Gen Y and Boomers, Suffering the Most

As my colleague Robert Pear reports, a new study from Sentier Research finds that four years after the start of the economic recovery, the median American household income is still down 4.4 percent. Incomes have risen a little since their recent trough in August 2011, but not enough to make up for the losses sustained earlier.

The declines were not distributed evenly. One of the more striking findings from the report was the variation in changes in median income by age group:

Source: Sentier Research

Those in the 65- to 74-year-old group are the only demographic in the entire study â€" which also included breakdowns by race, family status, gender, education and work status â€" to have incomes rise by a statistically significant amount in inflation-adjusted terms. (Householders 75 and older also reported higher incomes, but the change was not statistically different from zero.) On the other hand, those under age 25 and between the ages of 55 and 64 (roughly the baby boomer demographic) suffered the biggest hits.

As I’ve written before, these changes in income are not the only ways that different age groups have been disparately affected by economic turmoil.

Older Americans may not only have higher incomes, but may also might enjoy higher life expectancies as a result of the recession and continually poor job market. One study found that death rates for people over 65 have historically fallen during recessions. The researchers theorized that weak job markets push more workers into taking relatively low-paying and undesirable work at nursing homes, leading to better care there.

By contrast, another study found that people who lost their jobs in the few years before becoming eligible for Social Security (in today’s case, that baby boomer cohort) lost up to three years from their life expectancy, largely because they no longer had access to affordable health care.

The young, meanwhile, sustain long-term declines in their incomes as a result of entering the job market during a recession. Two separate studies based on past recessions found large, negative effects on wages for people who graduated from college in a bad economy, which persist for as long as two decades. A Hamilton Project analysis based on one of those studies extrapolated that the expected loss in earnings over the next decade for the typical person who graduated around 2010 would be about $70,000.

In the wake of this recent recession, young people have also ended up moving back into (or never leaving) their parents’ homes in large numbers, and have suffered major wealth losses as well.