As an expert in money and poverty issues, I am often asked how young adults feel about life and their chances of improving their circumstances.
In these dire economic times, many young adults feel much worse off and less certain of their future than did a generation ago. While there are other factors at play, a recent survey that examined views of the downturn showed young adults are especially nervous.
The economic impact of the recession is often called “The Great Recession.” Yet, the impact that it has had on young adults – among the most recent cohort of young adults – is notable.
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The survey was sponsored by the National Center for Education Statistics and conducted by the Johns Hopkins University Steinhardt Center for Economic Policy Analysis. At age 21, college-educated young adults were particularly affected.
The median (one in 10) student loan debt for these students was more than $25,000, and nearly 30 percent of young adults had debt amounts of $30,000 or more.
The data indicates that while the student loan debt burden has abated, many young adults are falling further behind.
These young adults, the study stated, have lower earnings, lower incomes, lower home ownership rates, higher poverty rates and less wealth. The study found that all of these economic results have grown since the recession.
Sixty-three percent of young adults say they are currently less well off than their parents and 71 percent believe their future prospects are less optimistic than those of their parents. These findings are exactly in line with a survey of adults in general that was conducted by the Gallup Organization earlier this year.
Among students who did not graduate from college, another result from the census study was that 26 percent say they are “very worried” about being out of work and/or falling behind with their mortgage payments. This is two times the percentage as those who graduated college.
While the education and economic circumstances of young adults have changed, the rate of young adult poverty has decreased by 18 percent since its highest point. While the income gap between young adults without a high school diploma and college graduates is shrinking, that gap has still doubled.
There are some indications that these negative consequences may be beginning to fade. PEW found that 30 percent of young adults with an associate degree or less are no longer experiencing economically precarious living situations.
There are also signs that some economic indicators are on the rise. For example, Gallup found that the wealth gap between young adults and young adults without a high school diploma increased in five of the past six years. A new survey from the Investment Company Institute showed that 22 percent of millennials are self-employed, up from 19 percent last year.
In fact, most millennials are beginning to have jobs. A Pew survey found that 61 percent of millennials age 18-34 were employed. Additionally, their incomes have risen significantly from 2008.
The only hopeful factor is that millennials (those born from the mid-1980s to the early 2000s) are expected to have a lower rate of poverty than the previous generation. However, the Pew report stated, lower-income young adults are still dramatically more likely to be in poverty than young adults in the previous generation.
There are so many related factors to economic uncertainty and associated economic insecurity. It is in these times that government and business leaders need to make an effort to engage young adults to help alleviate problems that are interrelated. A critical part of the answer is to focus on students and workers. Young adults need to receive the training and experience that will lead to higher earnings and opportunities for improved life circumstances.
Because the social and economic impact of the recession is clearly not over, future generations need to be prepared for coming challenges. We need more than a hopeful economic outlook. We need to be intentional about how we create value.
Ralph Whitman is director of the Center for Business, Labor, and Employment Policy at the Hartman Group. He served in executive positions at the U.S. Economic Development Administration, Department of Labor, and as a legislative and executive assistant to former U.S. Sen. Al D’Amato. His most recent book is “Economics 101: An introduction for newly graduated workers.”