Class struggle has always existed in the history of human civilizations. Karl Marx, the most prominent social scientist who promulgated communism, made the concept of class struggle the central focus of his entire theoretical work, which impacted many countries for the worse. It seems today that the notion of class struggle is resurfacing again in America. This time, this class struggle appears to be within millennials—people born between 1981 and 1996.
Indeed, the wealth gap between rich millennials and the rest of their age group is the largest of any generation, creating a new wave of class tension and resentment according to a study. According to the study, the average millennial has 30% less wealth at the age of 35 than baby boomers did at the same age. Yet, the top 10% of millennials have 20% more wealth than the top baby boomers at the same age.
Moreover, the study finds that millennials—typically defined as those between the ages of 28 and 43 today—have faced repeated financial headwinds. The study highlighted that millennials have lower homeownership, larger debts outweighing assets, low-wage and unstable jobs, and lower rates of dual-income family formation. At the same time, the authors of the study asserted that the top 10% of millennials have benefitted from greater rewards for skilled jobs as they went to college, started families relatively late, and have higher levels of wealth than Baby Boomers with similar life trajectories.
The wealth gap within millennials is the massive transfer of wealth and this massive transfer is based on inheritance. Indeed, baby boomers are expected to pass down between $70 trillion and $90 trillion in wealth over the next 20 years. High-net-worth individuals worth $5 million or more will account for nearly half of that total, according to Cerulli Associates.
John Mathews, the head of UBS’s Private Wealth Management division, stated: “The great wealth transfer, which we’ve all been talking about for the last 10 years, is underway. The average age of the world’s billionaire is almost 69 right now. So this whole transition or wealth handover will start to accelerate.”
It is fair to say that tensions between millennial classes are likely to escalate as more wealth is transferred in the coming years. A survey by Wells Fargo found that 29% of affluent millennials (having assets of $250,000 to over $1 million in investible assets) admit they “sometimes buy items they cannot afford to impress others. According to the survey, 41% of affluent millennials admit to funding their lifestyles with credit cards or loans, versus 28% of Gen Xers and 6% of baby boomers.
The battle between rich millennials and the rest could also shape their attitude towards wealth. For several decades, most billionaires and millionaires were self-made. The growth of inheritance is now becoming the new way to acquire wealth. The surge in wealth among millennial heirs is also creating a lucrative new market for wealth-management firms, luxury companies, travel firms, and real estate brokers.
Article originally written and published by CNBC.
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