Each new generation has a harder time overcoming the wealth of their parents. This graphic illustrates
For the first time, a generation of young people discovered not without bitterness that they would live worse than their parents.
The political-economic-social system that emerged in Western countries after World War II was based on a very simple premise: if you worked hard, if you tried hard enough, you could always live better than your parents. That truth held for a few decades. At the beginning of the eighties, it began a slow and gradual decline, finally consummated in the Great Recession of 2008.
That crisis and its consequences represented a point of no return for the model of growth and economic distribution that prevailed during the previous sixty years. For the first time, a generation of young people discovered not without bitterness that they would live worse than their parents.
This is beautifully illustrated by this graphic produced by Opportunity Insights and collected here by Visual Capitalist. It focuses on wealth data collected by the American administration from the middle of the last century to the present day. The visual conclusion is hardly optimistic: generation after generation children are having more and more difficulty matching or exceeding their parents' earnings. The social elevator, that old promise of contemporary capitalism, has disappeared. It is already the illusion of only a few.
What happened? The causes are very varied and we have discussed them at length here. We know that wages, for example, have stagnated. Western workers earn more or less the same today as they did 40 years ago. We also know that access to higher education has become the key to aspiring to a good career and big earnings. The workers without studies, the lower classes, can no longer aspire to middle or responsible cadres in exchange for a decent salary; only to increasingly precarious and temporary jobs.
This process has been penalizing each new generation with respect to that of their parents, crystallizing in the millennials, whose exit to the labor market coincided with the Great Recession of 2008. Europe reached peaks of 55% of youth unemployment and even today it is above 40%. Their job opportunities no longer involve long-term positions in stable companies, but rather a very high job rotation, the result of temporary employment and, for some demographic cohorts, of precariousness.
The figures for the United States are very illustrative. The probability that a young person outperforms their parents has been falling little by little in all deciles. In 1940, the children of the lowest percentile (those poorest families) had a 95% probability of obtaining a better economic position than their parents. By 1980 that percentage had dropped to 79%. The same happened with the middle percentile (the middle class): if in 1940 93% of their children could hope to live better than their parents, in 1980 they were only 45%.
That is to say, at the height of Generation X, the outlook for most middle-class children (more numerous than the rich or extremely poor cohorts) was stagnant. They could no longer overcome the wealth and status of their parents. Similar figures show the high percentile: the children of wealthy families had a 41% improvement in the earnings of their parents in 1940; a huge percentage that contrasts with 8% in 1980. A steep decline at all levels.
As we say, the factors are varied, but can be roughly summarized in two: wages have stagnated since the mid-1970s (instead, workers in 1964 earned $ 20.27 an hour, compared to $ 22.65 in 2018); and the economy has become polarized (less middle class and a larger gap, and more difficult to bridge, between the most economically privileged and the poorest). Something that the new generations, increasingly politically active, more radical, and more dissatisfied with capitalism have perceived.
In America it is the death of the "American dream", a dream that ceased to exist many years ago. Your parents' income is the best predictor of your future income. In Europe the process has been mimicked, discounting their greater social assistance and their greater redistributive nature, but the conclusion for millions of young people is the same: they will live worse than their parents (or aspire at most to maintain their status; in Spain, inheriting their real estate). The old promise of capitalism has not even become an option for them.