older white Millennials catch up with previous generations of white Americans older black Millennials, keep falling further and further behind not just compared with white people, in their age group compared to previous generations of black Americans. The typical older black Millennial household. Only has about half as much wealth, as he typical black American in previous generations. That's incredibly Chaka because black Americans have made great progress in terms of political representation and job protections. And it doesn't seem to be translating into wealth gains to get some perspective on this. We called it Nicole Smith. She's an economist at Georgetown, who's done a lot of research? They can help explain why the wealth Gap is so large for Economist, like me that I've been looking at the wealth Gap and disparities for quite some time. It is not surprising to see a number that large. Nicole says that understanding the wealth Gap facing the current generation has to start with all the awful, Reese's Puffs.

Season American history, ones, that excluded black Americans from all sorts of opportunities and social programs including ones that helped Americans buy homes. The biggest determinant of wealth in this country is home ownership and do you own your own home? This Legacy from the past means that black parents have less wealth and had a harder time, helping their kids put down payments on their own homes, or pay off student debt. In the closest student debt goes a long way in explaining. Why older black Millennials are poorer than the generations that preceded them with the decline of manufacturing. And many other middle-income jobs at used to provide opportunities to less educated. Folks college has become the primary path to making it to the middle class. While black Millennials are more likely to go to college than the generations before them. They're also more likely to be saddled with a large amount of debt. We still have a significant earnings premium for

For our students who didn't finish college. But what's been happening is is it's their finishing college and finish it with much higher debt than anyone else. And Nicole says, when black people do go to college, they just proportionally end up at institutions that are blessed, elective and are not as valuable on the job market. These include for-profit colleges men who prey on kids dreams of a better life. We have a situation where, you know, where we're feeding a lot of these. Young people fall from mrs. Go to school. Go get your degree and I know you're going to get a good job. You're going to be better off. Nicole believes, we should do something proactive to address the situation and it is why she's in favor of forgiving a large amount of student that still. She says she does see problems with making a policy like that Universal. For example, it could end up giving money to Blackberry hype. A professional to do not need to help. You can let the perfect, be the enemy of the good, right? We can make this

Spaced. We can decide on which types of professions we want to give an extra push to, and we can do it for different segments of the community and men. And I think if we do that, then it's definitely a step in the right direction to removing some of the burdens of student loan, debt, from society, in spite of all the daunting numbers, Nicole says, she's optimistic that policymakers are at least discussing issues, like the racial wealth Gap, and she's hopeful will start to do something about it.

This episode of the indicator was produced by Jamila hospital with help from Josh Newell. It was fact-checked by Sam's by the indicators edited by Kate, concannon and is a production of NPR. Also, subscribe to Greg newsletter. Where can you find a Greg? You can find the Planet Money newsletter at Planet Money newsletter.

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