At Strategic Investment Conference 2018, my good friend Neil Howe and I talked about the differences in generations with regard to income inequality.
His data shows that when you were born makes a big difference. Those now 75 and older (what it is generally called the “Silent Generation”) began their economic lives in the 1950s–1960s when businesses were hiring lots of young people and the country was growing.
Boomers mostly began their economic lives in the 1980s, just in time for the greatest bull market in history. This generational experience shows up in the distribution of wealth that we have today.
With apologies to Generation X, which followed the Boomers, the age-wealth disparity is even more apparent in the next chart. As older generations have prospered, Gen Xers have actually seen their median net worth go down in the last 20 years.
Ugh. Basically, the young rule in terms of numbers, but the old rule in terms of dollars.
At the conference, I showed several charts on wage disparity, but I think the following is the one I find most poignant.
Note that it is the 95th percentile of workers that has received the bulk of the increase in wages. The bottom 50% is either down or basically flat since 1979. Even the 70th percentile didn’t do all that well.
The average wage increase was boosted mostly by the gains that top wage earners made. This income-growth disparity is one of the key reasons for the increased frustration with “elites.” And this same gap is widening across much of Europe and the rest of the world.
I’m afraid that the differentials in income and wealth are going to increase, not decrease, for a variety of reasons.
For one thing, that’s just where we are in the economic cycle, though technological change and globalization are important factors as well, and not ones that politicians can readily control.
Frustration will be on the increase, too.
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