Do you think you're better off than your parents?
It's a question that's not so easy to answer: Plenty of 20- and 30-somethings say their parents were able to afford a first home, children, and financial security long before they even settle into a stable job. But according to a survey taken earlier this year by the Economic Mobility Project at the Pew Charitable Trusts, almost six in 10 respondents said their standard of living is much or somewhat better than their parents' was at the age they are now.
Some people may wonder how this can be at a time when 20-somethings are burdened by higher amounts of student loan and credit card debt than ever before, as well as a recession that has left as many as one in five of those under 30 unemployed. Ianna Kachoris, project manager of the Economic Mobility Project, says the answer lies at least partly in Americans' optimism. "Even during one of the biggest downturns, eight in 10 Americans still believe they can get ahead," she says.
That optimism is also backed up by facts. The median American's compensation, which includes wages plus benefits, went up 28 percent between 1975 and 2005, according to research by Terry Fitzgerald, senior economist at the Federal Reserve Bank of Minneapolis. The increase in benefits refers largely to healthcare. The recession, of course, has temporarily made it more difficult for young people (and older ones) to achieve financial success, but Fitzgerald says the longer term trend still suggests increasing compensation levels. "Once the economy recovers from this recession, more people will have more opportunities for the 'pursuit of happiness' than at any time in our history. And my bet is the opportunities will be even better for our great-grandchildren," he says.
Fitzgerald also points out that young people are able to buy much nicer things than their parents were, including central air conditioning, safer and superior cars, cellphones, cable television, computers, and high-definition televisions. "I suspect that if most families had to live in a middle class house from the 1970s—with only 1970s amenities—they, and most definitely their children, would feel considerably worse off," he says.
[For more, read: "A Financial Roadmap for Generation Y."]
Do you agree—despite the recession, are you better off than your parents?