Matt Bruenig, a writer at the think tank Demos, has a very interesting theory about poverty. He points out that poverty declines as people age. Much of it is simply due to the life cycle of earnings -- as people get older, they earn more money. Earnings tend to increase steadilyfrom age 25 to age 45, then top out.
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Remember, to smooth the transition from youth to middle age, young people need to borrow. But borrowing exposes people to a lot of risk. If the labor market tanks, and interest rates or inflation soars, people who borrowed a lot of money could be stuck with an unbearable debt burden.
That seems like it may have happened with our current millennial generation -- especially the slightly older members of the cohort. The Great Recession left a lasting scar on that generation’s employment prospects and earning power. Unfortunately, that generation also took out record amounts of student loans.
In other words, millennials suffered a huge shock that reduced their chances of becoming old and comfortable, at the exact time that they had made themselves most vulnerable to such a shock. That one-two punch is taking its toll, and the generation is buckling under the strain. A huge number have moved back in with their parents. Meanwhile, fertility rates have plunged to lows not seen since the 1970s, erasing much of the demographic advantage that had recently made the U.S. look like a better long-term bet than other rich countries.