NO ONE HAS IT HARDER THAN THEIR FATHER DID:

Take the high levels of debt. Millennials have almost twice as much debt as their parents did at their age. But this is mostly student debt, reflecting that they made an investment in their future earnings. As the economy changes, more education has become necessary for higher pay. According to data from the Federal Reserve Bank, about 69% of millennials had some education beyond high school, compared with 54% of boomers.

True, millennials paid higher tuition than their parents. And the salary premium from going to college has fallen since the 1980s as more people get a degree, making them a little less valuable. There's also evidence that starting wages are lower and may grow more slowly when you control for education. But that income has become more valuable.

In finance, an asset is worth more when it's more predictable, and wages are much less variable than they used to be. Before, wages swung around as people changed jobs and worked more hours. But over time, people changed jobs less frequently and worked less. This helps explain why wages have stagnated, because in the past, increases were partly driven by more moving around and less secure positions. An asset that pays predictable income each year is more valuable than a riskier asset because knowing how much you'll be paid (or have to pay) each year is desirable, whether you are an investor or a worker. This is why junk bonds cost less than U.S. Treasuries. So when you account for less risk and more stability, a millennial's reliable $1 wage in 2021 is worth more than an erratic boomer wage in 1991 that might swing from 50 cents to $1.50.

Education has contributed to that stability. The more education you have, the shorter, less frequent periods of unemployment you face. In the new economy we've traded risk for stability. It's debatable if it's worth the trade-off, but you can't deny there is value in less risk. And in this new world, investing in yourself (or your education) is often the smartest investment you can make.

It's also true millennials are less likely to own a home: 48% of 26- to 39-year-olds are homeowners today compared with 52% in 1989, according to Fed data, and home prices are much higher. But that also reflects some reasonable choices. Before the pandemic, at least, higher wages and better skills development were found in large urban areas. These places also had higher home prices, in part because of demand and also because of policies that limit development. So if you live somewhere you can't afford to buy a home, it might be because you live somewhere that puts your career on a fast track.

Millennials may have more debt, but they also have more financial assets -- about 25% more than their parents did at their age. This is partly because they are more likely to have a retirement account at work, since these savings vehicles are more common than traditional pensions used to be. You could argue traditional pensions were better, but they were also harder to come by: 86% of millennials have some kind retirement plan, compared with 73% of boomers at their age.

Tweet   @brothersjudd