NCPA - National Center for Policy Analysis


May 21, 2007

The growing divide in U.S. income inequality is more of a generation gap than class conflict, according to a USA Today analysis of federal government data.


  • Nearly all additional wealth created in the United States since 1989 has gone to people 55 and older, according to Federal Reserve data.
  • Wealth has doubled since 1989 in households headed by older Americans.
  • The median net worth -- the middle point for all households -- for those aged 55 to 59 rose 97 percent over 15 years to $249,700 in 2004, the most recent year for which data is available. Median income rose 52 percent.


  • Households headed by people in their 20s, 30s and 40s have barely kept up with inflation or have fallen behind since 1989.
  • People ages 35 to 50 actually have lost wealth since 1989 after adjusting for inflation, Fed data show.
  • The median household net worth for those from 35 to 39 years old fell 28 percent to $48,940; median income fell 10 percent.

The implications are far-reaching and can turn conventional wisdom on its head, says USA Today.  Further, Social Security and Medicare increasingly are functioning as a transfer of money from less affluent young people to much wealthier older people.  The financial shortfalls of Social Security and Medicare over the next 75 years are so large -- $340,000 per household -- that they dwarf the wealth of every age group.  This hidden debt will make it a challenge for young people to accumulate as much wealth late in life as their parents have.

Source: Dennis Cauchon, "Generation gap? About $200,000," USA Today, May 21, 2007.

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