How Young Americans Are Struggling to Sustain the Financial Burden of Older Generations

The Generational Shift in Social Safety NetsYou know the expression “OK, Boomer”? It might be more apt to say “Boomer OK”. The social safety net in the United States increasingly favors the older generation over the younger, impacting political views and the security of future generations.
Income and Wealth DisparitiesYounger Americans have valid reasons for their dissatisfaction. Significant shifts in income and wealth are heavily biased towards the older population. Since 1980, under almost every president, 80 percent of the real growth in domestic spending has been allocated to Social Security and health care, with Medicare being the most costly health program. This is based on calculations from federal data. Meanwhile, as a share of GDP, all other domestic spending has decreased.
The Burden of Education CostsOur current tax system largely fails to support Americans, especially the younger ones, in paying for higher education. This wasn’t as much of an issue in the 1960s or 1970s, when the average college graduate had little or no student debt. Today, however, the average annual loan amount is about seven times what it was in 1971. This is partly because state governments have significantly cut funding for colleges and universities.
Housing Affordability CrisisThis financial strain is occurring at a time when homeownership is becoming increasingly unaffordable. The median home price has surged from approximately 3.5 times the median annual income in 1984 to 5.8 times in 2022. Thus, it’s no surprise that younger generations are more likely to fall into lower-income categories compared to their parents or grandparents. Nearly half a century ago, the situation was the opposite. In 1989, the median net worth of Americans aged 35 to 44 was almost 75 percent of those aged 65 to 74. By 2022, that ratio had plummeted to one-third.
Why the Discrepancy?The reason is straightforward. Unlike most other types of spending, Medicare, established in 1965, and Social Security, expanded in the 1970s, were designed by Congress to increase outlays perpetually faster than national income. Medicare costs rise with medical prices and new treatments, while Social Security benefits are structured to grow with each new generation’s wages and inflation. Additionally, increased life expectancy means more years of benefits.
Implications for Future SpendingCurrently, tax revenues are so heavily committed to mandatory spending, primarily for older Americans, and to paying interest on the national debt (which has quadrupled as a share of GDP since 1980), that little is left for other crucial areas. Unless we resort to borrowing, there’s scant funding available for education, infrastructure, the environment, affordable housing, poverty reduction, or the military. (Sigorta Haber)