Are the younger generations financially worse off than older generations?

In a previous blog post, I wrote about how data can tell any story you want it to but understanding the correct data can tell the truth. I often hear things about inflation, how difficult it is to live now versus our parents, the baby boomer generation, and how rising costs and lower wages are impacting everyone. Is it true?

Before I go into rising costs, the original data I pointed out regarding Covid was, unfortunately, realistic. Though only a few months of data had existed at the time, over the course of two years that initial data had set a forecasting model on deaths. Covid is not only more deadly than the flu, but at times has been more deadly than heart disease and cancer (source). I sincerely wished that the early data would result in an exaggeration as time went on.

Inflation is based on the CPI (Consumer Price Index) and can vary to roughly 3% every year since the CPI had been created back in 1914. It’s gone everywhere from -15.8 (June, 1921) to 21.9 (May, 1920) and more recent highs of 7.9 in February, 2021 as the Federal Reserve had built some stability into the system over the past few decades.

The Consumer Price Index is the average weighted price of purchased goods like food, beverages, housing, clothing, etc. Basically: how much is the average person spending each month? What’s important to know is that there’s a difference between the cumulative amount and the percentage.

% of change hovers around 0 while the index goes up

Theoretically, the % of change year-to-year for Inflation should be the same each year. Let’s find out:

% of the change in inflation/deflation

The two match, which tells us inflation mirrors the CPI. Notice how each year it’s roughly about 3%, which tells us the economic policies in America are working because the rise of costs are not increasing too fast causing massive debt, nor are the costs going negative to cause a depression, though we have experienced recessions.

The Federal Reserve was established to monitor these costs and make adjustments to the percentage of interest rates to either lower inflation, or raise deflation (source). While it’s easy to scapegoat a sitting president for rising costs, it’s a bit more complicated than that. The reality is that the blame is on the shoulders of everyone who decides to spend money.

To show you how complicated this is, I’m easily reminded of a sticker I saw at a gas station the other day.

What is the meaning of 'I did that' stickers? - A NEWS

Except, he didn’t “do that” and there are thousands of factors that cause the rise in gas prices outside of the trade ban on Russian oil exports due to the war. If you really want to dig into it, Politifact does an excellent job exploring why gas prices are rising. Returning to this article we can see that the prices are – from an inflation-based perspective – not that much more expensive than ten years ago.

Gasoline Price Trends Feb 2022

Why does inflation increase every year while the percentage of change seems to be low? Let’s do a scenario:

  1. I purchase a taco at $1
  2. The taco ingredients plus labor cost $0.30 to make
  3. The worker making the taco makes $12/hr
  4. The cornfield worker makes $9/hr that makes the taco shell
  5. The cattle rancher makes $10/hr
  6. The lettuce farmer makes $9/hr
  7. etc.

For the sake of simplicity, let’s say the worker at the taco shop is paying rent and they receive notice rent is going up $100 per month. Now, the taco worker needs to make $12.50/hr to afford rent, or they leave and find another job for more income, which leaves the taco place to either hire someone for the same rate or pay someone more money… like $12.50/hr, which the now-former taco worker asked for. Now the taco costs $0.32 to make. That former worker now earns more money but also pays more in rent (impacting the CPI) and the taco place may need to raise their costs to $1.05 per taco, which also affects the CPI. Even though the cost to produce the taco may increase the following year, the percentage of that change could range from 0.1% or 5%. This is why prices almost always rise even though inflation change percentage could be menial. The percentage is what we always hear about. While consumers can spend less the following month, the taco will likely keep its new pricing anyways. Put this on a larger scale and you have something called economics.

In an inflating economy interest rates are cut, employees become job-seekers for higher pay, and higher pay means higher costs to produce goods or services and thus higher prices for the consumer. This is a healthy economy. In a deflating economy, capital is put back (or re-invested) to prevent a market collapse, which we saw in 2009 with ARRA.

Okay, by now you’re probably thinking: I didn’t come here for a lesson on economics I learned in high school, so get to the damn point! Okay, I will, but I wanted to make sure the context of inflation was set in stone because the rest of the article uses inflation adjustments to level the playing field. Remember: good data needs a common denominator, so all prices are adjusted to 2021.

When I hear about people saying it’s difficult to live these days and buying a home is almost out of the question, I have to wonder if that difficulty is true now and what causes that difficulty, versus our parent’s generation the “Baby Boomers”. Okay boomer, now it’s time to let data tell the story.

Remember, in the previous article I wrote: when looking at data it is important to use proper comparisons and common denominators to ensure that data is fair. The common denominators I’ll be looking at include all age groups, all genders, all ethnicities, and an entire household on a per month basis. The reason is that a data breakdown of specific groups dating 40 years is not practical – if not impossible – and I couldn’t find any after dozens of hours of research.


The median household income in 1970 was $9,430. I use household income because I think it’s the fairest of all data points. People talk about salaries, but what about the women who normally didn’t work in 1970? A household income talks about the entire household regardless of gender, race, or how many income providers there are. Additionally, I wanted to make sure to use the median as the average wouldn’t be fair since the gap between the rich and poor is increasing and thus the average may be rising, while the median looks at the most common salary. To put it another way, if the smallest dogs remain 6″ tall and the largest dogs increasingly become larger every year by an inch, then the average rises. The median should theoretically remain the same unless the smallest dogs or all dogs also increase in height each year.

In 2021, the median household income was $79,900. Using an inflation calculator, it was roughly $65,856.88 in 1970.

Disclaimer: the income is gross income without taxes and other deductions. Let’s add some deductions and we’re using Colorado (my state) as an example:

  • 1970 $65,856.88 – taxes = $40,745.60
  • 2021: $79,900 – taxes = $60,190

How about medical insurance? In 1970 most people were enrolled in Medicaid, which is already included in the tax calculation. Keep in mind Medicaid was cut as private insurance companies took over (story for another day). I also want to point out that I will use the average figure in this circumstance since income doesn’t impact medical insurance as opposed to age. Since the gross income figures include all ages, so will the medical insurance costs.

  • 1970: $40,745.60
  • 2021: $60,190 – $541 (per month) = $53,698.00

And Social Security:

  • 1970: $40,745.60 – 8.4% tax = $37,322.97
  • 2021: $53,698.00 – 12.4% tax = $47,039.45

These are the salary figures, so let’s look at a per month basis because we want to make sure everything is based on a similar timeframe.

  • 1970: $37,322.97 = $3,101.73 / month
  • 2021: $47,039.45 = $3,909.21 / month


In 1970, the median house value is $17,000 or $118,723.97 adjusted for inflation. In 2021, the median house value is $374,900. Again, I’m using median instead of average so we can avoid the conversation of multi-million dollar homes that fall in the top 1% of home values and throw off the average balance.

What about loan rates? Unfortunately, there isn’t data going back to 1970. But, FreddieMac does have data going to 1971 with an average rate of about 7.5%. Let’s input these figures into a 30-year mortgage calculation with the average loan in 2021 at 4.85%.

  • 1970: $830 / month
  • 2021: $1,978 / month

The above figures are after inflation calculations. Not everyone owns a home, so what about rent after inflation? For this I focused on a single-bed studio so I can compare like settings:

  • 1970: $754.25 / month
  • 2021: $1,294 / month

For the record, the 1970 rent above is for New York City as I couldn’t find rent data for anywhere else. In 2021 in Queens, it was $1,760 / month. Rental fees are less than home mortgages, so for the rest of the article, I’ll focus on the mortgage payments.

What about college tuition and degrees? First, I want to figure out how many people had degrees in 1970 compared to now. In 1970, only 14.1% of males had a degree and 8.2% of women had one. In 2021 it was 36.7% and 38.3%, respectively (source).

Unfortunately, I couldn’t find the tuition costs in 1970, but the nearest I found was 1975 and it was $2,607 adjusted for inflation. Also, they didn’t have loans at the time. In 2021, it was $10,560. Not only was student tuition significantly more, but more than twice as many people went to college. Roughly 34% of students claimed to take out a student loan. The average student loan payment is $613 per month.

Groceries adjusted for inflation?

  • 1 LB Pork 1970: $8.10
  • 1 LB Pork 2021: $3.77
  • 1 dozen eggs 1970: $4.15
  • 1 dozen eggs 2021: $1.53
  • Loaf of bread 1970: $1.63
  • Loaf of bread 2021: $1.36

Thank you, mass production and government farming stipends. Gas was already covered above where it’s about equal today as it was in 1970.

How about electricity? I’ll use 1,000 kWh as a baseline since we want to make sure we’re comparing like electricity usage, then adjust for inflation:

Pretty close.

Other things are hard to capture like phone lines since we pay monthly bills now and in 1970 you paid per phone call. Internet? That wasn’t even in a small percentage of homes for another 20 years. Television? Everything was antenna and there were no cable plans. Selfish plug, but I still don’t pay for television. What about other things like movie theater tickets, childcare, household items, etc? I wanted to focus on things that everyone generally pays for, and childcare wasn’t common as most women weren’t working (85%) at the time.

I wanted to approach this subject as neutral as possible and let the data tell the truth. So, let’s do the math:

  • 1970: $3,101.73 (monthly income) – $830 (mortgage) = $2,271.73 spending cash remaining
  • 2021: $3,909.21 (monthly income) – $1,978 (mortgage) = $1,931.21 spending cash remaining

With utilities and groceries at a similar rate, we can wash those out. Could we potentially include additional costs like phone service ($5o/month) and internet ($51/month) as necessary essentials they didn’t have? Yes, but the difference might be negligible as we don’t know how much money was spent per month on phones in 1970.

Before I conclude this article, I want to thank the University of Missouri for storing a lot of the data I used for this research.


Did the baby boomers have it harder financially than the younger generations? It depends. The younger generations have an 85% income-to-expense difference comparatively. Though slightly lower, I wouldn’t consider it a huge disadvantage unless you fall under these three fundamental exceptions:

  • If you took out a student loan then the difference is more significant at an additional owed $613 per month, in which case if you’re of the 34% who did, then your income-to-expense ratio is 58% of the baby boomers.
  • You require childcare. In 1970, only 15% of the women worked so most took care of children at home, while in 2021 there were nearly 60% of women in the workforce. That means there are up to 45% more families relying on two incomes rather than one.
  • If you’re a single-income household. Because 15% of women were working in 1970, a majority of homes were able to survive on a single income. This means for potentially up to 60% of household incomes are reliant on two incomes, and thus we could assume that the income per person is halved compared to 1970.