CNN Reading 1 What broke the American Dream for Millennials

By Allison Morrow, CNN

8 minute read

Updated 2:25 PM EST, Mon January 22, 2024

Rachael Gambino and Garrett Mazzeo planned their financial life by the

book: They went to college, paid down debt, saved aggressively, got

married, bought a house, started a family. The dream.

But sitting at the kitchen table of their suburban Pennsylvania home —

an asset they feel both lucky to own and also somewhat trapped by —

they say they wouldn’t do it all over again quite the same way.

For their nine-month-old son, Miles, Rachael and Garrett agree: They’re

not going to push him to pursue the same path.

“I think a lot of Millennials were forced into saying, ‘you need a four-year

degree in order to be successful,’” says Rachael, who is 33. “At 18, you’re

signing up to be $100,000 in debt before you even really know how to

make the best decisions for yourself. I think we need to change that

narrative.”
Rachael and Garrett know how lucky they are, both having steady work

and parents whom they were able to live with temporarily while they

saved for a down payment. Critically, they also have a tenant: Rachael’s

younger sister, Kristen Gambino, 26, moved in shortly after they bought

the house in 2022, helping them pay the mortgage while saving herself

from an increasingly unaffordable rental market.

But the couple still feels like they’re on a knife’s edge. Their day-to-day

lives are dictated by a spreadsheet where Garrett, 35, meticulously

manages every dollar coming in and out.

“This is the American Dream,” Rachael says. “But at what cost? What are

we paying for the American Dream now?”

From one crisis to the next

There’s a perception so prevalent in post-Covid America it’s practically

become a cliché: The economy is good but the vibes are bad.

Having skirted an actual recession last year, we entered a vibecession in

which virtually all economic data suggests the United States is thriving,
but people aren’t quite feeling the effects.

In a CNN poll conducted last month, a stunning 71% of Americans said

economic conditions in the country were “poor,” with 38% calling them

“very poor.” And that’s somehow better than in the summer of 2022,

when 82% said the economy was poor.

The culprits behind the bad vibes are obvious:high prices, an

impenetrable housing market, persistent inequality, rising debt.

Decades-high inflation is finally coming back down to Earth, butin its

wake is the scourge of high prices — a daily reminder of how much more

we’re shelling out both for basic necessities and the indulgences we

denied ourselves during the pandemic, like concert tickets and vacations.

But less talked about are the financial resentments that have calcified in

the psyche of the nation’s most populous generation over the last

quarter-century. For Millennials, hit with two world-altering economic

downturns before their 40th birthdays, bad vibes come standard.

Even as Millennials have made up significant ground in terms of wealth

over the past four years, according to Brendan Duke, senior director for

economic policy at the Center for American Progress, that shift only

came after more than a decade of stagnant wages and more or less flat

wealth accumulation.

They are the most educated generation in US history, but it didn’t come

cheap.

Between 1987 and 2017, the cost of attending a public four-year college

rose more than 200%. While data on student debt varies, the average

balance for a borrower between the ages of 25 and 34 stands at

$32,000, according to Department of Education data.

All of those strains — a long hangover from Great Recession, all the way

through the whiplash of the pandemic economy — have taken a toll.

To borrow a refrain from an earlier era of turmoil: It’s the 21st century

economy, stupid.

The generational wealth gap

For years, Millennials, now ages of 27 to 42, have lagged behind their

Baby Boomer parents and Gen X counterparts in accumulating wealth.

Most were raised in the economic idyll of the 1990s, one of the longest

recorded economic expansions in US history. But by the time they

graduated college, their world had been turned upside down by the

Great Recession.

Older Millennials entered the job market just as Corporate America was

coming off its hinges in the worst downturn since the Great Depression.

The 2008-2009 recession made entry-level jobs scarce. It also pushed

older workers to put off retirement, gumming up the corporate path for

younger workers. For years after the recession was technically over,

unemployment remained higher than its pre-recession 2007 level, and

wages stagnated. Critics of the Obama administration dubbed the

decade following the Great Recession “the barbecue economy” because

the recovery was low and slow.

The result was a Millennial wealth gap that was larger, relative to other

generations. By 2016, families headed by 1980s-born Millennials were

about 34% below “wealth expectations” — the level economists would

have predicted them to reach based on where earlier generations were

at the same age, according to the Federal Reserve Bank of St. Louis.
Although that gap has narrowed significantly — the Fed later updated its

research with data through 2019, finding Millennials were just 11%

below wealth expectations — older Millennials also had the highest debt

burden of any demographic group, making them particularly vulnerable

to economic shocks.

The nest egg myth

A common refrain Millennials heard from their Boomer parents is that

buying is always better than renting. That advice is now out of date.

Central to the pitch of the American Dream is a house. Homeownership,

the traditional thinking goes, is the surest way to build wealth. Save up

for a down payment, buy a starter home, and definitely don’t spend too

long throwing money away on rent.

That dream has become more fantasy in the Covid-era economy.

Housing inventory was already low before the pandemic — a long-

lingering effect of the bubble’s collapse in 2007, which created a glut of

empty homes and prompted developers to drastically scale back

production. The supply dwindled even further as newly remote workers

retreated from cities, taking advantage of the record-low mortgage rates.

Between 2021 and 2022, home prices surged to record highs. Then, as

inflation took root and interest rates rose, those too-good-to-miss 3%

mortgages vanished.

For Garrett and Rachael, missing the low-rate window was a painful

blow.

Following the popular wisdom that you should try to put 20% down on a

home purchase, they focused on an aggressive savings plan so they

could put $100,000 down — more than enough for the roughly $425,000

they expected to pay for their first home.

By the time they reached their savings goal, home prices and mortgage

rates had gone through the roof.

Had they chucked out the traditional wisdom, they say they’d be in a

much better spot financially.

It’s an “if only” thought that seems to haunt Garrett, who majored in

economics and prides himself on being financially disciplined. If only

they’d bought their house in 2019 instead of 2022 – even with no down

payment – their monthly mortgage payment would have been lower.

“I don’t think anyone could have foreseen house prices going up 20% or

30% in a three-year period,” Garrett says.

The couple says they’re now stuck with a monthly outlay that amounts

to about 40% of their take-home income.

Interest rates are expected to come down later this year, which could

give them a chance to refinance at a lower rate. But in the meantime,

Rachael and Garrett are hunkering down.

A common refrain Millennials heard from their Boomer parents is that

buying is always better than renting.That advice is now out of date.

Renting a three-bedroom home is more affordable than owning a

similarly sized unit in nearly 90% of local markets in the US, according to

a report from Attom, a real estate data company. But both options are a
still a stretch for a household earning the local median income.

Asked why homeownership was such a priority for them, Garrett

responds with a laugh: “I honestly don’t know. I mean, because that’s

what they taught us — the American Dream. We’re supposed to buy a

house and the white picket fence and have the baby and the dog. And it

just felt like the natural next step.”

Although they’re quick to acknowledge their good fortune relative to

many of their friends and millions of others for whom homeownership

remains out of reach, they still worry all of it could crumble, Rachael

says. If one of them loses their job or an unexpected medical bill arises,

she fears they could lose it all. And while her sister has no imminent

plans to move out, when she eventually does, “we’re going to have a

whole reshuffling of financials in the spreadsheet.”

Silver linings

Last year was a particularly painful time for consumers across the board.

Prices were still rising quickly, and so were interest rates, making credit

card debt and other loans especially painful to pay down. Over the

summer, credit card delinquencies surpassed pre-pandemic levels for

the first time, according to the Federal Reserve Bank of Philadelphia.

Some relief is coming, even if it isn’t widely felt yet.

Wages have cumulatively gone up more than prices since 2019, and

that’s especially true for Millennials. Workers who are now between the

ages of 29 and 38 saw wages go up an average of 14%, adjusted for

inflation, since 2019, according to Center for American Progress’ Duke.

That’s a nice bump. But at the same time, Duke notes, those increases

may not have sunk in psychologically for workers who also became

parents in that time period.

“Being a parent in America is very expensive,” he said. Maybe you get a

raise and a promotion in your late 20s or early 30s, but the cost of child

care more than offsets it.

“A strong economy isn’t necessarily going to provide parental leave or

affordable housing,” Duke says. “Those are investments that we as a

society have to fight for.”

Rachael and Garrett feel that pain acutely. Pricing out the cost of day

care for Miles was a reality check that quickly altered their timeline for a
second child.

“We’d love to have kids back to back,” Rachael says. “I’d love for him to

have a partner in crime, but we can’t afford to give him [a sibling] for at

least four years.”

CNN’s Alisyn Camerota, Matthew Friedman, Deborah Brunswick and

John General contributed to this report.

Opinion: Three ways to help millennials overcome the cost of living crisis

Opinion by Jill Filipovic

8 minute read

Published 2:26 PM EST, Mon January 22, 2024

Editor’s Note: Jill Filipovic is a journalist based in

New York and author of the book “OK Boomer, Let’s

Talk: How My Generation Got Left Behind.” Follow her

on Twitter. The opinions expressed in this

commentary are solely her own. View more

opinion on CNN.

CNN —

Millennials, as you’ve have probably heard, have

gotten pretty screwed.

By some accounts , we’re the most educated

generation in American history, but also underwater

with educational debt. We haven’t amassed the kind

of wealth our parents had at our age, and it’s

unclear whether we’ll ever catch up. We’ve been

slower to purchase homes in part because Baby

Boomers won’t sell theirs , and so we’re throwing our

hard-earned cash away on skyrocketing rents, which

in turn puts saving for a 20% down payment further

out of reach. We’re so financially stressed that we

can’t afford to have kids, and by staying childless

we’re breaking our Boomer parents’ hearts .

I wrote an entire book on the plight of Millennials ,

on the many advantages Boomers enjoyed and then

hoarded for themselves, and what Boomers and

Millennials alike don’t understand about each other.

There is much doom and gloom to be found in nearly

all of the reporting about Millennial life, and things

aren’t looking much better for Gen Z and younger

generations. But there are also tremendous

opportunities. American

Boomers enjoyed unprecedented wealth and

opportunity not just out of sheer luck or even sheer

numbers, but because the government made

unprecedented investments in them: in their

education, in their health, in their ability to live

independently.

Our country could do the same for Millennials. It

may, frankly, be too little, too late for many of us. But

it could ensure that the Millennial generation is an

unfortunate aberration, and that future generations

return to a path of prosperity and upward mobility.

The “how to fix it” list could itself fill an entire book.

But here are three priorities:

Make higher education much more affordable

One of the more troubling shifts of the past

American decade has been the broad loss of faith in

higher education . While 74% of young adults a

decade ago agreed that a college degree is very

important, only 41% say the same today. Nearly half

of Gen Zers say that a high school diploma or GED is

sufficient to ensure financial security. And they were

the least likely among generations to say that

colleges and universities are having a positive effect

“on the way things are going in this country today.”

Perhaps unsurprisingly, a smaller proportion of high

schoolers are continuing on to college. It’s a decline

not seen around the rest of the developed world,

where higher education is expanding. At its core,

this uniquely American rejection of higher education

seems to be about value: Given all we’ve heard about

how even well-educated Millennials struggle

financially, the price tag on a degree in the US just

doesn’t seem worth it.

The truth is, of course, more complicated. A college

degree does mean, on average, significantly better

wages, and graduates of elite universities do best

of all. Those higher wages, though, can be offset by

debt. And people who take out loans to go to college

but don’t graduate see the worst of both worlds :

lower wages and higher debt.

Jobs that require a college degree are also likely

to remain higher-paying, while those that do not

seem to be in a race to the wage bottom. Life for

Americans without a college degree has become

more perilous by a range of measures: This is the

group most likely to perish from “deaths of despair ”

and to live in communities rife with

alcoholism, substance abuse and financial struggle.

And American economic growth and global

competitiveness both require a workforce with

plenty of college graduates.

This is not a problem that one-time student loan

forgiveness is going to solve. We need massive state

and federal investment in education: in higher

education, to make college much more affordable,

and in K-12 education, to ensure that where a child

grows up doesn’t limit her prospects for college and

beyond. The federal government needs to regulate

the student loan industry and end the proliferation of

predatory and exploitative for-profit educational

institutions. Not every student needs to go to an Ivy

League school, but every student should have

access to an affordable, high-quality four-year

education near their homes.

This is largely a solved problem across Europe. We

could make it happen here in the US, too. Doing so

would benefit young adults, of course, who could

graduate without the weight of five- or six-figure

debt weighing them down from the start. But it

would also benefit the nation as a whole, equipping

us with a more sophisticated workforce better

prepared for the technological evolutions of the

coming decades.

Provide universal low-cost child care

From my vantage point, the single highest barrier to

Millennial economic stability is child care.

Millennials are now squarely within childbearing age,

and while many of us are forgoing children, most of

us are or will be parents – but we’re having fewer

children than women of previous generations, and

we’re having them later. The reasons behind that are

complex, but cost is certainly among them: The

United States has some of the highest child care

costs in the world.

And that isn’t because American kids are getting

better-than-average care; it’s because our

government simply doesn’t invest in it . The US

government spends, on average, $500 per child per

year on early childhood care costs. The average

spent among OECD countries is $14,436.

Affordable, high-quality, universal child care helps

mothers, and particularly low-income mothers, to

stay in the workforce, which pays dividends for

their families. Child care programs help to prepare

kids for school and may keep them more active and

socially engaged. As it stands, screens have

become a stopgap measure for poor families, with

kids in low-income households spending many more

hours looking at them than kids in more affluent

ones – something that was exacerbated during the

pandemic.

Social conservatives often prefer

that mothers leave the labor force and stay home

with their children, which is one reason there has

been such broad resistance to universal child care

on the American right. The demand that women

stay home seems to be based more on nostalgia

and gender traditionalism than evidence, of which

there’s plenty, that working mothers bring

significant benefits to their children,

to themselves and to national economies.

The reality, for many American families, isn’t a well-

paid dad who can support a family on a single

income and a mom whose primary aspiration is to

dedicate herself to raising children, were it not for

manipulative feminists and scheming liberals who

pressure her into the workforce. Much more often,

reality is a complicated mix of mothers who want

many sources of purpose and gratification, as well

as the freedom and pride that financial

independence brings; couples who need two

incomes in order to raise their children in financial

stability; and single moms who are the only person

bringing home the bacon.

All of these groups would benefit hugely from free or

affordable child care. It would radically decrease the

stress American parents live under, it would enable

parents to provide a higher standard of living for

their children and it would give children a leg up.

It might also make having a child, or having an

additional child, feel possible for a greater number of

young people.

End the housing shortage

America’s housing system is broken, and not just

because so many Millennials can’t afford homes.

Millennials drove re-urbanization as many of us

graduated college and moved to cities instead of

returning to the small towns or suburban enclaves in

which we were raised. But those cities simply don’t

have enough housing units, especially affordable

rentals for low-income people or starter homes (and

even starter apartments) for those taking a big step

into adult life. This housing shortage has expanded

out into the suburbs and even rural areas.

This wasn’t the case for Boomers, in large part

because the government invested in a massive

expansion of housing stock during their early years.

The federal government could do the same now,

expanding tax credits and voucher programs. Cities

could embrace growth and build, and tax

homeowners who do not live in or rent out their

units. States could expand aid to first-time

homebuyers, ideally lowering closing costs for real

estate purchases and making that so-hard-to-amass

20% down payment more doable.

And this is very pie-in-the-sky, but the US is far

overdue for a total overhaul in property taxation. We

are vastly over-reliant on property taxes for

government revenue, which poses a big problem for

homeowners who are just scraping by, as well as for

retirees who may have paid off their homes but still

owe a hefty tax bill every year. Property tax costs

are inevitably passed down to renters, who also wind

up paying more. And local property taxes, in turn,

contribute to wildly unequal funding scheme s for

public schools, the outcome of which is that the kids

in the richest enclaves also enjoy the best public

educations — better-paid teachers, nicer facilities,

smaller classes, updated textbooks, advanced

science equipment, college and mental health

counselors — while kids in poorer areas receive far

less investment and far fewer educational resources.

This, too, hurts young families, who may spend

beyond their means to get their kids in to a decent

school district, or who see their children’s

opportunities drastically diminished simply because

a parent doesn’t make enough to move to a tony

neighborhood. And it hurts children, who are, after

all, future adults, keeping those who already come

from challenging backgrounds at an even greater

disadvantage, while giving the best-off an additional

leg up. That’s fuel for growing inequality, and a

compounding of the problems Millennials face for

future generations.

There is much more than should be — could

be, must be — done to help Millennials and the

generations after us achieve the American dream (or

at least financial stability). But there’s no time to

waste. The oldest Millennials are in our early 40s,

and the window to improve our future is rapidly

narrowing. We may indeed wind up left behind. But

the US can also refuse to repeat these mistakes and

instead choose to invest in something better for the

generations that come next.