In that very literal sense, they are a lost generation of transgender people. But even the ones who have survived are part of the lost generation I've described, for they were not able to pass on what they learned, whether from a previous generation of trans people or from their own lives. They taught each other how to shoplift, find places to "crash" (Most of them had little or no money; if they had any, they were saving it for surgery.) and deal with cops and tranny-chasers as well as tranny-bashers.
In other words, they were only learning how to survive for the moment. Now, of course, that is important, for if we don't live through this moment, we won't have others in which we can live. But, as we have seen in history, people who expend--whether through choice or necessity--all of their energy in immediate survival tend not to make advancements in their consciousness, let alone in the ways they do things. And they tend not to live very long. In those senses, young trans people in the 1980's were not so different from almost anyone who lived in Europe during the millennium or so that followed the disintegration of the Roman Empire.
But the young people who were living in the ball culture shown in Paris Is Burning were marooned in a moment of history. Most of them did not know about pioneering transgender activists like Sylvia Rivera, who were shunted aside when LGBT organizations and movements were taken over by, and therefore focused on, gay white men. (Lesbians found themselves stuck in their own kind of limbo in the feminist movement.) Although they were less than a generation removed from the Stonewall Rebellion, they were as unaware of it as most American college freshmen are of John Brown and the slave rebellions.
What was even worse was that they were stuck without the knowledge of how to deal with the struggles they faced in a society and nation (at least in its political leadership) that had grown more hostile to them. Sylvia Rivera herself was all but forgotten, homeless and battling addiction, as transgenders and drag queens were shunted aside to make the gay-rights movement (which was dealing with the stigma of AIDS) more attractive to straight people and others in the mainstream.
In brief, the young people who were competing in those balls had already lost what little history they had. We all know that one of the easiest ways to destroy a people--or to make it an underclass--is to separate it from its history. I'm not talking about History in the academic sense (although that matters, too); I mean a person's own history and that of the family and community from which he or she came.
The older trans and drag queens could teach them how to "boost" designer purses and eyeliner. But they couldn't teach them the things a previous generation would have been able to teach them. That is what was lost with the lost generation of trans people.