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The role of social media and its impact on social isolation, especially among the young, is real, and destructive of authentic human connection.
The conservative and financial press has been filled with articles proclaiming how well Generation Z is doing. According to The Economist, “Generation Z is unprecedentedly rich. Millennials were poorer at this stage in their lives. So were baby-boomers.”
The Economist adds, “The typical 25-year-old Gen Z-er has an annual household income of over $40,000, more than 50% above baby-boomers at the same age.” A Forbes piece, warming to the theme, claims, “In 2022, nearly a third of 25-year-old Americans were already homeowners, outpacing both millennials and Gen X at the same age.”
This is nonsense. In truth, homeownership rates among adults under age 35 fell from 44 percent in 1960 to 34 percent in 2017.
The fact that those numbers have even stayed as high as they have is the result of more and more homebuyers relying on parental help. According to one survey, 49 percent of Gen Z homebuyers relied on family help with a down payment, as did 27 percent of millennials.
Obviously, parental help is not an option for young adults whose parents have little net worth and are struggling themselves. According to a Pew survey, 43 percent of young adults from lower-income families report giving their parents financial help.
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The story is even more stark when you add race. Black professionals who made it into the professional class are even more likely to help their parents financially.
Black homeownership rates peaked in 2005, at 49 percent. By 2019, they had fallen back to 40 percent, the lowest rate since the Fair Housing Act was passed in 1968.
Subprime lenders targeted Black homebuyers and Black homeowners seeking refinancing. According to a study by the Economic Policy Institute, in 2006, just before the financial collapse, 52.9 percent of Black borrowers assumed a subprime mortgage compared to 47.3 percent of Hispanic borrowers and 26.1 percent of White borrowers. In the ensuing epidemic of foreclosures, Blacks suffered disproportionately.
The Economist piece and kindred articles are good examples of how to lie with statistics. You can show that the typical 25-year-old’s income outpaces boomers’ income when they were 25 only by failing to adjust for inflation and the rising costs of life’s necessities, or using averages rather than medians. According to the Federal Reserve, for people under 35, the average net worth is an impressive-sounding $183,500, while the median, which represents the typical young adult, is just $39,000.
And to the extent that the average Gen Z 20-something has a cushion of wealth, that wealth reflects windfall inheritances, which in turn reflect the extreme maldistribution of income and wealth in society as a whole. Gen Z has already begin inheriting money from boomer and Silent Generation parents and grandparents, and another $84 trillion is expected to be passed down between now and 2045.
A publication called The College Investor did a deeper dive into the financial picture of Gen Z adults between 22 and 26. The article found that because of student debt, each succeeding age cohort has had more student debt than the previous one. The average member of the class of 2022 had debt of $37,570, up from $35,210 in the class of 2019.
Not surprisingly, the result is negative net worth—negative $31,571 for the typical member of the class of 2022, up from negative $17,347 for the class of 2019.
So, no. It is preposterous to declare, as The Economist does, that Generation Z is “unprecedentedly rich” without addressing who in Gen Z.
To understand what’s really going on in America, look at class, not generation. If you unpack Gen Z by class, you find that the vast majority are struggling economically, not enjoying unprecedented riches.
Why do publications like The Economist try to paint a deceptively rosy picture of life among the young? It’s part of the larger fable that all is well in the neoliberal world.
This is a generational story only to the extent that earlier generations, on average, benefited from double tailwinds. The rate of economic growth was higher during the postwar boom, and it was more equitably distributed. Therefore, each succeeding generation of young adults could expect to do better economically than their parents did at a comparable age. But in the 1970s, that dynamic went into reverse. Growth slowed, and its fruits were distributed more unequally. In the 1980s, Ronald Reagan doubled down on policies that increased hyperconcentration of income and wealth.
In an oft-cited paper, Raj Chetty and his colleagues showed that the share of children with higher inflation-adjusted incomes than their parents declined from around 90 percent for children born in 1940 to just 50 percent for those born in 1984. That percentage has continued to decline. The flip side of that statistic is that the likelihood of young adults thriving is increasingly a function of the affluence of their parents.
THERE IS ALSO A VOGUE FOR PATHOLOGIZING very real economic anxieties among the young and defining them as psychological problems. A widely praised best-selling book by social psychologist Jonathan Haidt, The Anxious Generation, argues that smartphones, offering relentless entertainment and social media, are the prime cause of increasing mental illness among young people. Haidt’s book has spawned countless stories in other media.
The increased anxiety among the young is real, as is the negative effect of the addiction to screens. But what’s largely missing from Haidt’s analysis is the role of predatory capitalism both in promoting mindless social media and undermining the economic prospects of the young.
Gen Z has every reason to be anxious. The pandemic added to their social isolation. The job market isn’t great. Housing costs are astronomical. College debt is an immense millstone. And yes, smartphones add to isolation and undermine genuine social interactions. A 25-year-old can also wonder if the planet will even be habitable when she is 50.
But all of these economic anxieties are the result of an ever more concentrated distribution of income, wealth, and political influence, and the policies that follow. The boomer generation, by contrast, benefited from a far more egalitarian social contract that reflected the legacy of New Deal politics, policies, and values. That era had more powerful and influential unions and more constrained capitalists.
Increasing rates of depression are not just confined to the young. Deaths of despair are rising among all age groups. Most older working-class Americans who are using drugs and committing suicide at increasing rates are not addicted to smartphones.
The role of social media and its impact on social isolation, especially among the young, is real, and destructive of authentic human connection. But you can’t fully tell that story without mentioning the role of surveillance capitalism in promoting ever more insidious screen addiction.
For a much more illuminating discussion on social media, the role of corporate-driven screen time in depriving children of play needed for healthy development, and the role of corporate elites in blocking needed regulation, a much better source of wisdom is psychologist and child advocate Susan Linn’s recent book, Who’s Raising the Kids?: Big Tech, Big Business, and the Lives of Children.
The travails of Gen Z are real. They deserve a thorough understanding of the complex economic and cultural sources of stress.
