A Lost Generation? Long-Lasting Wealth Impacts on Young Families (St. Louis Fed)

Summary

The second essay in the St. Louis Fed's Demographics of Wealth (2018) series, by Emmons, Kent & Ricketts of the Center for Household Financial Stability, sorts American families into six birth-decade cohorts (1930s–1980s) and compares each against a life-cycle wealth benchmark estimated from the Survey of Consumer Finances. It is the US birth-cohort complement to Kurz, Li & Vine's generations-at-age comparison, and it isolates which balance-sheet items drive the young-family wealth deficit — pointing squarely at housing.

Key Findings

Only the youngest cohorts are still below benchmark. All six cohorts sat above their expected wealth just before the Great Recession; by 2016 the three oldest (1930s–1950s) had recovered to above-expected levels, while the three youngest (1960s, 1970s, 1980s) remained below. The gap widens the younger the cohort:[1]

• A family headed by someone born in 1964 (age 52) had 11% less wealth than expected.
• A family headed by someone born in 1974 (age 42) had 18% less than expected.
• A family headed by someone born in 1984 (age 32) had 34% less than expected — "at risk of becoming a lost generation as far as wealth accumulation is concerned."[1][2]

The cause is debt and homeownership, not income or thrift. Examining why these families lag, the authors conclude:

"Income and saving trends appear to be relatively unimportant, while several financial indicators—especially debt and homeownership—loom large."[2]

That is the finding that ties this study to the land question: the young-family wealth deficit is concentrated in housing — the asset whose price is mostly land — rather than in earnings or saving behaviour.

Relation to the Georgist Case

For the young-locked-out-of-land-wealth claim, this is a US data point that goes one step past Kurz, Li & Vine: it not only documents that younger cohorts hold less wealth at a given age, but attributes the shortfall specifically to homeownership and housing-related debt rather than to income or saving — consistent with the claim that the generational wealth divide concentrates in the land under housing. The 1984 cohort's 34% deficit is the sharpest single US figure for the scale of the gap.

Nuances and Limits

• Recession timing. The 1980s cohort came of age into the 2007–09 crash; part of the deficit could narrow as the cohort ages (the authors frame it as "at risk," not doomed).
• Housing, not land. The homeownership channel is measured at the dwelling level; the land share is an interpretation drawn from the decomposition literature.
• A benchmark model. "Expected" wealth comes from a fitted life-cycle model; the deficits are relative to that construct, not to a natural experiment.

Bears On

• Outcome: The young are increasingly locked out of land wealth — supplies the US birth-cohort wealth deficits and the debt/homeownership-not-income attribution.
• Study: Kurz, Li & Vine — Are Millennials Different? — the companion generations-at-age SCF analysis.

See Also

• The Decline of Homeownership Among Young Adults (Cribb, Hood & Hoyle) (UK counterpart)
• Kurz, Li & Vine — Are Millennials Different?
• Unearned Increment

Sources

1. William R. Emmons, Ana H. Kent & Lowell R. Ricketts (2018), "A Lost Generation? Long-Lasting Wealth Impacts of the Great Recession on Young Families," The Demographics of Wealth 2018, No. 2, Federal Reserve Bank of St. Louis, Center for Household Financial Stability. FRASER record · St. Louis Fed news release — used for the six-cohort design, the recovery-vs-still-below-benchmark split, and the "lost generation" framing.
2. William R. Emmons, Ana H. Kent & Lowell R. Ricketts, "Why Were Young Families Hit So Hard by the Recession?," St. Louis Fed On the Economy (31 July 2018). Article (fetched and read this session) — used for the verbatim cohort deficit figures (11% / 18% / 34% below expected for the 1964 / 1974 / 1984 cohorts) and the "income and saving ... relatively unimportant, while ... debt and homeownership ... loom large" quotation.