How Generations Differ

We can start with how our birth years divide us:

Generational Differences

Defining Success

In its “Secret to Success” study, Empower concluded that more than years divide us. We also define success differently. Still, I would suggest that, although wealth was one of four metrics that measured success, it relates to the other three. According to economic research, for many of us, money helps to create happiness, free time, and physical well being:

Annual Earnings Needs

In the Empower survey, with 2,203 participants, Baby Boomers said they needed to earn $99,874 annually. By contrast, for Gen Z, the total was $587,797. In the middle, the Millennials selected $180,865 and Gen X, $212,321.

Actual Annual Earnings

Taking the next step, we can ask how much each age cohort does earn. However, we should note that Empower and Business Insider numbers are based on different studies. Still, we can get the picture:

But it gets more complicated when the Bureau of Labor Statistics gives us the details. Then, not only does age matter, but also race and where you live. Furthermore, the Empower numbers refer to individual salaries while here (below) the census is looking at household income:

And finally, further illustrating generational differences, a Charles Schwab survey showed how different age cohorts invest:

Our Bottom Line: Labor Markets

Whenever we look at how much people earn, as economists, we are referring to labor markets.  In our circular flow model, labor markets are in the lower loop within the factor markets rectangle. As the process through which price and quantity are determined, labor markets are “where” earnings are determined:

My sources and more: Thanks to this Empower study, the Census, a USA Today summary and this econlife post for today’s facts. You might be concerned (as was I) that using difference sources, I was comparing “apples to oranges.” However, even those disparate metrics revealed how the generations differ.