Today’s youth, both here and abroad, have been screwed by their parents’ fiscal profligacy and economic mismanagement. Neil Howe, a leading generational theorist, cites the “greed, shortsightedness, and blind partisanship” of the boomers, of whom he is one, for having “brought the global economy to its knees.”
How has this generation been screwed? Let’s count the ways, starting with the economy. No generation has suffered more from the Great Recession than the young. Median net worth of people under 35, according to the U.S. Census, fell 37 percent between 2005 and 2010; those over 65 took only a 13 percent hit.
The wealth gap today between younger and older Americans now stands as the widest on record. The median net worth of households headed by someone 65 or older is $170,494, 42 percent higher than in 1984, while the median net worth for younger-age households is $3,662, down 68 percent from a quarter century ago, according to an analysis by the Pew Research Center.
The older generation, notes Pew, were “the beneficiaries of good timing” in everything from a strong economy to a long rise in housing prices. In contrast, quick prospects for improvement are dismal for the younger generation.
One key reason: their indebted parents are not leaving their jobs, forcing younger people to put careers on hold. Since 2008 the percentage of the workforce under 25 has dropped 13.2 percent, according to the Bureau of Labor Statistics, while that of people over 55 has risen by 7.6 percent.
“Employers are often replacing entry-level positions meant for graduates with people who have more experience because the pool of applicants is so much larger. Basically when unemployment goes up, it disenfranchises the younger generation because they are the least qualified,” observes Kyle Storms, a recent graduate from Chapman University in California.
Overall the young suffer stubbornly high unemployment rates—and an even higher incidence of underemployment. The unemployment rate for people between 18 and 29 is 12 percent in the U.S., nearly 50 percent above the national average. That’s a far cry from the fearsome 50 percent rate seen in Spain or Greece, or the 35 percent in Italy and 22 percent in France and the U.K., but well above the 8 percent rate in Germany.
The screwed generation also enters adulthood loaded down by a mountain of boomer- and senior-incurred debt—debt that spirals ever more out of control. The public debt constitutes a toxic legacy handed over to offspring who will have to pay it off in at least three ways: through higher taxes, less infrastructure and social spending, and, fatefully, the prospect of painfully slow growth for the foreseeable future.
In the United States, the boomers’ bill has risen to about $50,000 a person. In Japan, the red ink for the next generation comes in at more than $95,000 a person. One nasty solution to pay for this growing debt is to tax workers and consumers. Both Germany and Japan, which appears about to double its VAT rate, have been exploring new taxes to pay for the pensions of the boomers.
The huge public-employee pensions now driving many states and cities—most recently Stockton, Calif.—toward the netherworld of bankruptcy represent an extreme case of intergenerational transfer from young to old. It’s a thoroughly rigged boomer game, providing guaranteed generous benefits to older public workers while handing the financial upper echelon a “Wall Street boondoggle” (to quote analyst Walter Russell Mead).
Then there is the debt that the millennials have incurred themselves. The average student, according to Forbes, already carries $12,700 in credit-card and other kinds of debt. Student loans have grown consistently over the last few decades to an average of $27,000 each. Nationwide in the U.S., tuition debt is close to $1 trillion.
This debt often results from the advice of teachers, largely boomers, that only more education—for which costs have risen at twice the rate of inflation since 2000—could solve the long-term issues of the young. “Our generation decided to go to school and continue into even higher forms of education like master’s and Ph.D. programs, thinking this will give us an edge,” notes Lizzie Guerra, a recent graduate from San Francisco State. “However, we found ourselves incredibly educated but drowning in piles of student loans with a job market that still isn’t hiring.”
More maddening still, the payback for this expensive education appears to be a chimera. Over 43 percent of recent graduates now working, according to a recent report by the Heldrich Center for Workforce Development, are at jobs that don’t require a college education. Some 16 percent of bartenders and almost the same percentage of parking attendants, notes Ohio State economics professor Richard Vedder, earned a bachelor’s degree or higher.
“I work at the Gap and Pacific Pak Ice, two jobs that I don’t see myself working long term nor jobs that are specific to my major,” notes recent University of Washington graduate Marshel L. Renz. “I’ve been applying to five jobs a week and have gotten nothing but rejections.”
Particularly hard hit are those from less prestigious schools or with majors in the humanities, notes a recent Pew study. Among 2011 law-school graduates, half could not find a job in the legal field nine months after finishing school. But it’s not just the lawyers and artists who are suffering. Overall the incomes earned by graduates have dropped over the last decade by 11 percent for men and 7.6 percent for women. No big surprise, then, that last year’s class suffered the highest level of stress on record, according to an annual survey of college freshmen taken over the past quarter century.
The proliferation of graduate degrees also impacts those many Americans who don’t go (or haven’t yet gone) to college. High-school graduates now find themselves competing with college graduates for basic jobs in service businesses. Unemployment among 16- to 19-year-olds this summer is nearly 25 percent, while for high-school graduates between 2009 and 2011, only 16 percent have found full-time work, and 22 percent work part time.
Once known for their optimism, many millennials are turning sour about the future. According to a Rutgers study, 56 percent of recent high-school graduates feel they would not be financially more successful than their parents; only 14 percent thought they’d do better. College education doesn’t seem to make a difference: 58 percent of recent graduates feel they won’t do as well as the previous generation. Only 16 percent thought they’d do better.
This perception builds on the growing notion among economists that the new generation must lower its expectations. Since the financial panic of 2008, “the new normal” has become conventional wisdom. Coined by Mohamed El-Erian at Pimco, it’s been used to describe our world as one “of muted Western growth, high unemployment and relatively orderly delevering.”
The libertarian Tyler Cowen, in his landmark work The Great Stagnation, makes many of the same points, claiming that the U.S. “frontier” has closed both technologically and in terms of human capital and resources. He maintains that we’ve already harvested “the low-hanging fruit” and that we now rest on a “technological plateau,” making any future economic progress difficult to achieve. Stagnation is not such a bad thing for people already established in college-campus jobs, think tanks, or powerful financial institutions. But it wipes out the hope for the new generation that they can achieve anything resembling the American Dream of their parents or even grandparents.
Inevitably, young people are delaying their leap into adulthood. Nearly a third of people between 18 and 34 have put off marriage or having a baby due to the recession, and a quarter have moved back to their parents’ homes, according to a Pew study. These decisions have helped cut the birthrate by 11 percent by 2011, while the marriage rate slumped 6.8 percent. The baby-boom echo generation could propel historically fecund America toward the kind of demographic disaster already evident in parts of Europe and Japan.
The worst effects of the “new normal” can be seen among noncollege graduates. Conservative analysts such as Charles Murray point out the deterioration of family life—as measured by illegitimacy and low marriage rates—among working-class whites; among white American women with only a high-school education, 44 percent of births are out of wedlock, up from 6 percent in 1970. With incomes dropping and higher unemployment, Murray predicts the emergence of a growing “white underclass” in the coming decade.
The prospect of downward mobility is most evident in recent discussions about the future of the housing market. Since World War II the expectation of each generation was to own property, preferably a single-family house. The large majority of boomers became homeowners during the Reagan-Clinton era. Yet it is increasingly fashionable to insist this “dream” must be expunged. If millennials ever move out of their parents’ house, they will live in apartments they don’t own. There’s a lot of talk about a “generation rent” replacing a primarily suburban ownership society with a new caste of city-dwelling renters. “I’m hoping that the millennial generation doesn’t set its sights on homeownership as a benchmark of economic stability,” sociologist Katherine Newman suggests, “because it’s going to be out of reach for so many of them.”
No doubt the prospects for homeownership will be tough in the years ahead. But it’s delusional to believe millennials don’t desire the same things as previous generations, note generational chroniclers Morley Winograd and Mike Hais. Survey research finds that 84 percent of 18- to 34-year-olds who are currently renting say that they intend to buy a home even if they can’t currently afford to do so; 64 percent said it was “very important” to have an opportunity to own their own home.
And where do millennials see their dream house? According to research at Frank Magid Associates, 43 percent describe suburbs as their “ideal place to live,” compared with just 31 percent of older generations. Even though big cities are often preferred among college graduates in their 20s, only 17 percent of millennials say they want to settle permanently in one. This was the same percentage of members of this generation who expressed a preference for living in rural or small-town America.
So far, the Great Recession has driven young people around the high-income world to the left. Generations growing up in recessions appear more amenable to arguments for government-mandated income redistribution. And since so few young people pay much in the way of taxes, they are less affronted by the prospect of forking over than older voters, who do. This left-leaning tendency has been on display in recent European elections. In France, 57 percent voters 18 to 24 supported the Socialist François Hollande, one of the reasons why the conservative Nicolas Sarkozy lost. Similarly, 37 percent of those in that age category voted for Syrizia, the far-left party in Greece.
But Winograd and Hais—and Democratic strategist Ruy Teixeira—say it’s not just economics working for the Democrats. Social issues such as gay marriage, women’s rights, and immigration—a large proportion of millennials are children of newcomers—tend to drive younger voters toward the Democrats. Half of millennials, for example, favor gay marriage, compared with a third of boomers, and some predict the Republican embrace of draconian social conservatism will serve to harden the Democratic tilt of millennials for the foreseeable future.
Yet Republicans may take heart from some of the more conservative values embraced by the young. As a group, millennials appear to be very family-oriented—being good parents is often their highest priority—and roughly two thirds claim to believe in God. And since their long-term aspirations are not so different from those of earlier generations—they still want to own a home in a nice, secure neighborhood—Republicans could make a case that their economic model will work better with their personal goals.
Right now, politics is just another place where American millennials are getting screwed. Republicans want to deport young Latinos while cutting investments, such as roads and skills education, that would benefit younger voters. Democrats, meanwhile, seem determined to mortgage the future with high spending on pensions, predominantly for aging boomers; cascading indebtedness; and economic policies unfriendly to the rapid growth necessary to assure upward mobility for the new generation.
This suggests millennials need to force the parties to cater to them and play hard to get. Being taken for granted, as African-Americans have been, does not always produce the best results for any demographic grouping. Politicians target “soccer moms,” “independents,” and suburban voters precisely because they are not predictable. Millennials should not want to be in anyone’s hip pocket.
Wanting the next generation to succeed is in everyone’s long-term interest. Eventually they will constitute the majority of parents, potential homeowners, and workers. This year they will comprise 24 percent of voting-age adults, up from 18 percent in 2008; by 2020 they will amount to a third of all eligible voters. And if, by then, they are still a screwed generation, they won’t be the only ones suffering. America will be screwed, too.
Research assistance by Gary Girod. Portrait interviews by Eliza Shapiro.
Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.
This piece originally appeared in Newsweek Magazine.
Comments
70 responses to “Are Millennials the Screwed Generation?”
“…… If young Americans knew what was good for them, they would all be in the Tea Party…….”
– Niall Ferguson, 2012’s first Reith Lecture, London School of Economics
http://www.bbc.co.uk/programmes/b01jmx0p/features/transcript
Are they any more screwed than the GI generation. I would contend not, there is no equivalent of WWII on the horizon which meant that every able bodied young male went off to war (Recall this is 1901 to 1924 births). Or the younger cohort who faced the great depression. It may be this shafting that leads to the civic engagement of the generation. So it may be more appropriate to put it that since WWII they are the most shafted young generation.
Millennials are not so much worse off than prior generations. Kotkin’s analysis correctly starts with the massive damage done to Millennials by the Great Recession that started with the global meltdown of 2008. By assuming there will never be economic improvement, he essentially projects this short term crisis into a hypothetical longterm disaster. This is far too pessimistic.
Yes, jobs and salaries are greatly depressed. Yes, for some reason Republicans in Congress have fought tooth and nail to block or minimize any of the many economic kickstarters (public sector jobs!) that every previous Congress has successfully used to get us out of recessions. And yes, by drastically cutting teaching jobs, infrastructure investment, university research investment and every other public sector mainstay, we have indeed created an employment crisis. But even this will pass – just as it did with the great recession of the mid 1970s that had boomer college graduates similarly living with way too many roommates and a choice between unemployment or crappy waitressing jobs. Take a deep breath. It gets better.
The median levels of college student debt are indeed horrendous. Recent graduates who weren’t smart enough to have wealthy parents will not themselves be living the high life immediately. And their debt payments will be a drag on the economy for some time, hurting us all. But the implication that they were unethically steered into investing in higher education by devious boomer generation teachers, and that this education is useless, seems a little loony to me. In any case, Kotkin correctly points out that college graduates have been less damaged by the crisis than high school graduates. That sounds like their degrees are already starting to pay off.
I also don’t see such a deterioration in the educational situation of Millennials. A college degree has always been primarily a door-opening credential, and some individual graduates have always been far more intellectually elevated than others. There’s nothing new in the existence of a range of skills and talents with the same degree. The below average group may not do as well as the highly skilled, and not every graduate will be attractive to employers. Desirable jobs have always been competitive, when available at all.
There’s also nothing new about the fact that below average students who were let into Ivy League schools for whatever reason have an easier time getting jobs than average kids coming out of non-prestigious universities. What boomer doesn’t have stories about that? I’m most concerned about students who took on extreme levels of debt after being badly advised that no-name schools are every bit as good as prestigious ones. I suspect and hope that this group is much smaller than recent breathless press accounts would suggest. But even those graduates are in a far better position for jobs and lifelong career growth than their cohorts who didn’t go to college at all.
Finally, there is no question that society as a whole will be better because a much broader segment of the young population is entering adulthood with higher educational levels. That may well turn out to be America’s ultimate politics-defying economic kickstarter.
DM Lake
While I agree with many of the points in this article, it doesn’t address the problem of income distribution change over the last 35 years. Many of the problems facing today’s society are a result of the redistribution on income so that now the very wealthy (the so called top one percent but more like the top few percent of earners) now earn over 20% of total income, up from 12% 35 years ago. It this had been put into wages and benefits for employees (not taken as taxes) as it was in the post WWII era the job prospects for the millennials would be better.
This would also have helped to mitigate the looming pension problem in that a far great share of society would have defined benefit pensions. The problem with defined benefit plans was that most assumed the high rate of return in the 1990’s was over and above the 8% assumed, and contribution were reduced or eliminated. In the 2000’s private employers simply closed their defined benefit plans to as many employees as possible, or filed for bankruptcy to eliminate their pension liability. Governments underfunded their plans and are now having to make up the difference, in most cases not noting the money they saved from lower contributions. Had the share of income of the wealthiest not increased but been put into pensions, these pensions would still have invested in the stock market and encouraged growth, and most of society would have been better off.
Geography student
It seems people have a tendency to use what they read as peripheral fodder for their own ideologies and pie-in-the-sky wishes. This usually takes the form of, “ahh, it’s not that bad, we’ll magically get out of this like we have in the past” or techno-utopianism (“Ahh, we may not have work, but we’ll magically have miraculous new discoveries that will save us all, cheap energy, cure to illnesses, global warming, etc.).
No this it systemic and will not and cannot return to past patterns, because we are reaching the limits of sustainable production and consumption. That is unprecedented. We will have to transfer economic value into non-material markers of value and real quality of life as imbedded in diversity, challenge, love, community, learning, etc. We cannot and should not persist in all trying to be material kings of the world. It’s destroying us and making us more unhappy.
Hopefully this material scarcity will lead to a boom in development of non-material life values and practices, and we will find that we have a better life without all the goodies but with our better angels, our integrity, and our spirits well addressed.
You could probably say the same for every generation – they always blame the one before teeth whitening kits
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