💵 Study: Every generation has had higher income than the previous one

• American millennials aged 36–40 had a median household income that was 20 percent higher than Generation X at the same age.
• Every generation over the past six decades has had higher income than the previous one, even after adjusting for taxes and inflation.
• The income increase for millennials happened without them working more hours – earlier generations' growth was partly driven by increased work.

A new study published in the journal Demography has followed five generations of Americans from 1963 to 2023 and compared their incomes at ages 36–40. Researchers Kevin Corinth at the American Enterprise Institute and Jeff Larrimore at the Federal Reserve Board used data from the Current Population Survey Annual Social and Economic Supplement.

Income has risen in every generation

Measured as disposable household income after taxes and transfers, the Silent Generation had 36 percent higher income than the Greatest Generation at the same age. Baby boomers were 26 percent above the Silent Generation. Generation X had 16 percent higher income than baby boomers, and millennials came in 20 percent above Generation X.

Lower income groups have also moved forward. At the 25th percentile, household income for millennials rose by 21 percent compared with Generation X, a faster increase than what the median shows.

The increase happens without more work hours

For baby boomers, around 42 percent of the income growth was explained by working more hours than the previous generation, mainly because women's labor force participation rose sharply. Women in the Silent Generation and among baby boomers worked roughly 44–47 percent more hours than the previous generation.

For Generation X and millennials, the number of work hours has leveled off. Women in these generations worked only 1–4 percent more than the previous generation. The entire income increase for millennials therefore comes from higher productivity, not from more time at work.

Education costs are offset by higher income

The share of Americans with a bachelor's degree at ages 36–40 rose from 27 percent among baby boomers to 43 percent among millennials. The higher net cost of four years of higher education for millennials compared with Generation X corresponds to less than three years of income growth. Between ages 25 and 42, a millennial with median income earned about 71,000 dollars more than a corresponding person in Generation X.

The gap between groups is narrowing

The income gap between Black and white Americans has narrowed across generations. Black members of the Greatest Generation had household incomes 41 percent below those of white Americans. For millennials, the difference is 22 percent.

Wealth has also grown

At ages 36–40, millennials had on average 95,000 dollars more in net worth than Generation X. The share of 35–44-year-olds who own stocks rose from 39 percent in 1989 to 64 percent in 2022.

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