business

The Future Is Yours

Whatever quality of life means to you, achieving it is in your hands.

The ultimate expression of a bleak national future goes something like this: “Today’s young adults will be the first generation in U.S. history to live less well than their parents.”

A provocative cover story in New York magazine titled “Downward Mobility” warns: “You thought you’d live better than your parents did. Wrong.” But the article goes on to undercut the ominous headline by depicting Manhattan yuppies who seem to be living much better than their parents probably did when they were young adults.

The date of this gloomy article? August, but not this past summer. It was almost 30 years ago, in 1982, near the end of the most brutal recession of the post–World War II era until the Great Recession of 2008–09. (The jobless rate hit almost 11% in the fall of 1982, a higher peak than the 10.1% rate in 2009.)

This generational anxiety resurfaces in every recession, as many Americans suffer real financial setbacks and income inequality widens. But economic data indicate that, after the booms and busts are smoothed out, every cohort that has come of age over the past 40 years—the Baby Boom, Gen X, the Millennials—has enjoyed a higher material standard of living than the previous generation did at the same age. And I don’t see this ending.

That is, the median earnings of the members of each cohort have enabled them to buy more and better goods and services than their parents could afford—housing, cars, food, clothing, appliances, travel, entertainment, restaurant meals and so on.

Different choices. The mix of expenditures varies by personal choice. Some will choose a smaller apartment or house, for example, to afford more travel. Some will consume less of everything to save more for retirement.

In the past 40 years, solid gains in living standards have been achieved, on average, by women, racial minorities and immigrants. This trend reflects generally better educational and employment opportunities than their parents had.

The adults least likely to do better than their parents? Those with limited education—especially men. Their fathers may have earned a good living at low-skill, high-wage factory work, but those jobs are scarce today.

It seems that today’s young adults who grew up in middle-class comfort are the most likely to fret that they are doomed to a life of “living less well than their parents.” They often cite external forces that they believe will hamper their material success: fierce global competition, falling pay in many fields, burgeoning student debt, the demise of employer-paid pensions, and the size of the down payment now required to buy even a bargain-priced home.

All of those challenges are real, but young adults should also recognize that tomorrow’s living standards are largely within their control, especially through their choice of academic path and career and their willingness to take entrepreneurial risks.

If the son or daughter of a high-earning business owner, surgeon or corporate lawyer chooses to become a musician, elementary school teacher or journalist—all estimable, satisfying occupations—he or she is making a conscious choice to “live less well than their parents.” Ditto the child of the electrician or plumber who becomes a poet.

There has always been downward socioeconomic mobility in America, alongside broader upward mobility. It occurs across generations of once-wealthy families that overconsumed and didn’t invest wisely; in families beset by tragic bad luck; and in families of every social class who didn’t prod their children to think strategically about the future or motivate them to be self-reliant, high-achieving adults.

Living less well than your parents? It’s not just a matter of fate or global forces beyond your control. It’s also in your own hands.

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